So... Two quick questions:

1) Have you tried getting a business loan in the past 5 years?

and

2) Are you in the U.S.?

As someone in the US that has tried to deal with the business loan process, I can tell you that it's virtually impossible to acquire a small business loan from a bank these days. The only real way to do it is to use your personal home equity as collateral (even then, you have to have sterling credit), and a very large percentage of the population is underwater on their homes right now, so that is out of the question.

I have an extremely pleasant credit score (~825) and was literally laughed at by more than one bank when asking about a small business loan. I also work for an existing and profitable-ish company (in business over a decade) that can't get a small business loan from a bank to expand.

I'm just wondering where these mythical loans you speak of come from.

Thanks Johann!

I also wonder what alchemy the banks work that make the money they provide somehow purer than the filthy crowd sourced money they could get on kickstarter.

It seems to me that if either were to provide a superior class of money it would be the like minded individuals donating what they can afford rather than the faceless corporations out to bleed you for interest payments.

The money is the same, the difference is that banks like to back sure things. Most small businesses fail, so banks want some serious collateral to ensure that loan. Less than half survive 4 years, and that doesn't mean they are doing well... the owner might just be struggling to keep it afloat. What are the riskiest businesses? One of them is bars. What is a big reason they fail? Excessive debt.

Hell, if I could invest in something that would give me a return on small businesses that fail, I would bet my retirement on it and be able to retire early!

And that is, of course, the reason that a crowd-sourced project is groovy for this purpose.

Of course, if I were them, I would have made an offer like "$30 gift certificate every month for 3 years" as a prize for a $500 donation. That would give the locals a very valid reason to donate, plus giving them a very valid reason to regularly patronize the business if it opens, probably spending well more than that $30 each visit.

I think they're doing it wrong, but I still like what they're doing. I think a crowd-source model has a lot of potential for this type of endeavor, I just feel that they aren't leveraging that potential properly.

I guess I disagree that businesses that are prone to failure are good for crowdsourcing. I think that crowdsourcing is best for things that are sure bets if they can get funded. Putting out a game that you already wrote the rules for, but need to print and buy artwork for? Sure. Chip in on lottery tickets? No thanks.

I think the gift certificate idea or something similar is a good way to make it more appealing.

I like the idea, just don't want to put any money into it. Hell, if I thought I could get a bar started by Kickstarter I would do it... I just wouldn't risk a significant amount of my own money. I've been involved in the bar business to much and too long for that!

You missed the key point in your own post, though. The main reason small businesses fail is not poor business practice as such, it's excessive debt from the start-up costs. If you can start up without going into debt to do so, you only need to gain enough income to pay your operating expenses and taxes, which becomes far more feasible.

Buy the building, pay for the initial stock and decor outright, and have a buffer fund of at least three months' worth of predictable expenses (utilities, property taxes, advertising and wages for minimal staffing). Launch with that, and by the time you go through the buffer, you should be able to tweak your pricing, wages and advertising to keep going forward.

True. I guess my point was that this way they don't start with a huge debt load, making it far more likely for them to succeed.



Oh, don't get me wrong, I'm not either. I think it's a questionable business plan with a questionable Kickstarter plan to get funding. I like the idea, but I'm concerned by the execution. I'd love to see it work, but nothing they offer is, to me, worth parting with any of my limited monetary funds.

The only reason I even entered the discussion is that I was shocked by the implication of "you can just go get a loan from the bank." It's been many moons since that was a viable way to start a business. Crowdsourcing a business startup is a neat idea, and I'm in favor of the concept. I think it has a lot of potential. I just don't have much faith in this particular project. I hope they prove me wrong, though.

I don't object to the Kickstarter, per se. The point of the site is for people to fund projects that otherwise would not have sufficient funding to exist. But at the same time, donating money so someone can continue to take my money doesn't quite work out in my mind. So I get where DEBO is coming from.

The only pledge I'd consider making is the $200 level and then name a cocktail after the show. But that's an advertising opportunity through a drink that will exist in perpetuity, meaning I'm getting something of lasting value for my money.

If you want contributions towards that $200 pledge I'm in!

What would be in a "Fear the Boot" anyway?

Not the main reason, a big reason. There are plenty of reasons a business goes under. You can buy a bar outright and still go under. On the other hand, as a kick starter, the idea is great! You can use someone else's money to pay for all the stuff that you will just turn around and sell in a year.. or just keep if it's cool stuff. I know I've got lots of cool stuff from going out of business auctions of bars that people bought with their retirement funds.