The problem with loans is for any meaningful amount there must be collateral to borrow against. You can get some wiggle room by accepting conditions, but then you may as well be looking for an equity investor. The problem with that is they will eventually want to cash-out, and that almost always invariably leads to the kinds of problems you sound like you are trying to avoid. That doesn't mean there aren't options though. First and foremost a physical location now is asking for a BK. You can do e-commerce pretty much purely on variable cost (incurred when sales are made) to get some more money in the war chest before you go big. Drop shipping
can work but it is not as simple as it first appears and there are a lot of scams along these lines. In summary drop shipping means that while you broker the sale, the goods go directly from your supplier to the customer. There's a proper way to do it that you cannot afford that isn't without its own risks, but there's some hacky things you can do for boot strapping.
To start with you're going to be somewhat agnostic on price and product. Nothing too weird. Price extremes on either end are problematic. If you're making %500 profit on a $0.01 item, you still need to find a lot of volume to live off of that. Likewise you don't want to drop $2K on one item you have no guarantee of selling. What you are looking for is unmet demand. A simple one is niche-y products sold through specialty shops/sites that do not have listings on Amazon/Ebay/Etsy. Way too many people only look for things on one site and you can push a 20-30% premium without absolutely killing sales. Understand when fees, taxes, and logistics add up you're going to be paying about %15 for the privilege. Add a few days buffer to your lead times and you're off to the races.
- Customer places order through your listing.
- You take the customer's information and place an order with the vendor you have found. Monitor tracking and proactively cancel/handle issues. Positive feedback and reputation is far more valuable than the margin from any one sale.
- Bank the profits. (Never trust a marketplace to store any of your data/listings. I know of companies that have BK'd because Ebay borked their listings and they needed to start again from scratch/)
It is not the most efficient, or the most profitable, but it is virtually free and when you've got the hang of it you can make dozens of listings in a day. More importantly you can build a fairly robust catalog of these listings to provide some revenue quickly. You can then use that as life-support to find scripts/processes to automate, payment processors with lower fees, and vendors you're placing a lot of orders with who you may want to approach for a negotiated deal* in the near future. This should get you closer to 10% on fees or breaking into the single-digits while you are lucky.
When you can commit to spending more than $1500/yr on shipping open accounts with UPS/Fedex (kinda meaningless to do it beforehand now, AMZ/Ebay merchants get discounts consistent with base corporate rates). You won't get amazing discounts or VIP treatment but it lays the foundation for it and is an improvement. $5K-10K year is when you'll probably be hearing from account representatives that aren't just new-hires cold-calling. You don't need both at this point and negotiated discounts are based on volume. Since you're not a brand-new customer you can draw on your own experiences to choose who to go with (it really doesn't matter).
You want to preferably lock-in one of your higher-volume suppliers ASAP. It may require stocking certain items at certain levels, but that could be as simple as some wire shelves in your house. The sooner you can develop at least one good working relationship, the better. Small business general use "trade references" from other reputable companies in lieu of credit checks.
The end-goal is to eventually have your own website, logistics apparatus (avoid 3PLs like the plague), and payment processor accounts. The lack of expenses from a physical location will help you build out this infrastructure and start getting the money together to actually get a more favorable loan. A down payment, trade references, sales history, etc, is all going to go a very long way when it comes time to borrow. The interest will be a lot more affordable than having little more to assure them than an idea.
This is kind of complex, but if you don't have the gumption to self-teach I would suggest you reconsider. If you need clarification or have any questions just let me know and I'd be happy to help.
