Tuesday, February 26, 2008

CRAFTY BUSINESS WITH LAURA-JEAN: start-up capital

Our first Crafty Business Question! How exciting…


crafty business

My question has to do with finaces:

How did you get he capital to start up your business?
Have you recieved and grants or loans and do you have any advice on how to smartly go about doing this? – Serah-Marie

Good question!

For me, I started my business very, very small. I borrowed $600 from my roomate for a used knitting machine (and this was after I had sold my first sweaters made on a borrowed machine) and set up in my living room. I wasn't even sure I was starting a business, except that I thought it might be possible. So in the very beginning, any financial risks I took were small enough that I could waitress my way out of debt, if need be. I grew by investing back heavily, selling two sweaters and using the money to make 4 more.

I kept a part-time job during the early months of my business, and gradually went down to 3 shifts a week, then 2, then thought, "Ok I'll give it 6 months and see if I can make this business work." And I never went back!

I was young, and my personal expenses were very low. I had no family to support, and worked like crazy on my business. So this approach wouldn't be right for everyone, but it worked for me.

Looking back, I'm very glad I grew slowly. I know now that if I had borrowed tens of thousands to open a store right away, I would have been way in over my head. By making my mistakes small as I went along, I learned and developed my product and my business, and never had any devastating failures.

Over the years, I've had a few expensive expansions. Most of them I financed with my personal credit cards and whatever lines of credit I could get, but always based on my personal credit. I am careful about interest, always trying to get the lowest interest rate, and using my line of credit to pay off my credit card in full each month.

When I opened Fresh Collective in 2003, I learned a lot about financing, in that I got totally overwhelmed! I've always managed to do an expansion in a big burst of energy, then pay off the debt within a year or so, but FC was a way bigger project than any I had taken on. I had big expectations about paying off all the startup costs quickly, and when that wasn't happening I suffered a lot of stress. I eventually took a step back and made some longer term plans about paying it off over several years, with manageable monthly payments and that was a lot more sane.

Although I never got any grants, or business loans (other than on my personal credit), I did get accepted into a version of the SEB program years ago when my business was very young. It's a great government program to help people start businesses. Not only do they provide support in the form of classes and guidance as you set up the business, they provide financial support! Here's a link to one site with info about it http://www.jobskills.org/seb-tn/index.htm.

Thanks for the question. I hope my answer is helpful!

Laura-Jean

Send your burning crafty biz questions to knittingqueen@rogers.com

10 Comments:

Blogger awdּball said...

i have a bunch of friends who've gone through the SEB program and all found it super-helpful. they help you do business plans and marketing plans, as well as offer on-going support once the classes are finished.

you need to be on EI or at least eligible to get into the program, though, which can be tough (for me, cause i'm already self-employed).

anyway, i definitely suggest looking into it!

2:28 PM  
Blogger Ashley Winnington-Ball said...

very helpful entry, btw!

2:30 PM  
Blogger Mishi said...

Business loans are a staple nowadays for small businesses. Success doesn't come easily especially to those who are venturing out for the first time so loans come as a necessity to keep things going. Thanks for the info!

5:53 AM  
Anonymous startup business said...

If you don't have enough capital to start a new business, there are startup business loans that are available to back yo up in business financing.

11:42 PM  
Anonymous Sue Gillis said...

You did it the right way. So many people make business plans that are heavily dependent upon business loans, when the reality of it is that a) they can be difficult to get, and b) if you need a business loan in the first place for start-up, you're probably going to have a hard time paying it back.

THANKFULLY, not only are there government subsidised business loans that can help, but there are grants available for those who really need it. Financing without loans is possible, albeit a daunting thought. thanks for sharing your success story!

12:35 PM  
Blogger Lynn Clark said...

Nice post. This will be very helpful since I want to run a business soon. I know it'll be a challenging at times, so I can use all the financial (and non-financial) advice I can get. Lately I've been thinking about buying a business instead of starting one from scratch. I believe I have enough capital saved, but I'm sure I'll have to take out a loan. Any suggestions? Advice? Thanks.

11:36 AM  
Blogger Mary Crate said...

@Lynn -- There's a lot of on-line resources you can use. I suggest BizTrader.com. It's this global marketplace where you can buy a business, or even sell one. You can also use it to find professional help, like a lender, accountant, broker, etc. The find a lender function is particularly helpful.

Then there are your local small business groups that should be able to help you.

Good luck!

12:23 PM  
Anonymous Anonymous said...

Mary Crate: I've never used BizTrader but I will check it out. I would also recommend http://www.perfectbusiness.com as they have an entrepreneurial network for people in search of startup capital.

3:14 PM  
Anonymous Anonymous said...

the link is here Find Startup Funding

3:15 PM  
Anonymous Anonymous said...

@Lynn,

Try BizAg.com which lists over 100,000 businesses for sale.

10:24 PM  

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