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    8 Replies Latest reply on Oct 6, 2008 12:35 PM by Tony3143

    Working Capital For Growth

    ahirestaff Wayfarer
      My business has made a profit over the last three years, in fact we made a profit in the first five months that we opened our doors.
      We are currently running about a million a year in sales but our workers compensation costs are running about 72K per year due to the government taxes and the fact that we are in the high risk pool. I have not been able to get out of the high risk pool and I have tried many times. Our profit margins are being consumed by the high workers compensation costs.
      I have over ten years of experience in my industry and our company is becoming very popular.
      We are starting to grow at such a rapid rate that we can't cover our expenditures until our clients pay us. Maybe if our workers compensation costs were not as high we would have some breathing room. All of the financial institutions that we have been to are just looking at our personal credit which is good but maxed.
      I really don't understand why we are having a hard time getting a loan with all of the potential that our young company has.
      I am looking forward to a solid solution from an experienced business minded individual.
        • Re: Working Capital For Growth



          You didn't mention what kind of business or industry you are in but judging by your post name of "ahirestaff" I'm guessing you are in the staffing business. Of course my guess may be off base. At your size ... finding debt-based capital for growth is going to rest almost solely on your personal credit and collateral. Especially in tight credit markets. Without credit & collateral to get debt based funding, the only avenue you have is to try to raise capital by selling equity.

          Do you have an investor-ready business plan with 3 years financial projections that can be presented to equity investor prospects to gage their interest? If you do you should look at using it for the basis to have your attorney prepare a Private Placement Memorandum. Also known as a PPM this is the document that covers all the legal aspects of raising capital from from private investors by selling them stock (and sometimes bonds, which are often convertible to equity). if you are interested in raising capital that way then check with your attorney about a Reg D PPM filing; the costs etc.

          If you have established a solid and profitable foundation for your business and have excellent growth prospects then your business could be of interest to equity investors. Once you generate some interest then you can get your PPM put together to present to them. I have an investor contact that is interested in the staffing industry; I cannot say for certain that he would be interested in making an equity investment in your company but feel free to look at my profile and if you want, contact me to discuss.

          I hope the above helps. Good luck with your business.

          Dennis Lowery
          Adducent, Inc.
          1 of 1 people found this helpful
            • Re: Working Capital For Growth
              ahirestaff Wayfarer

              Thank you for your quick response. Yes, we are a staffing agency.
              We currently have a thirty page business plan that we have been following. We also have a three year marketing and growth plan.
              We are finding out that volume and deep pockets seem to be the key to success in our industry.
              Our clients are required to pay us weekly and most of the time their payments don't come in on time. We front huge payrolls that cut into our cash flow and it seems to be a revolving problem. If we cut our overhead by reducing workers compensation costs and our clients paid on time we would not need any money at all. The problem is that we can't get out of the high risk pool yet because of our experience raiting and the fact that workers compensation companies don't want to deal with companies such as ours.
              Right now we have over 30K tied up into a "deposit fund" held by our workers comp. company. They get to invest our 30K into whatever they want why we struggle for cash flow.

            • Re: Working Capital For Growth
              Mark SLF Wayfarer
              Have you ever looked at factoring your invoices. This can be a tremendous boost to your cash flows and is very easy to qualify for. Here is a link with some information on this type of funding.

              Mark Lomas
              • Re: Working Capital For Growth
                oldtimer Newbie
                Know the pitfalls of factoring. factoring your receivables at a discount to their book value IS NOT A LOAN.

                YOU WOULD BE SELLING YOUR ASSETS." Factors " as they are know in the industry are essentially likened to" buzzards". If you truly need a factor you may as well put a fork in it and call it done imo. There are more reasonable alternatives to factoring imo.
                • Re: Working Capital For Growth
                  fritzmaster Newbie

                  Hi, I think we can help you!


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                  Bob New Inc.


                  Phone: (888) 639-2621 / 818-247-3530
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                  Helping Business in all 50 states since 1957 incl. Canada
                  • Re: Working Capital For Growth
                    Tony3143 Newbie
                    If you accept credit cards and have been in business for more than 6 months. I can have the capital you request in your bank account by October 16, 2008. Call 877-700-7947 ext 1232 or 1480. Ask for Tony!