New Business Investment

[hp00nsb]

Hello there,

I am just about to set up a market stall selling shoes. I have been a merchandiser for a shoe company for a few years.

However, due to student debts, i do not have much money to invest, and i have been offered money to start up with by two investors who are friends with a merchaniser at work.

The deal is that if they cover the risk of buying the stock, they will get 50% of everything that sells.

My family is extremely concerned that should it not succeed, i could end up owing near strangers thousands of pounds.

I have researched my business carefully, and I live close to London. I do have storage space at home for 600 pairs, however, i do not drive which would significantly add to my weekly costs.

Am i wise to accept my family's advice who would rather i take their money instead, or should i confront these potential investors with my problems, taking the advice of professionals who can guide me.

I am confused about the best course of action to take.

Thank you,

Nick Bryant

[Statler]

Hi Nick,

It's a tricky one - on the one hand, it's great that people are willing to back your venture, yet on the other, you don't really know these people. You should draw up an agreement and all parties should sign it, so that you all know exactly what you are getting into.

In addition, if they are taking 50%, then how much will you actually make after you take off your overheads, eg the cost of the stall, transport costs, etc? Will you actually come out of this in pocket, or will all your profits actually be going to the investors?

The transport issue is worrying, as it will not only be impracticable, but it will eat into your money. If markets are an area you want to get into, I would recommend learning to drive.

Lee