starting a business

[TimiBoy]

Can anyone tell me if a guarantour is a standard thing on a commercial lease? The lease is in the company name, but i've been asked to sign as guaranour, which I didn't expect or feel comfortable with.

Darren

Mate I have a heap of Business finance, and I am guarantor on every contract (I am also the sole Director). They simply want to be able to make claim on your personal assets should it all go pear shaped - it also gives them a feeling that you are committed to the Business.

After all, if you won't guarantee it, does that help them form the perception that what you are proposing is something you believe in? If you believe in it, guarantee it. If you don't, then don't get in in the first place!

And don't try shifting all the assets into the wife's name - they'll smell a rat, and you'll find it harder to get finance anyway.

Cheers,

Tim

[TimiBoy]

In your case it might be ok to sign as guarantor if you are the only, effective, director but if any other party is going to be responsible for the lease and you are signing just as a guarantor then run the situation past a solicitor.

Better still, if you are thinking of signing as a guarantor for some other person then drop the pen and run like hell.

What he said!

DO NOT GUARANTEE IF YOU ARE NOT THE SOLE DIRECTOR!

If it's a partnership and the other party is not prepared/ doesn't have assets/ hasn't been your best friend for 500,000 years, march. The bastard'll screw you, count on it.

[PinHead]

I sign no guarantees at all..had a few businesses want me to open aco####s with them..they wanted personal guarantess..told them no way. I am the sole director of a company..a company is a separate legal entity to myself..has its own TFN and pays it own taxes. I will sign on behalf of that legal entity but under no circumstances will I guarantee anything for the company.

[boatboy50]

I certainly agree with Aigutso!

I can barely believe what I am reading on this thread. It is too late to go into detail because in a few hours I have to help a friend move a large boat.

Boatboy - please get independent, qualified advice also. Not understanding the role of a guarantor, even for a commercial lease, is fraught with danger. Not expecting to have to sign, is worse because it indicates that you have not got any sort of legal advice.

Please be very careful and always keep in the forefront of your mind the answer to that old question, "What do you call a guarantor?" "A fool with a fountain pen."

Over the years I have lost count of the numbers of people financially ruined because they did not know the bleak truth of that answer.

In your case it might be ok to sign as guarantor if you are the only, effective, director but if any other party is going to be responsible for the lease and you are signing just as a guarantor then run the situation past a solicitor.

Better still, if you are thinking of signing as a guarantor for some other person then drop the pen and run like hell.

Thanks TM,

Sorry to hijack the thread, but it came literally as the problem came under my nose. Ihad thought about putting it on here, but didn't know where.

I am planning on getting advice form a solicitor, but have yet to do it, so am after ideas on what's expected and what's not, as i've never been here before.

I am the director of the company (newly formed), with no other interested parties, apart from my soon to be staff.

Regards

Darren

[boatboy50]

I sign no guarantees at all..had a few businesses want me to open aco####s with them..they wanted personal guarantess..told them no way. I am the sole director of a company..a company is a separate legal entity to myself..has its own TFN and pays it own taxes. I will sign on behalf of that legal entity but under no circumstances will I guarantee anything for the company.

Thanks Pinhead,

This is the train of thought I had.

The business is a seperate entity to me, and if it can't pay the bills, good luck getting that kind of money from me alone as an unemployed individual!

I've spoken with the accountant, and know the business inside out, and everything is extremely viable.

I don't understand why I should sign as a guarantour. Commercial real estate is extremely expensive because of the risk. Why should I write off that risk but still pay the high price?

Thanks again for the answers guys. I'm a newbie to this world and appreciate all and any advice.

Regards

Darren

[Dicko]

Whilst the business advice so far is fair comment, besides figures there is more to consider.

Are you prepared for the lifestyle choice ? How are you with people ? Catching fish is one thing, but your personality will leave the biggest impression of the clients the day. (Moreso if you're catching bugger all). You will lose, or build a reputation over this.

Accountants/solicitors etc can be pretty anal when giving advice in these areas, and realistically, this type of set up shouldn't be looked as a pure money making excersise as they will.

There are a dozen reason why this type of business will struggle to ever be a 'large' business. The main reason is your future expansion is limited as you are the business.

If you're comfortable in that and it's more a lifestyle choice that you want to make a living out of, then go for it.

Be realistic with set up cash needed and have a time frame in mind in which you want to be making a dollar or call it quits.

Have a calculated target of your break even point. ie x amount of clients at x dollars. per week.

Have a calculated target like above of where you want to be. i.e sustainable and making a dollar.

These calculations are a bit variable to work out with costs, but you need to do it or you're flying blind.

Buy boat. (you'll own it if it doesn't work out).

The rest you've got to be prepared to lose if it doesn't work out.

Set up cash

Liability Insurance: ring around & find out

Advertising: where are you going to get clients from ?

Good advertising costs big bucks. How much are you going to spend ? Where are you going to spend it ?

Aside from spending money, beat your feet around the tourist info centres and motels intro yourself and leave brochures.

Living costs set aside till you make a dollar ?

Only you can answer that. 1 month ?, 6mths ? 12 mths ?

Can you start part time a few days a week & still do your current job ?

Oh, as someone else said, stay on top of your paperwork. The ATO is ruthless if you owe them a dollar.

You could add heaps more to this but I'm into my third coffee after a few too many bourbons last night and struggling to wake up properly.

[Dantren]

There is no substitute for capital.

Might be a good idea to have a years wages in savings before taking the leap.

Never listen to anyone who says it can't be done.

[Reel Nauti]

Probably the single most important tool to the consideration of any business proposal is the Business Plan. A carefully and HONESTLY constructed plan is your best friend. Every single core expectation is defined in the business plan. You can source formatts etc on line, or you can obtain the assistance of a professional. It is very easy to say 'She'll be right" but I can absolutey and categorically guarantee to you that without a business plan you will struggle.

Secondary, but just as important, is a budget. A forecast or proposed budget for a new venture can be a challenging proposition, but with careful research (as outlined in the business plan) and exagerated expenditures against conservative inputs, you will draw a picture of fiscal direction for your business. The first 2 years is usually the most challenging as you market yourself (also thoroughly described in the business plan) and build your reputation.

Another tip I would give you would be to get used to the jargon of your accountants. It is not their responsibility to communicate in simple speak, it is your responsibility to understand.

Have faith in yourself, be realistic, energetic and cautious. And one more: Pinhead's advice is excellent.

Cheers and good luck to you

Dave

[lampuki]

Yeah, I think i will be taking the leap, but not yet......not realistic at this stage....fuel prices will be something i (and other potntial operators) need to consider...particularly for offshoe fishing

[tigermullet]

Yeah, I think i will be taking the leap, but not yet......not realistic at this stage....fuel prices will be something i (and other potntial operators) need to consider...particularly for offshoe fishing

Very wise!

The most recent disaster I know of was caused by fuel costs and bad weather. Every single charter cost more than it brought in. Meanwhile, the other costs, Marina fees, registration, survey etc., etc., just kept on going. And the boat, motors and gear were depreciating every day.

Long story but it resulted in both husband and wife having nervous breakdowns and, of course, that compounded the problems resulting in a huge loss of capital and loss of their house. Fortunately they had just enough cash left over to buy into a house way out in the country where they will spend their remaining years, until the pension age arrives, trying to recuperate.

As others have said, an exit strategy is absolutely essential. Banks do not give out sympathy nor do they try to enroll the unfortunates in counseling sessions.

We live in a capitalistic free enterprise system which, by its very nature is competitive. In any competition there will be winners and losers. Generally there are more losers than winners in business.

Those who start out without bothering with sound, conservative business plan, professional advice and a full understanding of the commitment of time, effort and financial resources involved need to be slapped silly.

[garman1]

All info so far has been excellent, I had a welding business set up as a sole trader, I wish I had some of the info that has come forward so far. I made headway and had an employee, but I worked hard for my business.

The previous info about attitude is also a massive bonus, I found that the best form of advertising is by word of mouth, giving someone a discount if something wasn't up to their expectations etc can bring in better advertising than having an ad on TV.
Good luck with the new venture, I can only add one other bit of advice ...............

1..But never forget to have a "bit of fun along the way"
2..Run the business............... don't let it run you !!!!!!!!!!!!!!!!!!!!!!!!!!!

Sounds easy eh.........but remember those words, trust me

Cheers Garry

[STUIE63]

garman and pinhead have got it nailed get good legal advice and an accountant . have a plan . STAY ON TOP OF THE PAPERWORK . have fun on the way and run the business don't let it run you .
most businesses go broke in the 1-2 year timeframe due to not enough startup capital . or the owner realizing that it just won't generate enough profit .
my business nearly went broke at 2 years because of account customers taking 2-3 months too pay the bigger I got the more I owed . now after 7 years I am over the hump and it is going sweet.
Stuie

[For Steve]

Business plan
Legal advice
Accountants advice
Exit strategy

Also, speak to your local council and tourism organisations. This may help with some of the data needed to prepare your business plan. You're already doing the right thing - seeking others opinions, sharing their experiences and so on.

Operating your own business can be a very rewarding venture. It can also be heart-breaking. If you don't understand something you'll need to either seek advice by paying a professional or perhaps completing a course on the topic. You may also be able to have a job while your business is in it's infancy to keep some money coming in.

You obviously love fishing and you'd like to start a busy where you go fishing. It's a wonderful thing to work doing something you love. Being passionate about it and willing to dedicate yourself to it is the first step. These guys are offering great advice and are not trying to talk you out of it. You NEED to know this stuff and the possible pit-falls and risks. This is what it takes.

Maybe I'll be booking a day out on breamnut's fishing charters one day!

[Getout]

The best thing you can do Breamnut, is to start the new venture in a conservative way. Maintain a survival income with your current job and work your charters on the weekends. Slowly build up the charter business as bookings increase.
Its good to have a fallback if things go pearshaped.

[Dodgy_Back]

Just as getout says start slow and build it up, by the looks of your age you have plenty of time.

I only saw this mentioned a couple of times but as retired small business owner and having spent 3 long years in litigation make sure you have relevant and adequate insurances
Even if you are only doing the odd job you still need insurance.
Without it I would be stoney broke by now.
But if that's your dream to start a charter fishing go and grab it by the horns and get it up and running.

Cheers

Mick