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    14 Replies Latest reply on Oct 21, 2010 12:56 PM by Mrtitan

    Need to pull the equity out of my home to fund a buisness

    Mrtitan Wayfarer
      I am currently in need of an investor willing to except the $125,000 of equity in my home as collateral for a $50,000 loan. I will repay at 25% within a year. Is this feasable? MY credit score is not good at all due to a recent divorce. Trying to find some way to start my nursery. This will not be just your run of the mill nursery. The whole driving force behind my idea is to be as green as possible only makes since to do it with a nursery. This State-of-the-art nursery will use the pot-in-pot planting system wich will require less irrigation and maintenance. I will want to be as green as possible utilizing solar power to run most of the electrical requirments such as irrigation systems. I already have a retail/wholesale side setup on the 14acres of property. I also plan on using solar powered lighting where ever possible. I am a jack of all trades and can do most of the setup myself. Any tips or ideas or advice on different ways of funding my buisness is much appriciated. Thanks in advance
        • Re: Need to pull the equity out of my home to fund a buisness
          KathleenF Scout
          Hi mrtitan,

          Sounds like a really good idea. Do you have any experience working in a nursery? Have you researched your local market?

          Also, before attempting to get a loan I would highly suggest you work on creating a business plan.

          Kathleen
            • Re: Need to pull the equity out of my home to fund a buisness
              Mrtitan Wayfarer
              Thankyou for your response. I have a buisness plan thats is about 90% completed. Yes I have had experience working in a nursery. I live in a rural part of the county but it is starting to experience some rapid growth. I am trying to put myself in a position to be ready for when the economy turns around after the elections. One can hope anyways
                • Re: Need to pull the equity out of my home to fund a buisness
                  KathleenF Scout
                  Nothing wrong with hope at all! We all have it these days!

                  Have you tried to contact your local SCORE office to have someone take a second look at your business plan? Second set of eyes is always good :)

                  Kathleen
                    • Re: Need to pull the equity out of my home to fund a buisness
                      Mrtitan Wayfarer
                      Actually I have had several people/orginizations look over my buisness plan. I thought at one time I was complete with it but have been revising it for the last month. I actually have 3 seperate buisness plans. 1 plan consists of the current market conditions in my are regarding the supply and demand of a nursery in this area. the 2nd plan consists of the anticipated growth over the next 10 years in this area that I live. The 3rd primarily consists of a less detailed buisness plan geared towards the buisness itself and how I plan on growing the buisness. I am really trying to gear this whole idea of a nursery being green. It only makes since. That in itself I believe will be a huge driving force behind the buisness itself. My biggest hurdle will be the financial backing. My credit has been destroyed. Im a single father of 4 girls so there is my motivation to suceed. It will only take that one person that believes in my idea.
                        • Re: Need to pull the equity out of my home to fund a buisness
                          Tracker

                          Mrtitan:

                           


                          Congratulations on taking the steps to get your business going.

                           


                          Three plans? I may be a little confused, but you should only have one plan. You may only show portions of it to different people depending upon their interest and need, but you should only have one plan. Did you submit three plans to the different people / organizations to review? What was their responses?

                           


                          Plus, when you say "it only makes sense", according to whom? Does the market care? If going green is important to you, that's great. But will it cost you more and will your target market be willing to pay a higher price for this structure? Your research should give you the answer.

                           


                          I hope this helps.

                           


                          All the Best,

                           


                          Doug

                           

                          The Solopreneur's Guide
                            • Re: Need to pull the equity out of my home to fund a buisness
                              Mrtitan Wayfarer
                              Forgot to respond to your second part of your response. Actually having the whole nursery green will be a plus for this reason. I plan on utilizing the pot in pot method of planting. My soil type is perfect for this kind of setup. I will not have to put in drain channels beneath the pots. I have a sandy loam soil and does not hold water. Utilizing the pot-in-pot method will decrease watering, labor, and will produce a healthier plant. The initial startup is expensive though. Having the green idea I think is a plus and alot of people in my area have really picked up on the green movement. I just want to be in a position to capitalize on this movement. I will also use solar power to pump water for irrigation. I have already purchased a solar powered pump. Any investors out there? I have a wonderfull idea and i really think this will take off. The nursery industry needs a revolutionary change and I have the ideas to do it.
                                • Re: Need to pull the equity out of my home to fund a buisness
                                  KathleenF Scout
                                  Hi Mrtitan,

                                  This isn't really the place to look for investors but it is for any other resources and support. I think your idea is great and if you've researched your local market and "going green" seems to be a possible niche for you.

                                  Good Luck and I hope everything works out. SoloGuide is a great resource and a long time community member. I'm sure he can continue to provide you resources and things to think about.

                                  Kathleen
                      • Re: Need to pull the equity out of my home to fund a buisness
                        Marcellius03x Wayfarer

                         

                        Hello Mrtitan

                        I have looked over the comments and replies here, and they have given you no real answers. Please allow me to break-down what I see from you, and my advice. I apologize in advance if it is not what you are looking for.

                         

                        1) This is a hard business when it comes to growth because your success depends on volume plus price versus repeat and steady customers. The reason I say this is because no one person buys plants on an everyday or week basis. Your customer base would be people that purchase plants or accessories one a month or so. In order for you to be successful you would need fresh customers constantly. To do that you would need to advertise constantly. I am assuming you are not going to have any employees because of the 50k start-up cost.

                         

                         

                        2) I see that you are concerned about using the environmentally friendly approach for this nursery. You mentioned the pot-in-pot system, and a solar option. Solar power is the least cost effective thing that you could use. I know the energy industry and solar power for a home or small business for the most part is a scam. I will not go into detail on that matter because it is not important, but you would like me to I will. When your want to be eco friendly, you can do it in more ways than one. Think about using cost saving equipment instead. You can also sign-up for a 100% wind power plan with your local utility if they offer it. If they don't offer it, just sign-up for the lowest rate plan that they have if it fits your electricity needs. You could also have a SMALL solar powered section in the nursery or something, that you could advertise as current research being done to go 100% solar in the near future. You want to save as much money when you start a business up, and solar just won't do that. The pot-in-pot system is an ok idea though I have no idea of the cost for that, or your inventory size.

                         

                         

                        3) You made a comment about, you setting things up for when the economy gets better after the election. My friend, business has very little to do with politics unless you got a "polly" in your pocket. Never base business off of politics, because politics is based off of the economy, and the economy is based off of business ok. Base your business off of FACTS, your customers, and your cost, PERIOD. Those two things may change from time to time, but hey that's business.

                         

                         

                        4) You said something about having 3 business plans. Everything that you mentioned goes into one business plan Mrtitan. Market research, business financials, and business summary equals one business plan. You should have been informed of that in a prior comment. Also, whoever you let look over your plans should have let you know that. They didn't because they don't care. I don't want you to fail. I want to see you make it. If I can't see you make it, I at least would like to know that I put you on the right track.

                         

                         

                        5) You said that you have a retail/wholesale said setup on the property already, I don't understand this at all because I don't know if you mean that your already selling, or you have that in place to start selling when you get the 50k. Do you already own this land?

                         

                         

                        6) You are asking for $50k. You said that you will pay that back + 25% in 12 months. So you will be $62.5k in the red to start with. This means that in order to BREAK EVEN by numbers ALONE you will be needing something like this: $5208/month, or $1302/week, or $186 +/day. Those numbers include $0 profit.

                         

                         

                        I would suggest that you not go into this business, and if you would still like to, I suggest that you don't go into this business at this moment because I fear that you want to rush things, and don't have a good view of how business in general works which is OK because that's just the way the world is. Having the desire to go into business for yourself will far outweigh an lack of knowledge that you have at the moment. I don't think you're ready for funding right now.

                         

                         

                        If there is any info that you feel you need, just let me know.
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                          • Re: Need to pull the equity out of my home to fund a buisness
                            Mrtitan Wayfarer
                            WOW!!!!!! great info you have there. Ok about my buisness plans. They are virtually the same. I guess the easiest way to explain it is that I have had to start over with my buisness plan and have 3 versions of it. Yes I do own the property. I have already spent some of my own money to establish a retail/wholesale area. My ententions were not to do buisness just locally. I will be specializing in ornamental trees and bushes. I live along a stretch close to I-85 which is going through a huge widening project. I do think this will help out this area in a big way. The western part of my county experienced a huge growth spurt of 38% in 2009. As far as the solar side of things I am an electronics technician.(not claiming to an expert mind you) I have always been a firm believer in 12-24 volt systems. I will not be attached to the grid when it comes to the nursery. Many poeple will ask how I plan on using electricity in the winter to keep the young plants healthy in the coldframe. Geothermal heating will be used to keep the coldframe at a desired temperature. The reason why i am trying to get set up now is simple. 3 family owned nurseries in my area have closed there doors. So there goes my competators. I beleive my approach to this nursery will pay off in a big way. And yes advertising will be a huge expense but as we all know word of mouth is huge tool as well. Wish me luck. LIve is a challenge and I surely do not want to fail. Big risk big reward or big risk and huge failure. I guess we will see. Thankyou for taking the time out of your day to respond. Very kind of you to do that.
                              • Re: Need to pull the equity out of my home to fund a buisness
                                Mrtitan Wayfarer
                                Just one more thing. Just to provide an example. For one I have many contractors that I know quite well through family. They all have asked and requested plants from me that I am not ready to sell or just dont have what they want. Many nursery's are for retail or wholesale not many do both. Given my area I will need to supply both retail and wholesale.I will also be providing mulch dirt sand and gravel. I already have the equipment for this. The demand is here. I also live near Highrock lake where many homes are being built now. This has always been a dream of mine and im not going to let it go. Thanks
                            • Re: Need to pull the equity out of my home to fund a buisness
                              Marcellius03x Wayfarer
                              Hello Mrtitan

                               


                              Please allow me to interact once more. To begin, I am not trying to make you change your mind about what you want to do. I am trying to make you look at the business you want to start from another view. You should question your own examples when starting a business. You should question your numbers, and your thoughts about it. I have done it, everyone who thinks about starting a business should do it. You should be your own worst critic.

                               


                              You mentioned the 12/24 volt system. DC is not the way to go unless it's on a boat. It will cost more for a setup like that. You don't have to be tied into the grid, but it will be less expensive to follow the advice I mentioned previously. If you do go off-grid, to be cost effective you will still need a AC power system which means an inverter with along with your solar power source. A less expensive system will still cost you around 10k min. depending on what your requirements are.

                               


                              There is nothing that you have mentioned that I don't understand other than the retail/wholesale part which you cleared up.

                               


                              You talked about using a geothermal system in the winter. It's a nice idea in theory, but the problem is the system itself. The geothermal system itself requires a steady AC electrical source. The average geothermal system has a power demand of around 1500watts/hr (1.5kW/hr). If you're looking at a geothermal system the going price for one of those is at least $2k and up depending on your requirements, and your choice of systems. When I say your choice of systems I mean a heat pump system, or a full CHP system which is more expensive.

                               


                              You said that the reason you want to setup is simple, and it's because 3 family owned nurseries in your area just closed. My friend, this is not simple at all.

                               


                              1 Did they close down because another nursery opened up and took their customers?

                               


                              or MOST IMPORTANTLY,

                               


                              2 Did they close down because they didn't have the customer based that they once had, their market was down, and their lack of profit took them out of business?

                               


                              You said that your competition is gone, but you fail to understand WHY. When you have 3 family ran businesses that just shut down like that, it's that your competition is gone, it's because their customers are gone, which means your potential customers will not be there. This is called industry and business analyzing. Your view on that subject ALONE could make or break any business in any industry.

                               


                              I didn't mention advertising to bring up the cost of it. Most people will do this and it is a simple cookie cutter advice line. I mentioned advertising to bring up your potential to develop a customer base within your region, and more importantly I brought it up in the hopes of giving you an idea of the amount of customer it would take to cover your cost; $62.5k (@ $0 profit)

                               


                              You mentioned that you have people that would like to buy from you, but you're just not ready. I another word of advice; Don't take their words for it, because most of the time when you're ready to go, they'll move from "I wish you had it up, I'll buy it right now" to "Oh congratulations, but yeah, I'm not ready to buy right now". If you have contractors that want your business, give them a date of when you'll be ready, tell them to give you a deadline, both of you agree on each other's deadlines and make them sign a contract for your services. Just be sure than you can and WILL come through on your end of the deal, but you're not at this phase yet.

                               


                              The silver lining I do see is that you have a new string of houses being built in your area. When people build or buy houses it is true that they want flowers. A majority of the time, for something like what you want to do to be successful you need to ALSO include landscaping service with your commercial end. If they got a big project and want plants, they can get the service too, and that depending on your job sizes can and will bring in the money.

                               

                               

                              This is my advice to you, good luck to you and think more about how you are approaching your business, and the cost involved in it.
                              • Re: Need to pull the equity out of my home to fund a buisness
                                Bridge Navigator
                                To answer your question:

                                You may qualifiy for an SBA microloan. You should talk to a SBA loan broker.

                                If you have $125 equity in your home and you own land, a $50 loan should not be much of a problem.

                                With a SBA loan, you will get much better terms and a lower rate.

                                Best of luck.
                                • Re: Need to pull the equity out of my home to fund a buisness
                                  Adventurer
                                  You don't need any designs or plans , Just go to the bank and get an eqty loan on your home (unless u don't qualify.) If u do it right u don't even have to pay it back on regular schedule. Or maybe just int only untill u can afford it. --Now u need a plan.
                                    • Re: Need to pull the equity out of my home to fund a buisness
                                      Mrtitan Wayfarer

                                      No I do not qualify for a Small buisness loan or an equity line of credit. As I said before ugly divorce. Kids live with me and just trying to make the most out of what I have. I have 15 acres of land and want to try to profit from it. I have always had a green thumb or passion for gardening. I have most of everything I need to start including some solar panels and othere irriagtion supplies. I can do most of the work myself but will have to hire a book keeper right from the start. I will need to focus my attention on the nursery and will not have the time for paper work. I guess im hoping to find some interest from someone who is willing to listen to my ideas. Look at the nursery industry. I dont hear much of change at all in this industry towards the green movement. If you could water a nusery entirely off solar power. Think of the savings. I have the plans to do just that. Let alone the pot-in-pot method will help conserve up to 60% of the watering needs. As far as a geothermal plan I already have the system in place. So there will be no up front cost for that except for some simple fitting and tube purchases. I already have the pumps ,thermal sensors and controls to make it work.