Haven’t Bagged Financing Yet? Don’t Just Sit Around
When Perry Lopez and Monica Bosserman-Lopez decided to start selling a line of masculine baby bags last year, they were fairly confident they would get funding. They sold another business that had operated for four years, and they had some working capital and a track record. But as the search for financing stretched out over eight months and 25 banks, the couple nearly gave up. The grueling process taught them that start-up entrepreneurs should assume funding will take longer than expected and use the waiting time wisely. Freelance writer Karen E. Klein interviewed Perry Lopez.
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When our son Niko came along 14 months ago, I knew since we both worked at home I’d be taking him at least part of the time, so I started looking for a diaper bag and something to carry my stuff around in. I found a real shortage of products for men out in the baby stores.
So I decided to design my own along the lines of a backpack, with a rugged quality and a good, organized layout that would make it as easy as possible for me to take my baby out.
Monica and I felt we could start a niche business with the bag and other products for dads. We sold some bags at a local baby show in June 1997, finished a business plan in August and submitted our paperwork for a Small Business Administration loan in September. In November, we got a verbal commitment from the 15th bank that had considered our application. We figured by Christmas we’d be funded.
But after six weeks of keeping us hanging, that bank backed out. I was really disappointed and worried. It wasn’t just the two of us trying to get this business going--we had a new baby to think about. The bank that finally funded us turned us down the first time, and we had to go back and ask them to reconsider. They finally approved a $100,000 loan in February, and we got the first disbursement of $50,000 in April.
By that time, we were out of money entirely. All the money we got from the sale of our other business had been depleted. We were down to the last $10 in our checking account--literally at the end of our rope.
My advice to new entrepreneurs is assume your search for financing is going to be a long, frustrating process and try to be relaxed about it. Plan your funding and your schedule around at least a six-month wait. That way, if it’s approved earlier, you’ll be happily surprised.
If it does take months, use the time to look at your company, tweak your business plan, reevaluate your product and your price points. During the time we were waiting for funding we found a new manufacturer who makes a bag that is far better than the one we started with.
The waiting was hard, but it tested our ability to really want to run a company and stay in there. It also gave us time to do research and figure out what we needed to spend the money on. If we had gotten the money right away, we might have spent it on all the wrong things.
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Karen E. Klein will be featured at The Times’ Small Business Strategies Conference Oct. 17-18 at the Los Angeles Convention Center. If your business can provide a lesson to other entrepreneurs, contact Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia 91016 or send e-mail to kklein6349@aol.com. Include your name, address and telephone number.
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At a Glance
* Company: Dad Gear Co.
* Owners: Perry Lopez and Monica Bosserman-Lopez
* Nature of business: Manufactures and sells products for new fathers
* Address: P.O. Box 3814, South Pasadena, CA 91031
* Founded: 1997
* Employees: None
* Annual revenue: $220,000
