How Much?
How Much?
As near as Elise and her mentor can figure, Elise needs $25,000 to start her business. Roughly, this breaks down as follows:
$2,000 for filing, licensing, and accounting fees
$6,000 for the security deposit plus first three months rent on her storefront
$3,000 for furniture and interior decorations
$1,000 for signage and storefront decorations
$3,000 for advertising over the course of the first three months
$1,000 for a new sewing machine and various sewing implements to go in the back room
$5,000 for additional stock (the number is only so low because Elise has an overflowing personal closet to contribute directly to starting inventory, representing a lifetime’s accumulation)
Of the final $4,000 dollars, some has been set aside for miscellany such as office supplies, and the rest is reserved as an emergency cushion.
“And even if I get it all as a zero interest loan, this sheet says it will take me almost three years to pay it all off.”
“You didn’t think this was going to be easy, did you?”
“No,” Elise admits, petulantly, “I guess not.” Actually, she did, but that is neither here nor there.
“Look, we are going to do what we can to whittle this number down, while, at the same time, trying to raise the money in chunks. For example, you should take a crack at trying to get a used sewing machine, rather than a new one. My mom does a lot of sewing, and she insists that a twenty-five year old Elna is just as good as the shiniest new sewing machine on the market.”
“Guess I can sell my car,” Elise shrugs.
“No way,” David exclaims instantly. “Not a chance. Your car is far more valuable to you as collateral. You sell that heap you may get a few hundred dollars. As collateral for a loan it will net you bluebook, two grand at least.”
“But it’s not worth bluebook. Not even close. My transmission is shot, and I am not even sure if there is a muffler under there anymore.”
“Doesn’t matter. Whoever lends on it will never even see it. You will fill out the collateral sheet with make and model, and then write in the bluebook value. They will never send anyone around to look at the car; they will make their decision based on what’s on the paperwork in front of them.”
“That sounds a little shady.”
“Not at all. You disclose the requested data, they act on it with as much information as they choose to gather. You’re working on a shoestring, kiddo. Take what you can get.”
“Besides,” David adds after a moment, “You are not dealing with idiots. In their mind, the risk involved in not assessing your vehicle personally is outweighed by the costs they would incur by retaining an assessor. And if they have, for some reason, failed to follow through on such a calculation, that is their problem, not yours. Their bottom line is their problem; your bottom line is yours.”
“That seems awfully cold-blooded,” Elise chides.
“Not really, at least, not in business. You are going to have to get used to thinking this way if you want this to work.”
Next Week: Beg, Borrow, or Steal
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