Hi,
I am hoping to get some good advice, as I have read many postings here and unlike many forums, it seems there are some high quality contributors here.
I started a retail e-comerce business over three years ago with a friend/co-worker and we have built the business (with office/employees etc) through the startup phase to the point now where we run between $300-$450k per month in revenue. Our annual growth is over 300% and we now EBITDA positive...although if we have a large uptick from one month to the next in sales, we have cashflow shortfalls.
Here is the motivator for my posting:
We need to restructure the accumulated debt to reduce the cost of interest so we can imporve our operating margin and continue our rocket growth and profitability, while providing breathing room on our available lines of credit for hiccups. We have financed the business, as follows:
1. Started the business on cash savings and credit cards
2. Then tapped friends and family (small loans)
3. Pulled in an equity partner (cash for a small piece of the business)
4. Established a $50k BofA business line of credit (unsecured) and some BofA business credit cards
5. Dipped into 401k and pensions. As we grew revenues from 0 to $30-$40k a month and then on up to about $250k per month we had to put shortfalls and timing issues (sales vs receivables) on whatever credit facility we had available (including as much at $100k in my personal credit cards)
6. Once we hit the two year mark we began getting supplier credit lines and now have $200k in credit lines with them, that are all paid timely
Now, one factor in everything is that my original business partner and I both left comfortable six figure jobs to start this (3 years ago) and have had to reduce lifestyles and live off of every penny of savings, retirement and selling our homes (luckily, we sold the homes just prior to the real estate meltdown). How we have been able to manage personally while growing the business is ..well ..material for a great book - at least. Anyway, the reality is that we cannot seem to get approved for an SBA loan because of the debt on my personal credit cards (95% of which is business) and the fact that we are unable to pledge a home as collateral - oh, and we have not really had income to speak of in three years.
So - with our growth rate, time in business and profitability I think we should be able to find some version of financing that could help us without giving up "startup" levels of equity because we are way past the startup risk. People have talked to us about convertable debt, pure equity stakes and even loans based on the premise that we use part of the money to go public. What do you all recommend we do? To answer common questions: Business Plan, accountant, atty etc are in place. Thank you.
I am hoping to get some good advice, as I have read many postings here and unlike many forums, it seems there are some high quality contributors here.
I started a retail e-comerce business over three years ago with a friend/co-worker and we have built the business (with office/employees etc) through the startup phase to the point now where we run between $300-$450k per month in revenue. Our annual growth is over 300% and we now EBITDA positive...although if we have a large uptick from one month to the next in sales, we have cashflow shortfalls.
Here is the motivator for my posting:
We need to restructure the accumulated debt to reduce the cost of interest so we can imporve our operating margin and continue our rocket growth and profitability, while providing breathing room on our available lines of credit for hiccups. We have financed the business, as follows:
1. Started the business on cash savings and credit cards
2. Then tapped friends and family (small loans)
3. Pulled in an equity partner (cash for a small piece of the business)
4. Established a $50k BofA business line of credit (unsecured) and some BofA business credit cards
5. Dipped into 401k and pensions. As we grew revenues from 0 to $30-$40k a month and then on up to about $250k per month we had to put shortfalls and timing issues (sales vs receivables) on whatever credit facility we had available (including as much at $100k in my personal credit cards)
6. Once we hit the two year mark we began getting supplier credit lines and now have $200k in credit lines with them, that are all paid timely
Now, one factor in everything is that my original business partner and I both left comfortable six figure jobs to start this (3 years ago) and have had to reduce lifestyles and live off of every penny of savings, retirement and selling our homes (luckily, we sold the homes just prior to the real estate meltdown). How we have been able to manage personally while growing the business is ..well ..material for a great book - at least. Anyway, the reality is that we cannot seem to get approved for an SBA loan because of the debt on my personal credit cards (95% of which is business) and the fact that we are unable to pledge a home as collateral - oh, and we have not really had income to speak of in three years.
So - with our growth rate, time in business and profitability I think we should be able to find some version of financing that could help us without giving up "startup" levels of equity because we are way past the startup risk. People have talked to us about convertable debt, pure equity stakes and even loans based on the premise that we use part of the money to go public. What do you all recommend we do? To answer common questions: Business Plan, accountant, atty etc are in place. Thank you.
