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Rob R

Small business investment for 2013

Has anyone got any plans to invest/explore funding for investment in 2013? We tried crowdfunding for the first time last year, and it worked very well but I think it's more of a once in a lifetime thing, as people will get sick of appealing for investment and the rewards get harder to think of. Much of what [capital] we spent in 2012 was borrowing, but just wondered if there was any initiatives/ideas that are fresh on the horizon.
Hairyloon

I did wonder how much you'd charge for a lifetime supply of meat... not that I could afford it, but in case I won the lottery.
Pilsbury

I thought of paying interest on money loaned in meat boxes, set a rate and repay ths capital and pay interest in vouchers....
nats

I thought of paying interest on money loaned in meat boxes, set a rate and repay ths capital and pay interest in vouchers....


Dad had shares in a vinyeard that operated like that once. Bought your shares and got wine every year! Unfortunately the owner handed it over to his son who closed the thing down.... The wine was good!
Hairyloon

I thought of paying interest on money loaned in meat boxes, set a rate and repay ths capital and pay interest in vouchers....

I would be tempted by that... except I have nowt to invest.
There are a few people I could put it to though.
Pilsbury

Sort of thing I was thinking was 1000 investment with a return of capital and a 50 voucher per year, thats s a 5% return on investment and it could be either a minimum term or once the capital is paid back the vouchers stop.
Just sometime I was bouncing round, obviously you could do higher and lower returns for bigger or smaller investments or work on the theory the bigger the investment the longer to repay so more vouchers.
Rob R

It's an interesting idea Pilsbury, I'll think on it. The crowd funding is such a good idea but I think it's better suited to short term cash injections for higher return projects.

Having the new building at least in service, if not finished, makes me realise how much time was wasted before, just doing daily chores. Trouble is that I can see so many other opportunities just like that which would make it so much more efficient, but of course, they all come at a price.

The increase in the Annual Investment Allowance was great news for larger businesses but I can't see it doing us a lot of good.
Pilsbury

The,thing is you would have to be able to repay the capital at some stage, its good to do crowd funding for a one of where you don't have to give capital back, just honour rewards but as you say that's a one off, it would be hard to tempt me to crowd fund,you again as I gave enough to get the reward I wanted however, just like kiva, I would be happy to loan to small businesses with goods and services as interest payments, my money gets almost nothing in the bank which is why I am basically using kiva as a savings account, at least it does some good to someone. Rob R

Ah I thought you meant to pay back the capital in meat too.

The more I think about it, the more I see the merit in the old system of state funded grants, but I think we've seen the last of those days. Sadly before my time but I'm pretty sure both our livestock buildings were originally purchased under those schemes.
Pilsbury

The thing about repaying the capital in meat is thsts what you do at the moment, either with people buying meat boxes or the pay monthly scheme, if you wanted a cash injection of 20,000 would you be able to supply the demand if everyone wanted the meat for a summer bbq? Sure you could run it as a tab and if any of the investors wanted meat during the repayment term then they get it from their bill but if everyone did that you would have little of no income from meat sales for a few years so the capital would have to go on day to day running costs.
Better to get 20 investors for 1000 each, 5 year repayment term, 335 monthly repayment and vouchers as interest, you could look at paying off one investor at a time, so if someone could only invest for a year then they could get their money first and others would be happy to wait longer.
Rob R

I'd envisage that the meat repayments would be structured the same as cash ones. In terms of value you'd have to sell the meat to get the cash for the repayments, the advantage of paying in meat would be no costs in selling the meat...

The main problem is the time delay between spending the capital & getting the income back from livestock (up to 4 years). Difficult one.
Rob R

Don't know if this might be of use to anyone on here in the North East of England, I've just stumbled across it on the j4bgrants website...

http://www.entrust.co.uk/money/street-north-east
Rob R

I've just taken a look at Funding Circle, after it came up as a sponsored ad in google. It might be of interest to some people on here; https://www.fundingcircle.com/businesses Rob R

The thing about repaying the capital in meat is thsts what you do at the moment, either with people buying meat boxes or the pay monthly scheme, if you wanted a cash injection of 20,000 would you be able to supply the demand if everyone wanted the meat for a summer bbq? Sure you could run it as a tab and if any of the investors wanted meat during the repayment term then they get it from their bill but if everyone did that you would have little of no income from meat sales for a few years so the capital would have to go on day to day running costs.
Better to get 20 investors for 1000 each, 5 year repayment term, 335 monthly repayment and vouchers as interest, you could look at paying off one investor at a time, so if someone could only invest for a year then they could get their money first and others would be happy to wait longer.

I've just been thinking about this & have come up with an idea - which I'll throw out there to be picked apart;

The lender gives an amount to the business and the business offers them a percentage reduction for the life of the loan, eg 20% off. The loan could be paid off as quickly as funds allow but the incentive to pay off asap to stop giving away too much interest. How does that sound?
Hairyloon

The lender gives an amount to the business and the business offers them a percentage reduction for the life of the loan, eg 20% off. The loan could be paid off as quickly as funds allow but the incentive to pay off asap to stop giving away too much interest. How does that sound?
Is this instead of paying interest on the loan?
It seems to be too much of an uncertain arrangement: you could have a lender who buys pot loads of meat, all at the discounted rate...
Rob R

The lender gives an amount to the business and the business offers them a percentage reduction for the life of the loan, eg 20% off. The loan could be paid off as quickly as funds allow but the incentive to pay off asap to stop giving away too much interest. How does that sound?
Is this instead of paying interest on the loan?
It seems to be too much of an uncertain arrangement: you could have a lender who buys pot loads of meat, all at the discounted rate...

Yes, instead of interest.
The figures are just hypothetical, it would depend on the product for both parties as to what would be feasible but you need sales to pay the loan back so a lot of sales would kill two birds with one stone, presumably.
Pilsbury

So effectively you are encouraging those people who lend to you to fund their own repayments by buying discounted meat.
I can see it working although can you guarantee you will have enough product to supply people when they order or would there be an element of good will on deliveries?one problem I can see is it would be down to you when you ended the deal by repaying the loan, for example I could lend you 2000 and you could repay it in 6 months so I don't get a chance to perhaps make best use of the deal.
Maybe if you could offer the discount for 2 years or until the loan,is repaid would give the lender more security in knowing he could get enough out of it.
Rob R

TBH I don't see it working too well with meat, perhaps better for smaller scale, shorter term businesses with better margins. But yes, a minimum term is probably better than an unspecified minimum term. Pilsbury

Might seem silly and I don't know how,much capital you would be looking for and what repayment time but have you thought about asking if people fancy lending you some cash for free? I'm sure the occasional box of sausages or mince would be a nice treat but if your going to repay the capital over a couple of years people might just be willing to help out.
Just a thought.
Rob R

I have various projects on the back burner that range from a couple of grand to buying more land, and everything in between but anything small enough is easy enough to borrow as credit or overdraft, and anything larger is longer term and needs more security.

The trouble with being frugal & building things up from nothing is that you tend not to have the savings to make, it's just a case of making things better/easier. Having said that I have been on a process of working to remove/reduce unnecessary fixed costs since new year, which all adds up over the months.
Pilsbury

Yep, I took a loan in the new year to clear the overdraft and pay stuff in lump sums rather than monthly installments, I save about 30 on overdraft interest, about 13 in motor insurance interest and so on, the bills I can pay monthly for no fee, council tax and tv licence and so on I do but once I have all the rest paid in lump sums I should save over 1000 a year including the much lower rate of interest on the loan.
Small savings hut each adds up in the end.
Rob R

Getting rid of the dongle and paying the landline rental in advance are my two main ones. All the electrics have been newly installed so everything is already energy efficient but woodburner heated water is next on the cards, domestically. Rob R

So effectively you are encouraging those people who lend to you to fund their own repayments by buying discounted meat.
I can see it working although can you guarantee you will have enough product to supply people when they order or would there be an element of good will on deliveries?one problem I can see is it would be down to you when you ended the deal by repaying the loan, for example I could lend you 2000 and you could repay it in 6 months so I don't get a chance to perhaps make best use of the deal.
Maybe if you could offer the discount for 2 years or until the loan,is repaid would give the lender more security in knowing he could get enough out of it.

I've just come up with another mad-capped idea for crowd funding;

I could sell a limited number of 25 (as an example) 'shares' to fund a project - each month 1% (of the original amount) is added to the value of the share, so 25p per share. At the end of the year the original investment is worth 28, or 12% APR, and can be cashed in against a sale of our produce. If the share is kept it continues to earn 25p per full calendar month until it is cashed, which can be any time. The incentive is there to keep the share longer though which, I guess, would alleviate the problem of every one cashing in at once & also gives them the chance to decide when it is cashed in. The 'savings' would also be tax free, as you're effectively buying the goods in advance.
crofter

So effectively you are encouraging those people who lend to you to fund their own repayments by buying discounted meat.
I can see it working although can you guarantee you will have enough product to supply people when they order or would there be an element of good will on deliveries?one problem I can see is it would be down to you when you ended the deal by repaying the loan, for example I could lend you 2000 and you could repay it in 6 months so I don't get a chance to perhaps make best use of the deal.
Maybe if you could offer the discount for 2 years or until the loan,is repaid would give the lender more security in knowing he could get enough out of it.

I've just come up with another mad-capped idea for crowd funding;

I could sell a limited number of 25 (as an example) 'shares' to fund a project - each month 1% (of the original amount) is added to the value of the share, so 25p per share. At the end of the year the original investment is worth 28, or 12% APR, and can be cashed in against a sale of our produce. If the share is kept it continues to earn 25p per full calendar month until it is cashed, which can be any time. The incentive is there to keep the share longer though which, I guess, would alleviate the problem of every one cashing in at once & also gives them the chance to decide when it is cashed in. The 'savings' would also be tax free, as you're effectively buying the goods in advance.

12% is a lot to pay for your borrowing. Also, administration costs will be much higher "paying back" all the loans in this way rather than having one lender and making monthly interest payments. But if you do decide to do something like this, make the shares a pound each for ease of calculation...
Rob R

Re: 12% - it's not just borrowing though, as they don't get cash back but are buying in advance, rather than offering a savings account. Would a smaller return be attractive? The 25 minimum is an attempt to keep admin down. There are already people paying in advance, but this gives some return. Pilsbury

As another alternative you could try crowd funding again but for the rewards simply offer your meat boxes, wool, sheepskins and cowhides for funding at the appropriate level, nothing complicated, just using the crowd under site to advertise your wears.... Rob R

The trouble with that idea is that I'd like to give something back to the funders, rather than giving a percentage to the crowdfunding company. They also expect you to do a lot of the marketing & have a sob story to back it up. crofter

Re: 12% - it's not just borrowing though, as they don't get cash back but are buying in advance, rather than offering a savings account. Would a smaller return be attractive? The 25 minimum is an attempt to keep admin down. There are already people paying in advance, but this gives some return.

OK, I see the merit in that, but it still "costs" you 12%. If you look at the interest available on savings accounts, anything over 2% is currently pretty good, so I think you could offer 5 or 6 % return and still attract customers?
Rob R

6% sounds good to me crofter

6% sounds good to me

And me (unfortunately I don't need any beef!)
Rob R

6% sounds good to me

And me (unfortunately I don't need any beef!)

Hence my thought that it required a better return...

Perhaps a slightly lower rate for cash on a fixed term might work?

If anyone is up for it though I have 100 'shares' [or whatever you want to call them] available right now.
Rob R

This really is a discussion for my other thread in business chat...
Should we stop and adjourn?
Quote:
but I can't think of T&Cs that would cover your 20-something paleo & 90 year, other than a BUPA health heck for every applicant.

It is the customer's problem if they are not getting good value out of it, your T&C mainly just needs to protect you from people taking the piss.

Adjourned.

The 6% per year are the introduction of set terms - you can invest as much as you like and get a return. If I were to even consider a similar lifetime offer it would have to be in the region of 100 per 1%.
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