Comments on: Small Business Loans for Startups vs. Bootstrapping

By: Registered User

Registered User — Fri, 30 Nov 2007 15:44:44 +0000

In my case the primary investors were my dad, my partner’s dad, and a friend, so it sounds as if the dynamics between our situations may have been slightly different, as every business situation is…

It did occur to me to give equity in the new company to my former company’s investors but then I thought that given how the first company turned out, why would they want that? Plus I wasn’t starting MWI with the intention of selling it, so who knows how long it would be until there was an exit for them. They probably would be a lot more excited about getting their money back, and that’s what I plan on doing. The only challenge is that in the hierarchy of debt, they’re not anywhere close to first in line, since there are debts I HAVE to pay, and this is a debt I merely WANT to pay, and what I have to do comes before what I want to do. Or at least I’d like to think so.

By: Steve Hansen

Steve Hansen — Fri, 30 Nov 2007 15:21:04 +0000

Whenever investors are involved in a business venture, silent or actively involved the dynamics of any business begin to change. I too had a public company that I sold and all of my investors received equity in the new company. Unfortunately the new company tanked like yours, so I issued investors equity in my new private company to offset the unfortunate events that had occured.

These individuals have been involved from the beginning and even though everything did not play out exactly as expected they continue to be involved and supportive because of the way they were treated.

I applaud you for even posting my initial comment and detailing the circmstances surrounding your business launch. Let me know if you need anything. You described our history in your blog, we had 7 of us working in an office of 800 sq. ft with fans running everywhere to keep the room under 90 degrees most of the summer.

Now our business load and client expectations have compelled us to grow, expand and eventually move to the Union Park Center with an office 5 times our initial size, fortunately we remain profitable and debt free.

Good luck to you,

Steve

By: Registered User

Registered User — Fri, 30 Nov 2007 15:01:08 +0000

I’m not sure what the connection is between my treatment of investors and the success of the business. And it’s actually a bit more complicated than that. When Mindwire was sold, all investors received shares in the company that bought us out. The company that bought us out had 200 employees, was listed on the NASDAQ, and everyone was supposed to come out of the deal smiling, including those initial investors. Unfortunately before anybody was able to sell their shares the company I had sold to tanked, leaving the shares worthless. That same company also failed to keep other obligations they had to me, causing me to have to pay out $35K in cash for obligations they were supposed to assume. That’s where a third of that $100K loan I got went.

By: Steve Hansen

Steve Hansen — Fri, 30 Nov 2007 10:00:04 +0000

Perhaps if you had not screwed your initial investors in Mindwire and continue to do so, you may have had a different outcome. In business cash is KING and always has been and positive cashflow in a business is the only valid road to success.

Good luck repaying debt and finding the freedom that comes with wise decision making,

By: Registered User

Registered User — Thu, 29 Nov 2007 17:12:17 +0000

If the measure of an entrepreneur is the amount of business debt he has accrued, then I suppose I’m a true entrepreneur. But I’d give up the title in a moment if I could trade it in for being debt-free.

By: Blake Snow

Blake Snow — Thu, 29 Nov 2007 16:06:09 +0000

Far too many business owners miss the boat on staying cash flow positive — that’s really the goal as it buys you an infinite amount of time for you to decide where you want to take your business.

I must say though, Josh, your willingness to lay it on the line, take out loans, and grow revenues to a point where you can bless the lives of others by creating jobs makes you more of an entrepreneur than I.

I’m really just an independent contractor who has supported freelancer wages from time to time.