Interesting story about me and a lender

[Rieja]

I am in the process of getting a loan and the place I went to specializes in small business start ups.  They were formed:
"Its founders—all successful, local business entrepreneurs—recognized an absence of resources for small business owners in the region. They noticed that community banks were too small to handle the lending demands of a new business and mega banks viewed small businesses as too risky to lend to. Their idea was to create a bank that understood the needs of this unique group and to offer banking services and business solutions that would develop small businesses—all of these in a friendly, personable atmosphere that places the clients’ needs first."

So I had a very good meeting with a "personal representative" and he walks in saying this, "You have to convince me this will work.  Why?  Because 6 years ago I was the one who authorized the $400k loan for a LAN center that failed.  How are you not going to fail?"

First, I was like 400 grand?!?!?!  omg. 
 1. Then I questioned him on the location (3500sq').  Good uppity area but very "rigid" community.  The money was there but it would not be spent.  Like a mansion that you can't touch anything in.  Also it has been around for ages so new things are looked at with a raised eyebrow.
 2. The location has GREAT foot traffic but NO parking.  FAIL
 3. He is not a gamer.  Period.  He was a businessman that wanted to start this project.  No comp skills - not in the industry even as a player.
 4. He hired a staff.  He did not "run" the place at all.
 5. High end systems.

HUGE overhead, semi bad location, hired staff, and no knowledge of games/community.  I can see why it failed.

So here I am looking for about $150k loan.  I have a busness plan written up, I have the floor layout planned (see other threads of mine), and used the financial guidelines from Alomax for the start up/operational costs.  After about an hour meeting he looks at me and says "Well, you have me convinced and you did an excellent job with the plan and finances. I just need to pass this onto the SBA and my lending board.  Should find out next Wed after my meeting"

A little note about him as we talked - he has a teen and preteen daughters that are ALWAYS playing CoD  lol.  He said that times have changed due to social media and the advent of more moveable games like dancing.

So here I am filling out paperwork and basically giving up my house (and for that matter my family) for a loan.  Fingers crossed

[RsteeleAUG]

I hope the loan comes through for you!

$400k. Man I'd have a lazer tag complexe with the http://www.battlefieldsports.com/ sickest guns, Lan center with 3D monitors, and marketing out the wazoo.

[drtydawg]

great story. but 400 was a crazy loan for a lan. where are u and how can i reach this loan guy. wow

[Skyshark]

Man I'd have a lazer tag complexe with the http://www.battlefieldsports.com/ sickest guns, Lan center with 3D monitors,

Funny you mention it...but that's the direction we're heading.  Key is finding the correct location.   Not willing to pay retail $/sq. ft for that size of a center...so it will be a little off the main strip mall/shopping center real estate possiblities...but still close to high traffic areas.  Of course marketing is key to overcome the lower visibility and walk-up challenges.

The equipment overhead for the laser tag doesn't actually tag on much more for start-up, but does add complexity with facilities, power/AC, staff needs, and customer base.

[RsteeleAUG]

I spoke to the battlefield sports rep and they told me just the equipment for the Lazer tag would be in the area of $20k.

[Skyshark]

Yea, that sounds like it's about right for the starter setup...we're closer to 40k for equipment...and another 20k for arena construction and staging.  But that's for 30 guns...at $20-$30/hr. 

I think it would work great for someone that has a large outdoor tract of land, but as Hard Knocks and others have shown...it can be done well indoors (for a slightly higher cost). 

[Gord]

great story. but 400 was a crazy loan for a lan. where are u and how can i reach this loan guy. wow

My first center cost 200K.  The second one cost a bit over 400K to get up and running.

A LAN center is more than putting a computer on a desk.  Places that look like they are set up in one's mother's basement are hard pressed to get a profit that exceeds of what they would make had they been operating out of their mother's basement.

[Rieja]

200k would have been optimal for me but I don't have the 3 "f's"  -  family, friends, fools.  So 150k it is.  And there is no way in hell I am making it look like my "mothers basement".  Haven't been there in over 30 years anyway.

For me it is all about budget friendly social styyyyyyyyle. I have a ton of people that hopefully will pull through for me and help out.  And by ton I mean if one person bails, I have about 3 to back me up.

Once I am established and begin to grow, my next one will be easier to gain a better loan.

[Skyshark]

I don't think 150k is a bad starting budget as long as you invest it wisely.  Start-up is not the only time you'll be pumping money into your business (personally, loans, or investor)...it's just that most don't prepare correctly during start-up and short-change themselves before it ever gets off the ground.

If you're not keeping your day job or are relying on the early success of the business to pay mortgage, car payment, food, personal bills...I could see want more start-up capital.

[Rieja]

Yeah I should be good to go for at least the first 8-12 months.  But from what I was told, this other owner was already a successful businessman.  So I would assume that the entire 400k went into the center.