I took $500k out of my home equity and started a Saas + beauty + commercial property business. It is in high demand. I specifically searched and got a building with only the most superficial renovations required in a high traffic very trendy area in Los Angeles.
Day one of painting and flooring our crew arrives and the building had a burst pipe on the second floor and was spewing water from the main line for over a week. It took nine months to demo and dry out the building. The delay halved my budget.
Rebuilding finally began but the monthly utilities, mortgage and the unexpected renovation which we had not prepared for ran out budget completely dry short of $50k.
I’m now unable to open the building despite being 90% there with completion. I have a waitlist of customers which will make $50K day one of opening. Yet today I’m facing loss of my new building and my home, my credit is destroyed, I can’t get a loan and investors do not want to invest because they want the business to first generate revenue. I’m out of options and in total despair.
Why is it so hard?
Why is it so impossible?!?!
byu/CinnamonToastFecks inEntrepreneur
Posted by CinnamonToastFecks
15 Comments
You bit off way too much to start
What about your saas , is it profitable?
Seems like you were spreading yourself very thin, why start 3 different businesses at once that sounds like a nightmare. I think every business person that’s worth listening to would say the same
First, seems like the landlord or whomever was responsible for the damages should be responsible for your lost income and the property damage. I’d talk to a lawyer about that.
Second, you should still be able to find a potential investor who can get you up and running with a bridge loan that gets you operating and then perhaps he gets paid back out of revenue first and then once he gets paid back he keeps a small equity stake. Try negotiating with your landlord, the construction guys, the bank – whenever you can to get you to operational. Tell them all that if you don’t get there they wont make anything but if they can extend you 6 months credit you’ll give them some interest or an extra payment,
Lastly, biz is hard. Require: several pivots and creativity. It is not fair but it’s worth it. You will grow and build yourself in ways you didn’t think you could. Just embrace the tough times and find a way thru. Good luck!
You bet your house that nothing would go wrong, and things went wrong. So you lost your house
Can you sell to try and recoup some of that?
Let that be a lesson to you
You thought you could open up a physical location for under 500K in LA? Lolololol
For those reading this and thinking it is ok to take out loans for things…. this is why you never do anything unless you have the cash to do it with. 35 years later I have never had any stress over any business I’ve ever started.
Can you do presales?
If your certain you will lock in 50K revenue do sales!
Sell baby sell and start a referral program for their friends offer them a “founders rate for anyone they onboard”
You are in dire mode right and need to lean on your network and potential customers
Do presales after you fund that start chipping away
I feel you can get out of this now it’s time to hustle!
Pre-sales
Membership options
Sell memberships to new and aspiring salons “say cost of your service is $3,000 for the month” sell them on $25,000 for the year instead of $36000 do a few of these to overcome your $50k threshold. “These are made up numbers not sure what your COGs are”
Go to local businesses who are established and ask for small loans with returns in the future
Eat your fucking hands that’s what it means to be in business
I believe in you
How much money would you need to get to store opening?
I’m sorry for the struggles. Why do you need a building at all? I would scale back spend on office space for as long as possible while you prove your model and build a revenue stream.
Also, SaaS + Beauty + Commercial Property sounds like two or three different businesses.
Assuming that you will make $50K on the day of opening also reads like wishful thinking to me.
I would see if you can use these delays to get out of your lease. Use your remaining funds to build your product and drive demand. Once you have some sales, invest in an office, if needed.
You didn’t diversify your portfolio enough. All the risk went into one basket. If you spread your investments, shit can go wrong with one of them and the others will help compensate. That is not what happened here.