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Best form of investment -
23-07-2008, 11:49 AM
My business partner and I set up mudd & water Ltd an ethical/sustainable clothing company 18 months ago. The initial start up costs were bourne by us as well as guaranteeing a bank overdraft of £60,000K. Due to the success of our first season we will require increasing our overdraft to £120,000 or look for a form of investment/gurantor for the additional funds. We have 4 options.
1. Increase the overdraft to £120,000 but as we have no further security we can risk ourselves for the additional £60,000 either obtain a second gurantor through a family member ( not agreed yet) or an outside investor ( business angel)
We feel this is the best route for us if we can bring the family member on board as a gurantor.
2. Apply for an SFLG loan which we though we feel we would be able to get it appears at this stage as the funds are only required to purchase stock that is pre sold into stores an overdraft much better suits our requirements.
3. Look to tie in our supplier a UK based company whom have excellent experience in our field and may then ensure we gain the best prices and can control margin easier if we were to have them as ideally a guarantor of the overdraft for a small percentage return in the company.
We are unsure which step to take but are aware that even if we take step 1 at some stage we will need to increase from the £120,000 overdraft and again cannot put up security ourselves and also the family member if does agree this time wont be able to increase their secirity either. This will then mean that we have to look at an investor for idea 1. look to one of the other two options.
We feel initially we should aim to increase overdraft and hope to gain the family member as a guarantor and then in 12/18 months review then and by then if a further increase is required we will then at least be in a better position than present and perhaps be able to give away slightly less equity.
The one thing we wish to keep if/when looking for an investor is creative control and the running of the company and so wish to always have 51% between my business partner and I.
We would welcome any thoughts or advice people could offer us as.
Many Thanks
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