‘I need a dollar dollar, a dollar is what I need’
The Cool Bean Company’s Isolde Johnson and Sarah O’Connor on funding their start-up
The Cool Beans team: “If your business is good enough to succeed you should be able to do it without bringing your grandmother’s retirement lump sum into the mix”.
So you’ve got an idea and you want to take it to the next level but that requires capital. They say anyone can start a business with a laptop and a few grand, and while that is true to an extent, if you want to grow and get a bit of scale then cash is king.
Starting off the Cool Bean Company we basically had nothing, a few grand in personal savings and then our wages. Payday meant paying the designer for the job they did the month before so they wouldn’t stop designing stuff for us.
Our designers, Neworld, have put up with a lot supporting us along the way. They get that what we lack in deep pockets we make up for in raw determination but they still need to be paid.
People will allow you to stagger payments if you are open and honest up front and can put up a little good faith money. For example, you can offer to pay upfront for the first samples, on condition that you can delay the second payment until a certain metric or milestone is hit.
To date we have funded the business with our salaries, a pretty small bank loan from AIB, grant funding from what was the Dublin City Enterprise Board but is now our friendly neighbourhood LEO (Local Enterprise Office), incubator funding from partaking in the DCU Ryan academy propellor programme, MAP (Marketing assistance programme) funding from Bord Bia and some short term family loans for times when we had an opportunity but needed cashflow to make it happen.
You have to be careful when you bring family or friends into the mix and generally we would caution against it unless it is crowdfunding in small amounts. For example €50 your friends are willing to give you as a support payment not expecting anything back but some small gesture such as a limited edition t-shirt or a mention on your website as a founding funder.
If your business is good enough to succeed you should be able to do it without bringing your grandmother’s retirement lump sum into the mix.
Worst comes to worst and everything goes wallop you can always head back into the workforce and come up with a payment plan with the bank - if you borrowed the money from family and friends it can put a dampener on Christmas dinner, birthdays and engagement parties. You need your family and friends to be there as cheerleaders, favour doers and supporting you emotionally when you need that little something extra to keep going. Don’t jeopardise that important asset.
Using your salary is usually the first step and you need massive discipline as suddenly discretionary spending is out the window as the business needs that cash. Pints on a Friday are no longer a staple and that new outfit you were thinking of buying.... well maybe you already have something in the wardrobe you can wear. If these simple sacrifices are things you are not willing to give up without a second thought then the start up lifestyle is definitely not for you.
So we have gotten Cool Beans to a certain point, we love our brand, the product is ready to hit shelves shortly, our fans have been amazing but a big investment is needed in marketing and ramping up to the scale we need.
We are learning as we go with lots of advice from mentors and friends but for us the next question is how do we get the next round of funding we need in the medium term? The options include: bringing in investors - great for cash injection and expertise but downside is you are giving away hard earned equity (equity is blood); go back to the bank business plan in hand ready to sign away our lives; apply for larger grant funding which can mean giving away equity depending on the body or ideally; organic funding from the business, reinvesting profits into growth, the only problem here is there has to be enough profit there to do this.
Watch this space as we grapple with our next funding wall and how we scale it.