Small Biz
Some of that stuff doesn't work here in Podunk Junction. I can't explain it like DaveO with stats 'n' studies, but I know about it because I've been here a long time.
(1) Under-capitalization: I understand they need cash and you say get a gov't. loan. I last did an SBA app (triplicate city and six-inches high) in 1980 and it may have changed, but the only upside was SBA guaranteed the principal to the bank. Those "subsidized rates" didn't exist -- interest was the same for everybody. But even so, they wouldn't be worth "tens of thousands..." -- it would just mean note payments were $500 a month instead of $600. "Tons of cold cash" would help but, like the EIC bunch, they don't need a loan -- they need a grant.
(2) Good location: We can handle this one. Downtown died long ago, so you have to be on the highway, but rent's not bad at about $300 per month.
(3)Advertising: Outside of a sign next to the road, this doesn't do much good here and TV's too expensive. Here, only a limited amount's going to be spent no matter what you advertise. Once you're open, people vote with their feet (coming in/or not) and pocketbook (ours are tight as the bark on a tree). Some are dissatisfied with their vendors, some shop around, and some like you. If not, they.....leave you alone...and the parking lot stays empty day after day after day. Our small specialty shop has run sales to no effect -- you can advertise 'til the cows come home -- they won't buy it if they don't need it right then -- exception: "50% off" Wal-Mart items (we can't cut that much).
(4)Qualfied Advisors: Now who would/could that possibly be that I can afford to keep around long enough to do any good? Ordinarily it's just family starting off and will be six months before they can afford to hire any real help, much less a "smart guy" to tell them what's what.
Here's how close "capitalization" gets. We rent office spaces. In 2003 I quoted a man $275 plus $200 deposit. He couldn't pay it, so I called back and told him to forget the deposit. He moved in. His credit was so bad he couldn't borrow a cup of sugar and he was so broke he couldn't pay attention, but he had a semi-popular specialty line. They lasted a year before folding (wife was lazy--he had a job elsewhere). We were both "sort-of" happy for a year (although it was like pullin' teeth to collect rent and I took the final month out in merchandise).
I wish there was a way to bet on how long they'd last when they apply for a sales tax number. I'm a fair hand at it -- six months I might guess on one -- or six weeks for another. Usually I'm pretty close and my fees rise a bit for "estimated short-timers." Missed a couple last year -- tanning salon (est. 6 months/actual-3) and cafe (usually a year--never even opened--health dep't. problems).
Originally posted by jainen
(1) Under-capitalization: I understand they need cash and you say get a gov't. loan. I last did an SBA app (triplicate city and six-inches high) in 1980 and it may have changed, but the only upside was SBA guaranteed the principal to the bank. Those "subsidized rates" didn't exist -- interest was the same for everybody. But even so, they wouldn't be worth "tens of thousands..." -- it would just mean note payments were $500 a month instead of $600. "Tons of cold cash" would help but, like the EIC bunch, they don't need a loan -- they need a grant.
(2) Good location: We can handle this one. Downtown died long ago, so you have to be on the highway, but rent's not bad at about $300 per month.
(3)Advertising: Outside of a sign next to the road, this doesn't do much good here and TV's too expensive. Here, only a limited amount's going to be spent no matter what you advertise. Once you're open, people vote with their feet (coming in/or not) and pocketbook (ours are tight as the bark on a tree). Some are dissatisfied with their vendors, some shop around, and some like you. If not, they.....leave you alone...and the parking lot stays empty day after day after day. Our small specialty shop has run sales to no effect -- you can advertise 'til the cows come home -- they won't buy it if they don't need it right then -- exception: "50% off" Wal-Mart items (we can't cut that much).
(4)Qualfied Advisors: Now who would/could that possibly be that I can afford to keep around long enough to do any good? Ordinarily it's just family starting off and will be six months before they can afford to hire any real help, much less a "smart guy" to tell them what's what.
Here's how close "capitalization" gets. We rent office spaces. In 2003 I quoted a man $275 plus $200 deposit. He couldn't pay it, so I called back and told him to forget the deposit. He moved in. His credit was so bad he couldn't borrow a cup of sugar and he was so broke he couldn't pay attention, but he had a semi-popular specialty line. They lasted a year before folding (wife was lazy--he had a job elsewhere). We were both "sort-of" happy for a year (although it was like pullin' teeth to collect rent and I took the final month out in merchandise).
I wish there was a way to bet on how long they'd last when they apply for a sales tax number. I'm a fair hand at it -- six months I might guess on one -- or six weeks for another. Usually I'm pretty close and my fees rise a bit for "estimated short-timers." Missed a couple last year -- tanning salon (est. 6 months/actual-3) and cafe (usually a year--never even opened--health dep't. problems).
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