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    16 Replies Latest reply on Nov 20, 2008 10:36 PM by Elite1

    Negative cash flow, Need capitol injection, and adivce

    guitarboy8d6 Newbie

      Right now my company throws away about $3000 a month. It hurts and hurts bad. We want to do some marketing and refine some of our service but can't do that with out money (working capitol). As of Oct 21 we have been in operation for exactly 1 year. The only marketing we have done is word of month and some networking at local Chamber of Commerce events.

      We thought are sales would of been a lot higher by now and Nov and Dec are usually very dry months for our industry. So we expecting it to get real bad until January.

      We have written a new business plan and have prepared a very compressive marketing plan. I personal think it will work but as I reread over everything and look at it from a banks perspective or a lenders perspective I think wow this company is failing. Which we aren't breaking even and that is a problem and our funding has pretty much died up.

      My question is how in the world do you present yourself to someone as a company that isn't making a profit and wanting money to fund operational expenses. Also do it unsecured because we really don't have any assets to secure the loan.

      I know we have to try and prove that with this money we will be able to pay back the loan, but I don't see a bank tacking a risk on us like that. The loan we need to turn everything around is between 30-40 thousand. I am working 5 or 6 diffrent scenarios worth of financial right now.

      We brought in on average last quarter about $4000 a month which is much better than the quarters before. But are expenses are about 7500 a month. The 1st quarter of 2007 we were only bring in about 1000-2000 a month, so we are growing but we need to grow faster and stronger. We can't hardly continue with out some type of capitol injection.

      Anyone got any suggestions on how we can pull this off?
        • Re: Negative cash flow, Need capitol injection, and adivce
          DomainDiva Ranger
          You say your company is throwing away 3000 a month. Obviously you know where the waste is..get rid of it.

          You also posted some ideas on another thread and talked about how your company synchronizes data and contacts. How much is that costing? You could manage things through any number of free online address books, using blackberries or just cell phones.

          How much money are you paying yourselves?Do you have a job that pays the bills and feeds you, or are you drawing a salary out of the company? Are you drawing too much salary? Could you hold down another job until it is feasible to take a salary?

          ( I say this because I have a job that feeds me and all of my investors money goes to the start up).

          Also, are you nickle and diming the company? Small start ups demand sacrifice from everyone concerned. You are going to have to take a pen and paper to each line item and each company associate name as well.

          Bona Fortuna. DomainDiva
          1 of 1 people found this helpful
          • Re: Negative cash flow, Need capitol injection, and adivce
            LUCKIEST Guide
            The problem sounds very serious, and Domain Diva has the right answer CUT,CUT, and CUT again.
            You did not state what your industry is, but said Nov and Dec are DRY months.
            You also said that you are working different scenarios. Have any of them work??
            Do you have an Accountant?? a Lawyer??
            There are two sources of money "" and ""
            BE CAREFUL, BE WISE, Good luck LUCKIEST
            1 of 1 people found this helpful
            • Re: Negative cash flow, Need capitol injection, and adivce
              Lighthouse24 Ranger
              It's unlikely that anyone will provide money to cover the operating expenses of an operation that's losing money and has no assets. As noted in other posts, you need to start cutting costs immediately. You also need to come up with specific plan for generating more revenue. Just running the numbers you provided, you'd probably need monthly revenues of $11K or more throughout the coming year to get your firm out of the hole and make the risk worthwhile to an investor. Is that even feasible or realistic in your business? It very often IS possible for a small business to find an innovation or idea that triples revenue overnight, and that's what you might want to start looking for. I don't mean this to be trite or discouraging, but the more you keep doing what you've done, the more you'll keep getting what you've got. It sounds like a radical change is needed to however you sell whatever you sell. I do hope you can survive this difficult time and find that one change in your business or operation that turns everything around. I wish you the best of luck!
              • Re: Negative cash flow, Need capitol injection, and adivce
                guitarboy8d6 Newbie
                Ok, I like the input. We have already cut cost off of where we can. We got behind a while back from our original projections because of damage to our office from a storm. Since then we have never every recouped. We do design and development work. Mainly web based applications but we also do client side things as well. We are paying ourselves some but that was one of the first things to get cut.

                Due to the money we had to spend to repairing our computers and a few things like that we didn't get to do the marketing we wanted. The main way I see for this to work is if we can start bringing in more traffic. We want to increase billable hours and we already have the infrastructure to do it, But now we don't have anything left for marketing. The idea I have is to get a small loan to jump start our marketing. We want to advertise in 3 or 4 different ways. We have a flyer going out in the local chamber of commerce news letter this month, we got a small basic ad in the yellow pages, we are going to experiment with digital bill board advertising through sundrop, and do some mailers out to local business. We want to drive awareness of our company and get our name out there among the crowd. We already have a small portfolio for people to look at and a web site. If we can push are name and expertise we will get a little more of the market. Right now in our local area there is very little competition but of the one or two companies already here they are very well known. We are trying to show people that there is an alternative, and even if we get 1-2 new clients a month that will make us break even.

                So it is not really much. But it is how I am going to present myself. No we don't own real estate or any real assets, just some computers. But we really don't have any long term debt either. So I am trying to write a business plan that doesn't sound desperate. This can really work if we can increases Revenue. The only way to do that is to get a loan that will cover 2-3 months of marketing. So I am estimating about $15,000 thats not much but would do the trick. I want a really strong business plan and loan package that will really sway a lender to say yes, I see you are in trouble, I know you are in trouble, and with this aid you will defiantly be out of trouble and will be able to pay back the loan.

                Thats what I need help with is figuring how to present that.

                Thanks guys for all of your comments. I look forward to hearing more form you.
                  • Re: Negative cash flow, Need capitol injection, and adivce
                    erinoir Newbie
                    What does your business do? You've explored the great resource that is the local Chamber of Commerce. Have you tried advertising on Craigslist? If you sell guitars, for instance, you could post them on Craigslist in the for sale section to drive some traffic your way.

                    I hope your business picks up!
                    • Erinoir
                    • Re: Negative cash flow, Need capitol injection, and adivce
                      DomainDiva Ranger
                      So what you need is low cost marketing. let me tell you what I am doing and maybe you can take off on that.

                      Our business application is being inititially marketed to aircraft leasing companies. I went to and did a search for aircraft leasing companies and filtering through them made a list of the top 100, top 2nd 100 and top 3rd 100 companies. These would be targeted in three marketing campaigns separated by a 14 day time period.

                      We have a powerpoint presentation with a voice over (ppt 2007) and we put it on the small business card sized CD's at a cost of 1.10 each so thats 330.00 + tax

                      Then we made up a foldover brochure the size of a #10 (business sized envelope). There is a spot for the CD and a spot for a business card. Office Depot prints them for 84.00 per 100.00. Thats 252.00 + tax so we have 582.00 + tax mailing at .50 per that is 150.00 total 732.00 + tax to reach 300 BUSINESSES. To follow up, we use to create our follow up campaigns for each mailing.

                      We did it this way because we wanted to reach the top echelon first. On our launch date we will also have an ad in the WSJ (I am setting money aside for this every month).

                      Start talking to family and goes further than you know. good luck. Have you thought about starting a blog?
                        • Re: Negative cash flow, Need capitol injection, and adivce
                          print28 Adventurer
                          I am new to this site, and I read all of the forums, and just read this one! We own a small printing and promotional products company in Alamance county, NC, and we are not getting but a few jobs. PIP Printing in Burlington, NC, is very big, so we decided to go to other states, and counties. Juan is helping me with a site, but, I need help in, like the person you corresponded with, a new proposal, and business plan!!!!! My husband has been in the printing industry for 28 years, and we decided to go out with our own company in 2006. We also offer services in promotional products, and have added racing promotional products, for drivers and race tracks. We just cannot get people to understand the high quality of services that we offer, and they definately need to look at their invoices from other companies!!!!! I am not saying that to burn any bridges with the other printers, we just want our business to GROW!!!!!!!! Like last month, our profit was $140.00, and that is not good at all!!!!!!!!!!!!!!!!!!!!!!!!!! My husband does work fulltime for another printer, and also a part time job for another printer, and then prints for our company!! I do sales/marketing and alot of cold calling!! We have alot of quotes out there, but no one bitting yet. We have quotes for a local short track, and was so hoping to get the job, but have not heard back from them!!! I need some help, and you guys, are so brillant with what I have read, I wished that I had known about this years ago!!!!!!! I was in a networking group last year in our community, but it was so expensive, we could not justified in joining this year! I know I sound pity party, but I want this bad, and as you can see, we are working , and trying to get this working also!! Thank you for your time!!!!!
                            • Re: Negative cash flow, Need capitol injection, and adivce
                              Elite1 Adventurer
                              A business in my area provides the same services as you. The business owner was struggling at first. So, she started a bulk advertisement mailing for the local businesses. It's a monthly booklet of advertisements. Some businesses include coupons or discounts in their ads. She obtained a bulk mailing stamp from the post office to reduce the cost of postage and provide her clients with a broader audience. The mailing goes out to over 12,000 homes. The revenue she received helped fund the start-up of her business. Maybe something like this would help you?


                              Elite Financial Services, LLC
                          • Re: Negative cash flow, Need capitol injection, and adivce
                            Kelly90755 Newbie
                            Now you got to the crux of the whole matter--you had to spend marketing money on repairing computers! The first rule for a start up should be: Pay for Insurance before paying yourself. Second is: Keep a job to feed yourself while you get off the ground.

                            Given those two parameters, was there insurance in place that would have paid for the computer repairs due to the storm damage? You may still be able to file a claim. Also, reduce your marketing budget, just enough to cover that insurance cost.
                          • Re: Negative cash flow, Need capitol injection, and adivce
                            scsurfguy Wayfarer
                            Do you have a website that we can check out? Might have an answer that will fit your budget and bring money in.
                            • Re: Negative cash flow, Need capitol injection, and adivce
                              Lighthouse24 Ranger

                              To a typical lender or investor, the situation you've described will sound like, "We did this and lost money, so now we want to do more of it -- and the only way we can is to borrow $15K from you." In your follow-up post, you write, "I need help . . . figuring how to present that." Honestly, I'm not sure there's a way to successfully present that message. (You can put a gown and a tiara on a barnyard pig, but it doesn't make her the homecoming queen.)

                              I think the message you really want to deliver, and the presentation you really want to make, will follow this general outline:

                              • We did this and lost money.
                              • Here are (at least) eleven things we learned from that.
                              • Here are (at least) seven alternatives we explored for changing the way we do business in order to increase our profits, and here are the pros and cons of each of those options.
                              • Here are the three best alternatives, which we propose to implement immediately.
                              • One of those three alternatives relies on your assistance, and here's why providing us with that assistance is beneficial for you and for us.
                              • I am asking for that assistance, as well as for your input on other options you might suggest to strengthen our business.

                              When you've been losing money, the potential lenders' default conclusion is that they'd only be throwing good money after bad -- that is, unless you can show that you've learned some key lessons and are doing things differently now. When you tell potential lenders "the only way we can do this is...," they will conclude that you don't know your business very well -- because there are always at least seven options for modifying the way a business does business (and in reality, spending more money on marketing might not even be one of the best three). Finally, potential lenders have to know that you have looked into the future and considered not only the best case you're hoping for, but the worst case they're imagining -- and that in either case, you can pay them back.

                              I sincerely hope this helps you prepare, and ultimately gets you the cash infusion you need. Good luck!
                                • Re: Negative cash flow, Need capitol injection, and adivce
                                  guitarboy8d6 Newbie
                                  That was more of what I was looking for. Thank you lighthouse. I am going to work off of what you are saying. Showing lessons learned and such. That is the best way I can find from my research.

                                  DomainDiva thank you for sharing what your business is doing. I found it reassuring since we are planning to do something similar to members of the surrounding chamber of commerce. We also have a flyer going out in the next chamber news letter. That is already setup and paid for.

                                  We also are going to experment a little with indoor digital billboard advertising. It is a fairly new thing but from the other business owners I have talked to it has worked well. We can experment with it for a month at a really low cost.

                                  To answer other question yes we will be reimbursed for some of the money lost to repair.

                                  And our web site is

                                  I would like to thank everyone who contributed and will take more ideas if anyone has any.

                                • Re: Negative cash flow, Need capitol injection, and adivce
                                  Finances4Life Newbie
                                  Dear Guitarboy8d6:

                                  Please go to to see if they can help you with your capital problems. It is a peer-to-peer lending company/website. The better your credit rating, the better a chance you will have to receive funding for your business.

                                  I hope this helps.
                                  • Re: Negative cash flow, Need capitol injection, and adivce
                                    CEO Space Scout

                                    There is a lot of great advice to you. There has been however, some people advising you (or anyone) to keep a job while getting a small business off the ground.

                                    In all my 23 years of business (running my own and consulting others) I have NEVER seen a business
                                    survive where the owners had jobs outside of the business. Never. Not once.

                                    What you are describing in the primary reason most small businesses fail. Lack of initial capital.

                                    It always takes twice as long and costs twice as much as you thought and sales are slower in coming than your projected.

                                    So, my suggestion would be to review your business plan and have a solid plan that works for you.

                                    Another suggestion is the book, "Instant Income" by Janet Switzer. This book gives you lots of "right now" marketing tips to get cash in the bank. Things that most businesses can do in a week or so.

                                    Jack Canfield and Mark Victor Hansen of the Chicken Soup for the Soul books (who are members of our network) have used Janet Switzers ideas to get them out of situations in the early days.

                                    I just looked it up online and if you buy it online, you get some bonuses so I would suggest that
                                    if you can't wait, just go to any bookstore and buy it.

                                    Good luck.
                                      • Re: Negative cash flow, Need capitol injection, and adivce
                                        flaguy Newbie
                                        I would like to thank CEO Space and Lighthouse24 for the great answers given to the original poster. I recently contacted someone on the forum concerning funding who was very knowledgeable, and pointed out some of my cash flow issues through private phone calls & e-mails. Although I thought I had a good grasp of my numbers, between him pointing out some problems and these helpful posts have now gotten me moving with some additional cuts and information to contact some additional sources of funding with confidence again.

                                        We have recently made several cutbacks, and been able to reduce last years spending by approximately 125K which SHOULD get us into positive cash flow. IF I can consolidate a LOT of debt quickly to keep my head above water. Debt service can drop by 25% or more.

                                        Anyone got a spare 300-400K hanging around? ;)

                                        By the way... guitarboy8d6 if you're still out there how was the turn out? Thanks again to all the helpful posters.
                                      • Re: Negative cash flow, Need capitol injection, and adivce
                                        carson Newbie
                                        Have you been able to show your companys commitment regards paying off loans collected and also do have a detailed plan to show the real nature of your companys and its use of capital for profit maximization?all this will be definitely needed by an interested investor.if you can get me with these then i think we could settle for an agreement as to investing in your venture,do send the informations to