My wife and I have wanted to start our own business for years. After a lot of discussion we decided that the best fit for us would be to open a Tobacco and Smoking Accessory retail shop, so I did a lot of research and spent well over 100 hours drafting a business plan. I made an appointment with our local Small Business Development Center to discuss my business plan. The appointment was 2 days ago and what I thought was going to be a meeting reviewing and refining my business plan turned out to be an hour long session of the counselor telling us how difficult it is to get financed for a start-up. The whole meeting had a very negative tone to it and if I took her information at face value, I would give up now. I am sure she was trying to just be the "reality check" that every entrepreneur needs and I refuse to give up on this dream until I have exhausted every option available to us to get started. She did take a copy of my plan and told me she would review it when she had the time to dedicate to it and get back to me with recommended changes but did not give me any indication of how long that might take.
The numbers I have crunched show that we need $120,000 to get up and running and cover 6 months worth of operating costs. My wife and I have $25,000 to contribute, but no other real property or assets to use as collateral. I haven't run our credit reports in almost a year so I know I will need to do that soon, but the most recent ones I have we both have credit scores below 600. Over $66,000 of that initial costs will be direct purchases of retail assets (display cases, POS Systems, walk-in humidor, inventory, etc) and I am not sure if that would qualify as worthy collateral to a traditional lender.
I believe my business plan shows a very strong case for sustained success and profitability, and combined my wife and I have over 20 years worth of retail experience, and I have 10 years of active duty military service for management experience.
My questions are;
What is the actual reality of securing financing for start-ups? In my mind $95,000 is not that much money in the grand scheme of things, but I also understand that it is a very large risk without collateral.
How much weight is placed on the strength of the business plan versus credit history?
How difficult is it to find and "sell a business idea" to angel investors if traditional financing falls through?
How many angel investors are happy with debt-equity only versus those who want owner-equity in the businesses they invest in?