Idea for Helping Small Business Bypass Banks - Not Dragon's Den but Same Style

if you can ever find time...read 'slide rule' by neville shute

it is only recently that banks become so dominant as *the* intermediaries between money and investment... in the poorer parts of the world, micro-financing is ever growing....

hey, i wonder if you could even get into the business you're suggesting!

regards

OK thanks

That is something I would love to do if I ever won any large amounts of money...

I only get ideas I'm afraid - no idea how to implement them (or money to put up to facilitate it). I did think about writing to the FSB...

hey, you could apply to dragon's den...or try it on with a few banks.. read the book!

regards

In which case why don't you team up with someone who is good at making things happen. Play to your strengths and join up with someone with other strengths. One of the problems with small businesses (plumbers and carpenters, for example) is that while they may be very good at the trade, they may not be very good at business management. Very few of them would pay someone who was good at this to do it for them and double their income. So they go bust!

Rob Graham

i think there is (or was) a web based op doing this.... the prime problem is scammers!

regards

Good post, but...

1. The dragons are looking for far bigger and faster returns than most of us would be happy to receive.

1. The whole idea of presenting in that way is so far removed from real life. Especially not being allowed notes / plans to refer to. Even the dragons are allowed to make notes etc. Interestingly, many "yes" decisions turn into "no" when the Dragons do the due diligence thing after the filming is over.

2. She didn't come away empty handed. Aside from the offer of help from one dragon, she got many minutes of peak air time (imagine paying for that...!).

1. Many rejects end up getting the investment elsewhere, and often on better terms. If I ever got a dragon's offer, I'd probably decline and pitch elsewhere, armed with a programme tape.

All that said, I agree that start-up / seedcorn investment is ludicrously hard to obtain (although there are loads of "angel clubs" around the country, doing rather as you suggest).

And those already running small businesses have found interest rates (eg on business overdrafts) are much higher now than a year or so ago. The banks boast about reducing their base-rates in line with BoE - but the banks' premium has rocketed from about 2% or 3% to 8% or 10% - and that's on fully secured loans! The clever bit is how they keep it out of the press. Sadly the government won't intervene... ex-ministers (wef June 2010) will be on banks' boards, not SME boards... :-((

'Maria' wrote thus:

Interesting. I think what you're really advocating are small investors buying shares in start-up companies. There are certainly benefits in bringing the two groups together more efficiently, although there needs to be a process to weed out the con-men.

'Maria' wrote thus:

FSB? "Front Side Bus"?

Because there is no provision for this within the rules of the game which is designed primarily for TV.

There are however numerous venture capital companies e.g.

I am not sure though as to whether this particular one would be interested in a mere £1000 investment!

Everything was not going for her though.

She had indeed done her design work and developed her original idea well obtained patents and so on.

She had not done her maths homework too well and it was this that failed to impress the dragons. When asked why she wanted £75k, she was unable to give a complete answer and, in effect left £35k unaccounted for which she quickly tried to pass off a working capital. The response of one of the dragons was that he was not so sure that she know what working capital was.

It further transpired that she was currently studying for a degree in management studies which did not impress another Dragon (Khan I think!) who immediately announced his reluctance to invest with a partner who could not apply her full concentration on the business.

Further the market was a small one (IIRC she stated there were ~20000 rowers in this country) and this was a low value product.

There was also some discussion as to if the device could be accommodated within the current rules of competitive rowing.

One thing that struck me but nobody mentioned was the possibility that, despite the patents, if the idea was a winner, there seemed nothing to stop future designs of oar to easily incorporate the principle simply by building a ball swivel into the handle.

I will agree she was a strong contestant but at 19 probably too young for the game. Nevertheless I am confident her life will not end here and she will not starve in the future. With young people like her in the pipeline the country has much to hope for in the future. I particularly liked the gentle way in which the Dragons let her down.

She, and other like her, more than make up for the rest.

That's my whole point Mel - I'm talking about getting a consortium of 75 individuals to invest £1000 *each* in her (or 35 at £2k - you get what I mean). Just needs a way to bring them all together - her and potential small investors to whom the risk would be much smaller and more interesting as a longer-term investment.

Yes - she is not a business-person - she might be good at invention and marketing also even. But if people cannot organise themselves to jump on a good idea when they see it because they are not co-ordinated, then so many good opportunities must be going to waste. I see that Lombard Direct are not even accepting any more loan applications - I understand why banks are not lending, but without their lending, Britain will be zombie graveyard before long.

This thing has much more potential than that...anything with a handle, she said. I don't see why not.

And she clarified that she had already consulted the rowing association or whatever it is.

More expensive and subject to a different patent.

I'm just postulating how small businesses and start-ups could find a way to get lots of small parcels of money rather than having to go to a bank with a large deposit and no accounts and being told no. I used her as an example. I would invest in her but she would not be interested, quite rightly, in £1000 from one person! If I found another 64 people like me...

:) Federation of Small Businesses

It might be alright if someone checked and registered anyone using the site before they could use it. It works for buying wholesale goods. But then that person needs wages or something for their time and effort...

The problem (or one of them) will be you will get those 75 people together and you will tell them there is no hope of any return for at least 5 years.

After six months, when most of the money has been spent in setup costs but there's not yet any significant revenue stream some will start complaining that they've lost everything in six months and it's all a scam. They they will start demanding their money back. Then you will have to liquidate whatever assets exist in a fire sale to pay everybody

5p in the pound and nobody will win.

(I cannot comment on the particular idea. I'm assuming that this is some TV program or another)

Tim.

'Maria' wrote thus:

Ah! thx

my idea about this...

Has the idea of state-sponsored self employment been tried?

Judging from the popularity of TV shows such as The Apprentice, the world of business has a lot of appeal to those wanting- or needing- an adventurous, intelligent and flexible career. The problem is that starting out in self employment is like leaving home. Especially if you?re new to the game it is a daunting if not frightening leap of faith to take. And this is precisely the issue. You?re a teenager begging gas money from Mum, after a string of the financial disasters that befall the naïve young adult. Or you?ve spent the last decade on social security. Esteem, Self Confidence? Its ironic that catching ?the bug? of business could provide people who are poorly motivated with not just a career but a life. An ever popular feature of computer software is the ?wizard? or ?template?. Properly implemented, this can allow the novice user to produce basic but acceptable results with the minimum of experience or training. Here?s how it could work. Commission a team of skilled management consultants to design a set of flexible generic franchises. This can be complimented by the creation of new legal business models concerning liability, control and ownership where necessary. . Franchises will tailor for a range of business models from sole tradesmen to a small business involving friends or relatives, and can make use of certain redundant business premises and equipment. Pair established local businesspeople who are looking for a new challenge with prospective entrepreneurs. To make this a more attractive proposition, legislation and funding can reduce any liabilities that would likely deter mentors. Ensure social security will adequately cover the personal survival budget until the business is making enough profit to pay a wage, without the ?apprentice? tradesperson accruing potentially crippling debt. Essential to the success of this is a pre business course brushing up skills and qualifications of the actual job. Being that bit better and having papers to prove it can only increase confidence which will radically improve the chances of business success. To find out what life is like working for a similar business provides the sense of structure which the materially formless business plan does not show graphically itself. Offer subsidised training towards industry recognised qualifications, work placements, and incentives to tradespersons who are prepared to offer training / support to start ups. If the latter is organised properly the new business will be seen as a potential ally as much as a rival. After the franchise model has been chosen and appropriate pre-training complete mentors and entrepreneurs can draw up a business plan based upon a detailed interview to flesh out the franchise model with facts and figures. A subsidy could be provided to top up a mentor?s investment in the form of grants and cheap loans. Essentially, ownership and control would pass from mentors to tradespersons. This would allow tradespersons to start working and making money as soon as possible. The trader would then have the option of owning and controlling more of the business themselves through ?buying? some of it back from the mentor , as both experience and finances are amassed. Tradespersons could ultimately take full control themselves or remain in business with their mentors, should all concerned feel that is the most desirable option. This would provide a guaranteed career path up the management ladder for all those with the commitment and ability. Starting with day to day bookkeeping, the businesspersons would get a feel for the administration of a business, working up to long term forecasting and decision making, eventually including tuning and changing the business model, market or structure. In a recession, it is new business, rising up where the old ones have fallen, that provide the much vaunted shoots of recovery. Where there is any person who wants something made or done and is prepared to pay there is money. The great strength of projects like this is they require very little initial outlay, they work with, and are operated by the community as opposed to grandiose state imposed projects. I have a strong belief that any human renaissance will rise up from street level as opposed to being sculpted by any great leader. Perhaps most importantly address the social mobility issue of those underemployed ? i.e. in a job that does not utilise their potential talent or earning capacity ? and those who have long forgotten what fulfilling work was like if they were lucky enough to have experience it at all.

They know that they want a 400% return in 2 years. This is the norm for VC investment and is not a secret.

But it isn't what most of the people on DD are prepared to give.

tim

There are venture capitalist funds which sort of do that.

On a smaller scale I'm aware of a family run bicycle shop who were (are?) funded by an investment club. The lenders where mostly customers and people who knew customers. They used to pay 3% above bank of England base rate, not sure if they still do.

I also know people who have funded property investments by inviting a large number of friends to invest relatively small amounts so it can be done.

I imagine that it would be difficult to set up a system which prevented investors being scammed without a process which strangled any innovation with red tape and micro-management.

It's the age old problem isn't it, even if you have a good idea, where do you go from there and who's going to listen? With the Dragon's Den it can very much depend on their current mood which is seriously unfair to those people who have invested alot of time and effort into their project.

My frustration with Dragons Den is the way people are spoken to. Their business os often their dream. The hope that keeps them motivated. I find it frustrating the way that some people are dismissed.

Often I see people looking to raise finance to meet the confirmed orders they have received from large organisations. When this is the case the Dragons all seem keen to help and take a large portion of equity to do so.

In my experience there are lots of lenders who will actively lend against confirmed orders. All of them are in the invoice fiannce market.

A useful website id Smart Factoring Quotes which can be accessed via

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