How do I get working capital?

BakerStreet

Joined
Jan 13, 2024
Messages
118
Likes
144
Degree
1
Hey. I’m selling two houses to invest into my business. The house sales are taking longer than expected. I was expecting to have the cash by next month as we started in December. I’m looking into micro loans of 250,000$ from non profits. Is there other ways to obtain working capital at fair rates? Our runway is 6-12 months left.

I feel nervous AF!
 
This is new information. Thinking back on the previous thread, maybe you should follow your original plan and look at offsetting your opex by outsourcing your in-house team's capabilities.

Maybe I'm crazy, but selling real estate to invest in an SEO-oriented business in 2024 doesn't feel like a solid decision... again, I might be crazy.

In terms of debt, that depends on where you're based... if you're in the US, Canada, UK, EU, Australia, etc. and you have a real business plan that you believe in... then just walk into a bank and ask for a loan. Hell, don't sell your house and just put it up as collateral instead if you're set on using it to finance the business.
 
Smith said:
This is new information. Thinking back on the previous thread, maybe you should follow your original plan and look at offsetting your opex by outsourcing your in-house team's capabilities.

Maybe I'm crazy, but selling real estate to invest in an SEO-oriented business in 2024 doesn't feel like a solid decision... again, I might be crazy.

In terms of debt, that depends on where you're based... if you're in the US, Canada, UK, EU, Australia, etc. and you have a real business plan that you believe in... then just walk into a bank and ask for a loan. Hell, don't sell your house and just put it up as collateral instead if you're set on using it to finance the business.
Click to expand...
You're not crazy. If he intends to build a solid brand and will remain commited for years, then yes.
 
@Zyzz exactly. It is a lot of risk I'm taking with all these algo changes but the numbers look good. @Smith its a productized service I sell with content marketing. profit is $70/product with a 85% margin. I've trained my VAs to do everything from fulfilment to content marketing. Our outgoing cashflow is 6,000/month and revenue is 4,000/month. We're only in the red by 2,000/month, which is not a lot given our lucrative product. We have 100,000 hits/month right now 1 year in and other competitors are 600,000 to 1,000,000 hits/month. If I can 10x my traffic, I'd be making $30,000/month with my current team. I also know this can become a multi-million dollar company, since another competitor (who got pwned by HCU) received a 12mm series B.

What worries me is that I only have $30,000 in the bank left after 1 year of building the company and my money is set to run out in December :'( I hope a sale goes through by December. My rentals are actually cash flow negative since I was stupid and those were my first properties. But I'll realize like $300,000 in value once I sell them. If not, rents are $4,000/month total so I still think I can get more from my capital with the business than with these two rentals.

I just really need more funding... if anyone wants to pitch in, I'm open to discuss (That one emoji where it's a smile but looks like the guy's just opening his mouth).
 
A productized service at $70 per sale is low. In most cases, when I hear productized service, I'm looking for $2k per transaction and ideally it's recurring.

At your price point, I'm guessing you're selling a commoditized service, something to do with content/graphics/editing/or something else along those lines?

If so, that means tons of competition and limited differentiation. Translation: You need to be in front of people at the point when they are ready to make a purchase. SEO is good. But guaranteed placement in front of buyers is better...

If you're running an 85% margin, that means (in theory) you have around $60 available to acquire a customer. It's not a huge amount but it's enough to get going with ads... So, why aren't you smashing paid traffic?

I remember you saying something about it being restricted and needing government approvals... Personally, I've never heard of this and have always found ways around ad restrictions (which are usually imposed by ad networks not governments), and I've played in some pretty sensitive niches.

Given what you've shared, I'd look into finding workarounds for paid ads and I'd also be building out a network of affiliates. Again, $60 isn't a huge commission, but if there's a way to make it recurring it could be really attractive to smaller publishers/creators.

This approach isn't something you'll be able to outsource to your VAs (at least not on day one) but it could be the unlock you're looking for and it doesn't require you to sell off valuable assets.
 
Smith said:
A productized service at $70 per sale is low. In most cases, when I hear productized service, I'm looking for $2k per transaction and ideally it's recurring.

At your price point, I'm guessing you're selling a commoditized service, something to do with content/graphics/editing/or something else along those lines?

If so, that means tons of competition and limited differentiation. Translation: You need to be in front of people at the point when they are ready to make a purchase. SEO is good. But guaranteed placement in front of buyers is better...

If you're running an 85% margin, that means (in theory) you have around $60 available to acquire a customer. It's not a huge amount but it's enough to get going with ads... So, why aren't you smashing paid traffic?

I remember you saying something about it being restricted and needing government approvals... Personally, I've never heard of this and have always found ways around ad restrictions (which are usually imposed by ad networks not governments), and I've played in some pretty sensitive niches.

Given what you've shared, I'd look into finding workarounds for paid ads and I'd also be building out a network of affiliates. Again, $60 isn't a huge commission, but if there's a way to make it recurring it could be really attractive to smaller publishers/creators.

This approach isn't something you'll be able to outsource to your VAs (at least not on day one) but it could be the unlock you're looking for and it doesn't require you to sell off valuable assets.
Click to expand...
This isn't the niche but, if I say it is this, you'll get how the economics works. Let's say it's e-notarization. $80 to get your paperwork notarized online. $20 to the worker, $60 to the company. Keywords for this content would be "how do I notarize a foreign birth certificate?".

As for "SEA in restricted niches..." are you saying churn and burn blackhat accounts? If not, can you share?

Also, I don't have any PPC experience, so I worry if my $30,000 in cash is enough to get the ball rolling. Is it? I mean, I know how to target keywords and make an ad, I'm just worried I'll burn up my runway! Total noob here.

As for making it recurring... it's on the to-do list for Q4. We don't have the money for that yet unfortunately. This roadblock is also holding back the affiliate system too.
 
BakerStreet said:
are you saying churn and burn blackhat accounts?
Click to expand...
I'm sure burn and churn could work but that sounds time-consuming and inefficient. It's also not what I'm talking about.

I'm talking about getting creative and finding ways around the restrictions to target your customers either directly or indirectly. And frankly, this doesn't need to be paid, especially when you have a limited budget.

From where I sit, you need to find a way to scale through cash flow...

... maybe that means cutting SEO and allocating the budget to a different channel. Maybe it means scaling back SEO to a point where the company isn't losing money. Maybe it means finding a strategic partner and allowing them to white-label your product at a discount to secure revenue and fund growth.

My point is this: You're talking about borrowing money or seeking investment for a business that is trying to scale through one of the hardest acquisition channels with a slow payback period, SEO.

In my experience, investing more money in SEO than you can recoup through SEO in the short term requires a business that is already profitable, has sufficient capital raised, or has cashed-up backers who see the bigger picture and aren't concerned about a 12-month runway.

And just to be clear, none of this is advice. It's just the opinion of one guy on an internet forum that you've never met and can't qualify... so take it with a grain of salt.
 
Smith said:
And just to be clear, none of this is advice. It's just the opinion of one guy on an internet forum that you've never met and can't qualify... so take it with a grain of salt
Click to expand...
Bullshit.
Its good lucid advice and op should contemplate all of it.
 
Smith said:
I'm sure burn and churn could work but that sounds time-consuming and inefficient. It's also not what I'm talking about.

I'm talking about getting creative and finding ways around the restrictions to target your customers either directly or indirectly. And frankly, this doesn't need to be paid, especially when you have a limited budget.

From where I sit, you need to find a way to scale through cash flow...

... maybe that means cutting SEO and allocating the budget to a different channel. Maybe it means scaling back SEO to a point where the company isn't losing money. Maybe it means finding a strategic partner and allowing them to white-label your product at a discount to secure revenue and fund growth.

My point is this: You're talking about borrowing money or seeking investment for a business that is trying to scale through one of the hardest acquisition channels with a slow payback period, SEO.

In my experience, investing more money in SEO than you can recoup through SEO in the short term requires a business that is already profitable, has sufficient capital raised, or has cashed-up backers who see the bigger picture and aren't concerned about a 12-month runway.

And just to be clear, none of this is advice. It's just the opinion of one guy on an internet forum that you've never met and can't qualify... so take it with a grain of salt.
Click to expand...
Yeah man, that's why I've been talking about diversifying my cash flow statement! I'm glad we're on the same page now!

I'm also glad you validated my hunch, that churn and burn is a waste of time and effort. I need something that's stable so I can scale it. And I totally agree that it's best for me to find $2,000 more in cash flow in a new channel or in a new contract so that I stop being cash flow negative. If I can keep the houses and not take on debt, that'll be the best course of action for me personally as well as the company.

Here's ideas so far:
* Check out Tier2 PPC networks to see if they allow my niche on there. Bing forbids. Maybe even tier3.
* Network with more people in my niche and see how I can help them. We have expertise that we can sell to finance the SEO team.

From posts we had, I think UpWork is just too competitive. It'll be better if I network with local business instead. It's only $2,000. $6,000 max. This is like 3 cheap contracts for any business.
 
My banker ghosted me twice after I called him. I think he saw my bank account and decided to not even bother. I checked Bank of America's working capital loans and they ask for $250,000 in sales/year. I definitely don't have that.

I talked to my real estate agent today and houses are way over-priced according to buyers who called in. We're cutting $20,000 on both houses this week then $10,000/week until we get 2 showings/week. I also gave him the lower limits on both houses that I'm willing to accept. It'll take 10 weeks to get to the lower limit and with a 45 days closing periods, we should have the proceeds from the houses by Q3.

If we sell at lower limit, I'll walk away with $80,000/house after taxes. Not baller at all but enough to cushion my savings account and put 3 years of runway into the company.

I'm going to take people's anxiety into account here and we're planning to put writers on part time status until cash comes in. In the meantime, I'm going to put the paperwork together to get government approval for my business so that I can officially run Google Ads! I don't have time to wait for SEO to kick in nowadays! Fuck these algo changes!

With writers going part time, we'd be burning $1,500/month, which is not that bad. Still have a chat with a lady to do their content writing for them.

God damn, I have a wedding, grad school, and honeymoon coming up this year too. And my gf wants a baby by the end of the year. Shit just got real.
 
Smith said:
This is new information. Thinking back on the previous thread, maybe you should follow your original plan and look at offsetting your opex by outsourcing your in-house team's capabilities.

Maybe I'm crazy, but selling real estate to invest in an SEO-oriented business in 2024 doesn't feel like a solid decision... again, I might be crazy.

In terms of debt, that depends on where you're based... if you're in the US, Canada, UK, EU, Australia, etc. and you have a real business plan that you believe in... then just walk into a bank and ask for a loan. Hell, don't sell your house and just put it up as collateral instead if you're set on using it to finance the business.
Click to expand...
That is a solid plan.

Also, $250,000 is not a micro loan. Micro loans are in the single digit thousand dollars at best. Sometimes below one thousand.
 
You must log in or register to reply here.
Back