Business proposal funding

tobe1424 · Post by **tobe1424** » Fri Mar 28, 2014 5:25 pm

Hello all,

It's been a while, but here I am with more experience in IT than ever. However, I do have a few questions as I do not generally where a finance cap.

So I've met a few people that I can possibly do business with, yet I don't have any business line of credit or much credit per say - lets assume none.

How can I submit a business proposal and state that they have to front all the money? Instead of me taking on the load and billing them at the end.

Let's say the project will cost about $8K

Can I say, 5K will be due upon the start of the project and the remainder upon completion? Does that sound fair?

Can I continue to take such an approach where the client funds the entire project and I don't dish out a penny?

best,

t

Mark · Post by **Mark** » Fri Mar 28, 2014 6:00 pm

i am a plumber and our shop does not do business that way, we get paid on completion of certain phases of the job.

there is no way i would personally hire a contractor that asked for money up front to do a project at my house.

in fact i had 3 bids for a new roof and one contractor wanted a deposit for the material, i threw that bid out on that reason alone.

not sure how it works in IT though, just food for thought

Post by **Philip** » Fri Mar 28, 2014 6:16 pm

If the project requires an extended amount of time, you can ask for half the payment at certain stage of the job. If it is a joint venture between you, there can be different functions for each person, i.e. you can word it so that they invest money and you invest time. The only reasonable way to get money up front would be for expenses that need to be incurred, i.e. purchase of software/licenses/hardware/services/inventory, etc.

Post by **YeOldeStonecat** » Fri Mar 28, 2014 6:34 pm

What is the project? How much money do you need to invest to get your BOM (bill of material) to do the project?
I'm an SMB consultant, providing IT services for small to medium businesses.

When we do a project like say...a server project...or a bunch of workstations, we ask for the money for the hardware up front. And then we place the order. We get our % profit for the hardware/software sales, and then comes the installation part. The "labor" charge for our installation/configuration. This is often 30-50% of the total bill. And we bill that part once the project is complete and the client is happy.

So..example, a server...$6,000.00.
MS licensing, another $1,500.00
Server migration, $5,000.00

So we'd ask for $6,500.00 up front.
For some clients...maybe we'd just ask for 5k. Depends on the month, how much we have hanging in AR that month, free credit, etc.

For many of our regular clients...we'll float a few thousand in credit for hardware/software.

tobe1424 · Post by **tobe1424** » Fri Mar 28, 2014 7:41 pm

thanks for the input. I now have a way better understanding of what terms would be feasible. However, at the moment I have "zero" credit.

let's hope that most clients won't mind allocating a large sum of the project. Any funding from my part will have to come out of my capital.

Post by **YeOldeStonecat** » Sat Mar 29, 2014 7:12 am

What are the projects? I see you mention IT...are they IT related?

Easto · Post by **Easto** » Sat Mar 29, 2014 10:18 am

1. IT Related - When we have had to make upgrades to our hardware at work I've noticed that the 1 or 2 IT firms that we've dealt with have always had us purchase the hardware and software ourselves before the work is done. They give us a list of the hardware and software required and once the equipment is on site they schedule their work. We are only a 17 person office and the upgrades are usually just server, router and firewall related.

2. Home related - I agree with Mark. I never pay anything up front. If they ask I tell them. I've found that in more instances than not that they agree to my terms. The asking for money up front is usually a sales scam/pitch they use to get their money even faster.

cybotron r_9 · Post by **cybotron r_9** » Sat Mar 29, 2014 12:12 pm

Why should anyone be asked to finance your business?

If you can't afford to be in business, then get the F out.

tobe1424 wrote:Hello all,

It's been a while, but here I am with more experience in IT than ever. However, I do have a few questions as I do not generally where a finance cap.

So I've met a few people that I can possibly do business with, yet I don't have any business line of credit or much credit per say - lets assume none.

How can I submit a business proposal and state that they have to front all the money? Instead of me taking on the load and billing them at the end.

Let's say the project will cost about $8K

Can I say, 5K will be due upon the start of the project and the remainder upon completion? Does that sound fair?

Can I continue to take such an approach where the client funds the entire project and I don't dish out a penny?

best,

t

RaisinCain · Post by **RaisinCain** » Sat Mar 29, 2014 12:45 pm

You can bid the job or you can negotiate the price for services up front. Either way, it seems like you are wanting to take on a project of which you do not have the $ to fund from the get go.

SlyOneDoofy · Post by **SlyOneDoofy** » Sat Mar 29, 2014 7:51 pm

Depending on the job, the client, and the location, in any business it's not uncommon to ask for a "deposit".

I've seem to many people do work for free because they didn't ask for some up-front money.

Just don't expect a huge up-front amount. 10% is reasonable.