An E-Commerce Journal Part 1
A contract was drawn up that suggested StreetArtist.com rent a server from the ISP in California. It's something called a co-inhabit. The server would be rack mounted with all of their other servers and would be given a pipe to the Internet through the California ISP.
The server would be a Dual Pentium system with 256 MG of RAM. The UNIX operating system (my choice) would run mySQL database and PERL 5.0x software. We would pay a monthly rental fee, a maintenance fee, a one-time fee for installing the server, and a one-time fee for placing the domains upon the server.
The deal stated that if I paid for a year up front, I would receive a 5% discount on the rental and maintenance fees. If I paid for two years up front, I would receive a 10% discount. I opted for the two year up-front payment. The total came to just pennies over $24,000.00.
Show me The MoneyMy wife and I took an evening, ordered a pizza and began playing around with nice round numbers. We factored in product, server costs, programming, advertising, shipping, and decided that we would need a pile of money in the low six figures to get this business up and off the ground correctly.
I don't know about you, but I certainly don't have $100,000 plus lying around the house. Neither my wife nor I come from rich families. We don't even have that rich uncle everyone seems to have. Tammy and I have a savings account, but we didn't want to wipe ourselves completely out. Besides, the majority of our money is in stocks, and funds. We don't keep a lot of liquid cash lying around.
We needed a bank loan. This was an Internet business, so we figured talking to an online bank would be the way to go. They would understand the business and would be at least open to talking to us.
The online banks didn't allow us to get past the front door. The problem was that we didn't have acceptable collateral. We owned our house and had a four year old car, but other than that, we didn't have much to put up. Banks are not fond of taking mutual funds, stock, or art as collateral. That's mainly what we had. I couldn't even put up the HTML Goodies business. I don't own it. At the time, Earthweb did.
It was time to hit the local banks. We went to the bank that carried our checking and saving accounts and asked the manager if he would be interested in hearing about the business. He was. That's one of the benefits of living in a smaller town. We knew the manager personally and he knew we were at least good on the other loans he had granted us.
We made an appointment for a week and a day later. He wanted us to prepare a business plan.
Uhhh...what's a business plan?