The debts may have been "necessary for this business", but I'm hard-pressed to understand what kind of business requires a $4,000 spend each month when you can't move at least that much out the door. Is it possible to look at the expenses for this business and find places to cut back (on inventory, advertising, whatever) until you get to a point where you can devote more time/energy to it?

The other thing I think you need to think about is where your time goes. I don't know how many hours you put in on your income source, but you certainly have a full-time job just in raising (and home-schooling) three boys and keeping house. DH is working 50 hours a week at his current job ... why? Is it possible for him to cut back so he can free up some hours for the new venture? Maybe even go part-time at the current job (say, 20-30 hours a week, just to give you a safety net)? Would the new business pay off more per hour than either of you would make at your current jobs? (If so, it makes sense to cut back on the current jobs and spend the time on the new ones.)

Finally, what is your business plan? Now that you've had a taste of the demands of the new business, you can review your business plan and adjust income, expenses, and growth. That should let you see when things should get better. It might also help you identify exactly what steps you need to achieve that plan and let you figure out how many hours and dollars you can find to complete those tasks.

Sounds to me like neither of you has time for this. How can you possibly homeschool 3 kids, and work, and run a new business???

Maybe it's time to send the kids to public school. Make sure DH spends every waking hour either at the old job or working on the new business. Have an exit plan for the old job--otherwise you won't be able to grow the business.

I also don't understand where the $4000/month is going. Better look at cutting costs. Ask these friends for advice--how did they turn profitable so quickly?

A business is like a baby. It takes lots of work in the infancy to grow well. Unless you can afford to take on that kind of debt and wait it out, something will have to give. And with the lack of attention, it still may not do what you anticipate.

Having been married to a couple of self-employed DH's, self-employed parents and a brother, a full time business can't just be done on the side. You will wear yourself out working too many hours a week.

Let us know what you decide to do.

Gloria

I guess I should explain this business better in order for you to understand why there is a loss of $4000.00 each month. There is nothing we can cut out to avoid this. We simply must grow the business. We are publishing a real estate book that is a free publication available in all grocery stores, convenience stores, restaurants, etc. Our income is earned from realtors, builders and mortgage brokers buying advertising in our book. The cost of printing these full color digest size books is spendy, not to mention the cost of racks, the cost of paying to be on certain racks (grocery stores have a contract with a distribution service and we have to pay the distribution service), shipping of the 25,000 copies from Portland, where they are printed, artist fees for designing the ads, etc. There is absolutely nothing to cut for the business at this point. We bought the equipment we had to buy up-front (Computer, fax, etc.) but have not splurged on nice office furniture, new vehicles or any obvious mistakes.

I run our household very lean also. We do not want to borrow more, as we are afraid it will be too hard to ever catch up. If we progress at the rate we are moving now, we will eventually earn a decent income, but in the meantime our hard, unchangeable business costs are significantly greater than our earnings. I would love for DH to be able to work less, but am not sure how that can be done. He is a paramedic in a supervisory capacity. There isn't enough job security as it is to be able to "dicker" with them on hours. If he went part-time he would lose all benefits. We simply cannot risk no insurance for a family of five. I have been a powerseller on ebay for several years and also have a booth selling antiques. It is a great way to earn quick cash, such as in times like now, but of course also takes time. The antique booth is not very time consuming, but it also earns much less than the ebay. I spend many hours each day handling the production end of the publication . . . getting photos and listing info. from realtors, instructing our artist with design specs., proofing and editing text. I just don't have the time to go out and sell the advertising too. When the publications come out, DH and I distribute all 25,000 ourselves, rather than hiring that out, as that isn't feasible. That is very time consuming, not to mention the gas and wear on our cars! When I do ebay, I do it late at night, so that it doesn't interfere with the business or the kids, so it isn't like I can just swap ebay time for this business time, as I must operate during realtors business hours.

We are seriously looking at putting the boys in school in the fall. I just don't want them to get the scraps" of our time. DH spends most of his off time on the business, for example spending over 8 hours today doing cold calls and setting up appointments. We are seeing growth . . . just slower than what we need given the debt factor.

This is a rapidly growing publication throughout the Northwest and all the publications started in other towns prior to ours have grown rapidly and are now showing a profit, so we are no where near walking away from this. I just am not sure what we should do in the meantime. We have used up our HELOC and visa. We can get more credit as we have an excellent credit rating and we have checked into it. It is just the fear of borrowing so much that it will take forever to catch up. So I guess I am wondering, if you were in our shoes and knew that within a year, two at the most, you can probably be earning a 6 digit figure, would you keep borrowing or what would you do? Thanks.

Brenda

So I guess I am wondering, if you were in our shoes and knew that within a year, two at the most, you can probably be earning a 6 digit figure, would you keep borrowing or what would you do?

First thing I would do is the math. Does "earning a 6 digit figure" mean grossing or netting 6 figures? Let's be optimistic and assume it means netting 6 figures. Let's say $140,000 (just to pick a round number) and that you hit that figure in 18 more months. That's $12,000 a month. Apply taxes to that and you're probably looking at around $7,000-8000 a month. By then, at your current spend rate, you'll be $72,000 (plus interest) in the hole (plus any other costs you incur along the way like higher distribution costs, bigger printing bills, etc.). You can pay that off in 2-3 years if your lifestyle doesn't change greatly. Is that acceptable to you?

It's pretty obvious the money has to come from somewhere. If you don't have any personal savings or retirement accounts, you may end up with unsecured loans on which you'll pay significantly higher interest. And even those probably will be subject to a loaner's income-vs.-debt requirements. How comfortable are you with that?

But here are a couple more questions for you:
- What prevents anyone else in the world (possibly with deeper pockets) from starting a competing publication? What, then, happens to your efforts?
- Now that you have a better idea of what needs to be done, it's time to re-evaluate who does what. With your limited time and resources, you need to figure out where you (and DH) add value to this business. The value probably is not in things like delivering the publication (almost anyone can do that) or even in proofreading (many people can do that). Maybe you should hire a high-school or college kid to do the proofreading so you can spend your time selling (the kid can't do that). Can you combine sales calls and deliveries? Maybe then it makes sense to keep making deliveries (though the cost of that isn't going down anytime soon). With the recent rise in fuel prices, maybe it makes sense to rebid your printing contract to choose someone who does not have to ship paper.
- You need to commit yourselves to getting the boys in public school this fall. "Seriously looking" really isn't much of an option if you feel you cannot walk away from this business. What would the two of you do with 60 or so additional person-hours a week? I think you'll find time to work on the business and still have time with the boys when they get home.
- You still haven't said if you and DH have a business plan. It sounds like you were caught unaware by the income/expense ratio this business demands. It's an old chestnut, but "If you fail to plan, you plan to fail." Do you two have targets for income and for when DH gives up the paramedic job? The targets don't have to be chiseled in stone, but they do have to inform how much work you do to achieve those goals.

You're climbing up a very steep mountain. It sounds like the view is beautiful (if precarious) at the top. I'm not trying to dissuade you from reaching for something more. But I think you two really need to figure out what you're willing to sacrifice (homeschooling, debt ratio, security) to reach the peak.

Hi - again - bouncer: nice to hear from you,

You speak of putting quite a substantial amount on credit cards. What rate of interest do they charge? Usually the major issuer ones run 15 - 18%, and store-issued ones upwards of 25 - 28%.

Not a pleasant cup of tea.

Have you talked to a bank about getting a loan from them?

Even at the higher rate where there's not easily-liquidated collateral, e.g. stocks, bonds, etc. on which they charge low rates, their rate would likely be lower than on the credit cards.

Unless you have those temporarily low-rate ones to recruit new customers that one sometimes finds.

I can't think of much else to be potentially helpful, at the moment - and have given it some thought since reading your story, yesterday.

I think that steve o has offered some useful ideas.

Sorry.

ole joyful

Steve O. I have to admit, we really didn't plan as thoroughly as we should have before we "jumped" which is really odd for us, as we usually plan things to death! Today was a good day, as DH sold two full pages, which puts us that much closer to break even point. I have realized part of the problem is keeping DH focused when he is doing his cold calls. He is an ADD salesman! LOL! I put together a list for him this morning and the difference was very noticable. While I know there are other people that can compete against us, other than the huge nation wide "The Real Estate Book" most other publications are smaller (there are now about 30 of us and growing) and don't have the website, etc. to help them promote things. Plus ours is a glossy full color book. The bigger magazine size publications in our area aren't One of our selling points is custom design. At this point all our competitors only offer set templates that they can choose for. We have our own artist who gives them unlimited options. We also are significantly more affordable than our big national competitor which is helping us. After some reflection and of course a good day in sales helped . . . I really feel like we are on the right track. We just have to be willing to ride the storm and do what it takes . . . including back to school for the kiddos!

Old Joyful, we would NEVER pay 15 to 18%!!! Our Heloc, which is the majority of the debt is fixed at 3.9% and our visa is fixed at 7.9% With today's competition, unless you have really poor credit, there is no need for such high interest loans. Our credit is excellent, so that has never been a problem. I also just heard about some possible grants for small businesses that we may look into.

Thanks for the great advice and things to ponder. I Just need to weather the storm. I really do believe in this business. Just need the patience is all!

Brenda

It sounds like you have a good grasp of what makes your venture different from the competition, which is good to have when you're selling. I agree that you have to "weather the storm before you see the rainbow". You just need to maintain some perspective and some rules about doing the most important stuff first (and maybe only). Good luck!

Thanks for the info that, with goode credit record, one can achieve much lower rates of interest than usual on credit card balances owing, Brenda.

And yes - I add my good wishes for success in your venture.

Takes more courage than I could muster, I think.

o j

Contact the Small Business Administration for help. They will actually help you do a business plan and help find resources for free I believe. Good Luck.