Originally Posted By: Dogfish
Three out of five new businesses will fold within 2 years. One of those two will usually make it to 5 years. This is what I have been taught for the past 20 years, and it is pretty much reality.

For start-ups you need to have operating capital, CASH. Don't put in your business plan that some of the money you want to borrow will cover your salary for the first year. If your business gets up and running right of the bat, save that money, don't go buy a new truck, or house, or toys. That cash belongs to your business, and if it grows rapidly, it will need that cash to expand.

I could go on.... I see smart plans, and very weak ones. Best business plan ever was 2 pages. Business plans are meant to be a living document, adjusting as time goes on.

Four stages of the business cycle.
1. Wonder! "Wow, it would be pretty cool to set up a vapor bar. I found this equipment on Ebay and bought it. We'll make a million!"

2. Blunder "Holy crap, this isn't going like I planned. Employees are a pain. B&O tax? Every where I turn there is another regulation..."

3. Thunder " Things are really clicking along. Been able to sell franchises to Andy's organic turkey turd vapor bar all over the west coast. Those suckers in CA really fell for it. This business is like owning my own printing press. Million? Billions Baby!"

4. Plunder "The thrill is gone. Time for me to retire. Wonder what I can get somebody to pay me for the business."






All good points, but at this point in history, pretty much anyone who is going to start a business has the cash or means to the cash to get a bank interested.

I wonder about loans on capital improvements for existing businesses? What sectors are showing enough growth that banks would look at a going concern and loan them money to make improvements without the cash backing? Will they? My guess is no, and that is leading to my point which is money is really "cheap" right now, but hard to get unless you can prove you don't need it. Another point is that there is cash out there, but what causes people to move it into an improvement or new venture?

Bernanke has promised to keep the IR at 0% for another long while. I can't see how this helps smaller regional banks, why would anyone want to make a deposit or pay off a note at those rates? What does the fed rate do to these smaller banks? The way I see it is with reduced deposits, there is no reason for the bank to make more aggressive loans as there is a ratio that they need to keep for reserves/long term loans. I am sure there are huge holes in my logic, I just have been pondering this stuff today.
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