Seems like I’m a few months away from striking out on my own and I’m brainstorming my options for financing. I’d like to hear what others have used and go over some of my own ideas with pros and cons.
Savings
Pro:
-In control
-No how much money you have available
Con:
-Sacrifice some peace of mind
-If you lose it you lose it all
Credit Cards
Pro:
-Easy money
-Lots of it
Con:
-It’s all in US $
-Getting it into Taiwan without going to the US
-Interest rates
Family
Pro:
-Low interest rates
-Large pool
Con:
-The ties that bind…
-Failure exacerbates awkward family situations
Investors:
Pro:
-Someone to take part of the risk who you have little social capital in
Con:
-Will want a say in what you do
-Personality clashes
Right now I can do any except family and savings. I’m looking at my choices between credit cards, friends and investors. I’d really like to hear what others have done on this front.
Stay far away from credit card financing of anything. It’s the worst kind of credit available, especially if it’s anything large. The interest is just so much higher. I’d say bring in investors/partners in combination with your own savings. Credit card debt is the express lane to bankruptcy.
Credit card doesn’t bother me as much because it’s dischargeable and it’s relatively easy to build your credit back up in the US after a bankruptcy. Plus there are no social costs to it.
I’m leaning towards investors, savings and credit card. Investors spook me because I’m honestly not that much of a people-person and not very good at selling myself.
Maybe I should just ask for charity and start jangling that tin cup?
[quote=“Okami”]Credit card doesn’t bother me as much because it’s dischargeable and it’s relatively easy to build your credit back up in the US after a bankruptcy. Plus there are no social costs to it.
I’m leaning towards investors, savings and credit card. Investors spook me because I’m honestly not that much of a people-person and not very good at selling myself.
Maybe I should just ask for charity and start jangling that tin cup? [/quote]
Sure, if big B is something you are willing to undertake. The pain comes for those people who keep struggling to pay. If you get in deep enough, the interest will be so much that the payments will eat up huge amounts of your income, and the amount owed will seemingly never decrease.
Don’t do it. I don’t care how blase you sound now, if your business fails the stress will take 10 years off your life.
Don’t do it.
Don’t do it.
If you have a good idea or existing then professional investment is the best way to get it off the ground. Although I don’t think any VC would be interested in a $500k farm project, unfortunately.
-Farming
-$500,000NT
-3 years then sell out and move back to the US
I’m pretty realistic about bankruptcy and would manage it pretty well. I’m also good at managing money.[/quote]
That’s a relatively small amount of capital. For something like that the best route is probably your own savings or a personal bank loan if you can get one. Other than that a partner or two would probably be the best. I aslo agree with Illary’s caution on the credit card front. Even if you think you’re fine with bankrupcy the intersts charged could quickly lead to debt servicing charges themselves resulting in the failure of the enterprise. What kind of return do you think would be reasonable for an investor to expect?
-Farming
-$500,000NT
-3 years then sell out and move back to the US
I’m pretty realistic about bankruptcy and would manage it pretty well. I’m also good at managing money.[/quote]
There’s another potential hitch in your plan-- the “sell out” phase. If you start a business for 500k nt, in all likelihood what you’ll be selling it for will be 500k nt, if that. Businesses aren’t valuated in quite the same way as they are elsewhere. Don’t expect a foreigner to buy it out. Most don’t have the money, don’t want to invest the money here, don’t want to commit to being here long-term or cannot be the fuzeren in a local business. In small businesses that are cheap to start, many Taiwanese would rather start a competing one than pay for an established one. I’ve known several small restaurant operators who thought they’d get good money when they sold out. In reality, they were lucky to get back their original investment.
At this point, Self-financing is looking like the deal I might take. I have 2 people interested in investing so far.
[quote=“Gman”]That’s a relatively small amount of capital. For something like that the best route is probably your own savings or a personal bank loan if you can get one. Other than that a partner or two would probably be the best. I also agree with Illary’s caution on the credit card front. Even if you think you’re fine with bankrupt the interest charged could quickly lead to debt servicing charges themselves resulting in the failure of the enterprise. What kind of return do you think would be reasonable for an investor to expect?[/quote]I wouldn’t do a partnership. You’re really taking a chance then and they tend to sour badly. I’m expecting a 5% monthly return on the investment.
[quote=“80sStar”]There’s another potential hitch in your plan-- the “sell out” phase. If you start a business for 500k nt, in all likelihood what you’ll be selling it for will be 500k nt, if that. Businesses aren’t valuated in quite the same way as they are elsewhere. Don’t expect a foreigner to buy it out. Most don’t have the money, don’t want to invest the money here, don’t want to commit to being here long-term or cannot be the fuzeren in a local business. In small businesses that are cheap to start, many Taiwanese would rather start a competing one than pay for an established one. I’ve known several small restaurant operators who thought they’d get good money when they sold out. In reality, they were lucky to get back their original investment.[/quote]I think selling out to a foreigner would be a lot easier than you’d think. Investing in a restaurant is just sketchy with their high failure rates and dependency on the manager.
I’d like to pay off the investment in the first year and pretty much have that planned in. It would be a rough first year. I’m currently putting it together on a Google Document and letting one potential investor critique it as I try to finish it.
