3000-6000 BTC loan - Hookah Lounge - 9/18/12 Update

[Monster-Ant]

you're putting way too much effort in trying to help someone who can't be helped.

I think you're right.

Nevermind, carry on, Dank! I'm sure that bank loan officers, investors, and the IRS will be just fine with your spreadsheet!

[Rarity]

Don't worry, Dank.  I won't give up on you too.  If you quit the drugs and the plans for morally repugnant businesses I will consider investing with you in the future.  Dank's Bank is a quality, stable, honest businesses and a shining example for the forum.

[dank]

OK, troop, lemme see what I can do to untangle this crap.

Let's look at your income section:

Item	Quantity	Cost/Price
People/session	4	25
Sessions/hour	6	150
Hours/day	8	1200
Hours/session	2	600
Sessions/day	24

All right, this is a damn mess. Let's try to break it down.
First of all NEVER have your cost/price on the same column, or quantity in/out on the same column.

So, you will be open 8 hours each day.
Each session will be estimated at 2 hours.
You are hoping for 24 sessions per day.
That means you have 6 stations. (We aren't going to bother with that "multiplier" crap, you ALWAYS assume worst case scenario)
You are assuming 7 days a week operation. (No holidays, not taking into account college breaks/testing times/activities)

So, let's assume maximum occupancy for your six stations, and break it back to 5 days a week.
We will assume an average of 2.5 (from a max of 4) people per session. (Some will be alone, others will be a full party, you average it out and hope for the best)
We will assume that you have made it policy that they will be charged per session or part of a session, so 2 hours 15 minutes will be charged as 2 sessions.

So, that gives us 4 sessions per day per hooka. Now, that probably won't happen, as there will be cleaning times, airing times, reloading times, so there WILL be times that each hooka will NOT be making any money. Let's be more realistic, and go with 3 sessions per hooka with 15 minutes of cleaning after each use and 15 minutes of down time. (It will RARELY happen like that, people are not robots)

So, 3 sessions per day.
Each session will be composed of 2.5 people.
So, that's: Hooka rental, bowl rental, per person.
Each of those is $5, so it'll come out to $17.50 per session.
That comes out to $52.50 per hooka per day.
With six hookas that comes out to: $315/day.
Or: $1575/week

Not to mention you'll need a minimum of 12 hookas so that they can be cleaned according to regulations, since anything that came into contact with bodily fluid (such as saliva) has to be sterilized, and add another 1/3 of the total for breakage so you aren't down one while waiting for shipping. So you'll need 16 hookas. And only 6 are at use on the floor.

But, you have a gross profit, at this time, of $1,575 per week.

Shall we begin looking at your weekly expenses?

(Anyone wanna check my math? I did this all off the cuff, since I don't have to worry bout actual accounting here. I'm just using it as an example)

Well, yes, when you change my numbers in that way, I do make $1,575/week.  I don't think it's fair to say I won't get more business on the weekends.  Your presumption is also faulty, I will have more than 6 hookahs in use.  Why did you add a per hookah variable?

You didn't break down my spreadsheet at all, you grossly modified it.

[silverbox]

I really only have one question..

Does your steering wheel on your car still have a rip in it??

[TheBible]

OK, troop, lemme see what I can do to untangle this crap.

Let's look at your income section:

Item	Quantity	Cost/Price
People/session	4	25
Sessions/hour	6	150
Hours/day	8	1200
Hours/session	2	600
Sessions/day	24

All right, this is a damn mess. Let's try to break it down.
First of all NEVER have your cost/price on the same column, or quantity in/out on the same column.

So, you will be open 8 hours each day.
Each session will be estimated at 2 hours.
You are hoping for 24 sessions per day.
That means you have 6 stations. (We aren't going to bother with that "multiplier" crap, you ALWAYS assume worst case scenario)
You are assuming 7 days a week operation. (No holidays, not taking into account college breaks/testing times/activities)

So, let's assume maximum occupancy for your six stations, and break it back to 5 days a week.
We will assume an average of 2.5 (from a max of 4) people per session. (Some will be alone, others will be a full party, you average it out and hope for the best)
We will assume that you have made it policy that they will be charged per session or part of a session, so 2 hours 15 minutes will be charged as 2 sessions.

So, that gives us 4 sessions per day per hooka. Now, that probably won't happen, as there will be cleaning times, airing times, reloading times, so there WILL be times that each hooka will NOT be making any money. Let's be more realistic, and go with 3 sessions per hooka with 15 minutes of cleaning after each use and 15 minutes of down time. (It will RARELY happen like that, people are not robots)

So, 3 sessions per day.
Each session will be composed of 2.5 people.
So, that's: Hooka rental, bowl rental, per person.
Each of those is $5, so it'll come out to $17.50 per session.
That comes out to $52.50 per hooka per day.
With six hookas that comes out to: $315/day.
Or: $1575/week

Not to mention you'll need a minimum of 12 hookas so that they can be cleaned according to regulations, since anything that came into contact with bodily fluid (such as saliva) has to be sterilized, and add another 1/3 of the total for breakage so you aren't down one while waiting for shipping. So you'll need 16 hookas. And only 6 are at use on the floor.

But, you have a gross profit, at this time, of $1,575 per week.

Shall we begin looking at your weekly expenses?

(Anyone wanna check my math? I did this all off the cuff, since I don't have to worry bout actual accounting here. I'm just using it as an example)

Where's the multiplier for wishing REALLY hard?

[TheBible]

OK, troop, lemme see what I can do to untangle this crap.

Let's look at your income section:

Item	Quantity	Cost/Price
People/session	4	25
Sessions/hour	6	150
Hours/day	8	1200
Hours/session	2	600
Sessions/day	24

All right, this is a damn mess. Let's try to break it down.
First of all NEVER have your cost/price on the same column, or quantity in/out on the same column.

So, you will be open 8 hours each day.
Each session will be estimated at 2 hours.
You are hoping for 24 sessions per day.
That means you have 6 stations. (We aren't going to bother with that "multiplier" crap, you ALWAYS assume worst case scenario)
You are assuming 7 days a week operation. (No holidays, not taking into account college breaks/testing times/activities)

So, let's assume maximum occupancy for your six stations, and break it back to 5 days a week.
We will assume an average of 2.5 (from a max of 4) people per session. (Some will be alone, others will be a full party, you average it out and hope for the best)
We will assume that you have made it policy that they will be charged per session or part of a session, so 2 hours 15 minutes will be charged as 2 sessions.

So, that gives us 4 sessions per day per hooka. Now, that probably won't happen, as there will be cleaning times, airing times, reloading times, so there WILL be times that each hooka will NOT be making any money. Let's be more realistic, and go with 3 sessions per hooka with 15 minutes of cleaning after each use and 15 minutes of down time. (It will RARELY happen like that, people are not robots)

So, 3 sessions per day.
Each session will be composed of 2.5 people.
So, that's: Hooka rental, bowl rental, per person.
Each of those is $5, so it'll come out to $17.50 per session.
That comes out to $52.50 per hooka per day.
With six hookas that comes out to: $315/day.
Or: $1575/week

Not to mention you'll need a minimum of 12 hookas so that they can be cleaned according to regulations, since anything that came into contact with bodily fluid (such as saliva) has to be sterilized, and add another 1/3 of the total for breakage so you aren't down one while waiting for shipping. So you'll need 16 hookas. And only 6 are at use on the floor.

But, you have a gross profit, at this time, of $1,575 per week.

Shall we begin looking at your weekly expenses?

(Anyone wanna check my math? I did this all off the cuff, since I don't have to worry bout actual accounting here. I'm just using it as an example)

Well, yes, when you change my numbers in that way, I do make $1,575/week.  I don't think it's fair to say I won't get more business on the weekends.  Your presumption is also faulty, I will have more than 6 hookahs in use.  Why did you add a per hookah variable?

You didn't break down my spreadsheet at all, you grossly modified it.

It's so cute that you think investors won't do exactly the same thing.

If you think he mangled your spreadsheet, wait until a serious investor tears into it.  People aren't looking for a hole to dump their money in.  They are going to want to be pretty damned confident they're going to get it back, and they are going to grill you many times harder than this. 

Oh, and they'll do it well before giving you any money, so you can't just keep dismissing them the way you have been.  That you don't even have your spreadsheet finished is extremely unprofessional.  Also, that spreadsheet is a joke and you're going to get laughed at/audited if you ever try to run a business like this.

[dank]

Does it really take a genius to figure out that a nice hookah lounge, the only one in the city, of 50,000+ college students, will do well?

[Monster-Ant]

Well, yes, when you change my numbers in that way, I do make $1,575/week.  I don't think it's fair to say I won't get more business on the weekends.  Your presumption is also faulty, I will have more than 6 hookahs in use.  Why did you add a per hookah variable?

You didn't break down my spreadsheet at all, you grossly modified it.

Did you even understand anything in my post that didn't consist of $?

Do you understand how averages work? Do you understand how statistics work? Do you realize that according to your own numbers you will only have 6 hookas in use? Do you realize as the number of hookas goes up the number of employees must also go up?

Did you understand ANYTHING about what I tried to show you?

[Monster-Ant]

Does it really take a genius to figure out that a nice hookah lounge, the only one in the city, of 50,000+ college students, will do well?

I believe it will do quite well, properly estimated, documented, researched, staffed, and managed. Properly funded, properly advertised with the well researched business plan and profit/loss estimates, it could probably do quite well.

Your spreadsheet only shows that you might be able to win a game of SimCity.

[Rarity]

Does it really take a genius to figure out that a nice hookah lounge, the only one in the city, of 50,000+ college students, will do well?

It's hard to know if it will or it won't without more information, like what city and state we are even talking about. A college town in Florida might be very different from one in North Carolina or Pennsylvania or Wisconsin. When there is demand in a market and nobody is filling it, there is usually a compelling reason. What do you think that reason might be in this case?

[repentance]

dont worry guys. he will make it all work out because hes super intelligent and the best wishful thinker known to man.  

poor kid, reality is going to hit him hard

What's with the hate?  If you don't have anything positive to add, to help me make this happen, please, do not post.

dank, it's not "hate".  It takes a hell of a lot of good planning and hard work to make any business succeed and most of what creates that success is invisible.  dank glass wasn't a bad idea, but it hadn't been refined.  Turning this proposal into reality is going to be way more expensive and complex than dank glass would ever have been and people are trying to get you to consider the obstacles you'll face so that you can plan for them before you spend a cent of your own or lenders' money.

I did some quick research and there are basically two hookah lounge/bar models which are profitable.  There's the one aimed at college aged people which serves alcohol, has live entertainment, etc and there's the coffee house/restaurant model aimed primarily at a Middle Eastern clientele.  In both cases, there's a revenue stream apart from the hookahs themselves - alcohol and entertainment cover charges in the case of the first and food and beverages in the case of the second.

I know that you're reluctant to disclose your location in even general terms, but it's going to have a massive impact on your costings.  If you're located somewhere where a business which allows indoor smoking is required to have an independent air-conditioning you're either going to have to pay for the installation of that system or rent premises which are already compliant with that requirement.  Food and beverage service also comes with location dependent requirements and commercial kitchens are extremely expensive to install, so you may need to look for premises which has existing commercial food preparation facilities and an independent air-conditioning system.

You will need to allocate space for cleaning and disinfecting the hookahs themselves to whatever standard is required by health regulations in your area.  You need to factor in how long each hookah will be out of commission for cleaning before it can be re-used on a busy night.

A successful business can fail.  You can be popular as hell and bringing in money hand over fist but if you've miscalculated your expenses or don't have the reserves to cover expansion, your business will fail.  You will need to cover increasing expenses before you have the additional profit (not revenue) to meet them.  You need to know things like how many paid hookah sessions it takes to cover the cost of one employee, bearing in mind that you can only count the profit from those sessions when determining whether or not you can afford an additional cost (whether it's an employee, advertising, amenities, etc).  

You need to know which nights aren't worth opening because your chosen demographic typically doesn't go out or doesn't have money on those nights.

The point which Ant is trying to make is that you need to research all of these things long before you even start asking for investors.  You can't just make it up as you go along and hope for the best or you will come undone on other people's money and you've already seen how ugly this community gets when the ventures for which they lend money fail.

I know that all of this preparation work is not as exciting as planning your decor or thinking about which bands you'd like to engage (one reason I get paid good money for project management is because ideas people typically hate doing - or even thinking about - all the mundane but necessary work which precedes the launch of a successful business), but it's necessary if you want to succeed beyond the first few weeks or months of opening your business.

Like Ant, I'm going to give you some advice for which I'd normally charge people.  Set up a Gantt chart (I do mine in Excel) or some other kind of project management chart now and list every single step you need to take between now and opening your venture.  Allocate deadlines for each task.  Look for any conflicts in the timeline, so that you're not going to have multiple tasks demanding many hours scheduled at once and other periods where you have nothing needing your attention.  You should always be working on something.  As a reference point, it typically takes me up to 20 hours to put together a Gantt chart for a small project.

Once you have your Gantt chart, you should create workflow charts.  Some tasks are going to be dependent on other tasks being completed first.  If it's going to take at least two weeks to get a particular permit, then you need to make sure that you've gotten hold of the applications, and submitted them with payment long before you come to a step which requires you to produce that permit.  

If you need any interior fitting out done of your business premises, you want plenty of time to obtain quotes from different providers and to have the work completed and inspected and you may need to work around things like noise ordinances.  You also want to minimise the period for which you're paying rent on the premises but not open for business, so this can be a tricky balancing act.  Don't assume that tradesmen will be available when it suits you - commercial work is often booked a long time in advance.

Track every cent which you spend on your project, and every minute which you spend on it.  Neither your financial estimates nor the amount of time you've allowed for stuff will be accurate.  This is normal, but if you don't track everything and make adjustments in your forecasts there's a very real risk you'll end up seriously over budget and behind schedule.

Above all, don't get distracted by the "sexy" part of this venture.  This is a business, not a hobby, and you need to remember that at all times.

[BorderBits]

Does it really take a genius to figure out that a nice hookah lounge, the only one in the city, of 50,000+ college students, will do well?

Obviously the people who were running one in your town before didn't think it was doing well enough to keep it open.  It could do well; however, it would be destined to fail if you managed it.

We're being harsh on you because of how obvious it is that you possess absolutely no ability to run this kind of business.  Despite what someone in your life told you, you're not a bright shining star who can will into existence anything you wish.  You are, however, a half-way descent artist.  Why not focus on doing something with an ability you actually possess? 

[repentance]

Does it really take a genius to figure out that a nice hookah lounge, the only one in the city, of 50,000+ college students, will do well?

No one is suggesting that it couldn't do well but the majority of service-based businesses fail.  How many "nice" restaurants, bars and cafes have you seen go out of business in your town/city?  Anything new gets a certain amount of attention when it first opens, but keeping people coming back week in week out is a hell of a lot harder than it looks even if you're the only game in town because people are fickle and they get bored after a while.

You spent pages and pages arguing with Rarity about shit which was utterly irrelevant to your business proposals, and he sure as hell wasn't trying to help you in any way.  It might be worth listening to what people with actual business experience have to say and if you choose to reject it at least understand why you're rejecting it.  

Never reject sound advice out of "ego".  You're not "different", "special", or "magical".  Your business proposal is not "unique".  If your venture is even moderately successful then you'll attract competition and that competition will likely be better resourced and better funded than you are.  You need to plan how you're going to create a "moat" before you even launch this venture.

[Rarity]

You spent pages and pages arguing with Rarity about shit which was utterly irrelevant to your business proposals, and he sure as hell wasn't trying to help you in any way.

Help him with a plan to poison people with tobacco? Definitely not.  I have a lot of respect for his business acumen however, Dank's Bank is quite succesfull and it proves this individual knows enough about starting a  business to succeed and that he can do so ethically.  I just wish he would continue to use his skills for positive businesses that will give back to the community more than they take instead of pursuing these destructive courses like selling illegal drug paraphernalia and deadly tobacco. 

[finkleshnorts]

I would listen to Monster Ant. He has provided a lot of helpful foresight to some of the obstacles you might face. I was very surprised at your reaction to his first post. I think maybe you should be grateful for such thorough input. His posts are much more substance than troll.

Just my 2 cents dank. I think you may be onto something with this idea.

[dank]

Well, yes, when you change my numbers in that way, I do make $1,575/week.  I don't think it's fair to say I won't get more business on the weekends.  Your presumption is also faulty, I will have more than 6 hookahs in use.  Why did you add a per hookah variable?

You didn't break down my spreadsheet at all, you grossly modified it.

Did you even understand anything in my post that didn't consist of $?

Do you understand how averages work? Do you understand how statistics work? Do you realize that according to your own numbers you will only have 6 hookas in use? Do you realize as the number of hookas goes up the number of employees must also go up?

Did you understand ANYTHING about what I tried to show you?

I don't limit the variable to 6 hookahs, I can have more than 6 sessions at a time.  If you'd like to make adjustments to the spreadsheet, feel free to make your own copy and share it so we can actually see the math going into it.

As it stands, 72 customers/day (9/hour) would bring in $7,452.64/month profit, 80 customers/day (10/hour) $9,375.20/month profit, 84 customers/day (10.5/hour) $11,930.08/month, 96 customers/day (12/hour) $15,132.64/month, 112 customers/day (14/hour) $20,890.08/month.  Of course, this is without taxes, insurance and other expenses yet to be factored in.  Seems to me the margin will be high enough to cover those, though.

Repentance, I appreciate your comment, I really just don't operate by planning out the tasks for the next month.  I don't make deadlines and I don't write step by step plans.  I learn what has to be done, and I do it.  I know, it must seem completely foreign to think of a business that is operated in the moment, but it would work just as well, if not better.  I'll still know everything that has to be done and I'll still do it all, I just won't write out how I'm going to do it.

It just seems redundant and unnecessary to me.  I'll keep track of finances, of course, but planning out tasks that way is not for me.

I have yet to see a whole lot of helpful advice from these experienced businessmen.  Perhaps if Monster-Ant didn't have a negative tone to everything he says, I could take it as advice.

BorderBits, how many times do I have to repeat, it was a restaurant, that is still operating.  Thank you for judging me and telling me who I am and what I can do.  I, and you, are capable of being anything and possessing any ability.

I've had enough of you all's doubt.  You don't know who I am or anything about me, yet you think you can tell me I can't do something because I want to do it differently.  I will prove you wrong, just as I have been doing to this very day.

Senbon, this is my main focus from here on until it's running smoothly.  I'll still have time for guitar, I get a couple hours in each day but business will have priority.

[repentance]

dank, your spreadsheet doesn't show any repayments to your lenders as an expense.  This is definitely something people are going to want to see in your financial forecasts.  It also doesn't include any money being put towards your future ventures.  My understanding is that you're looking at funding future ventures from the profits of this one, so it's important that you regard setting aside money for that as an expense.

I can help you set up a more detailed spreadsheet if you like, but you'll need to find out some hard numbers on stuff.

[BorderBits]

 I really just don't operate by planning out the tasks for the next month.  I don't make deadlines and I don't write step by step plans.  I learn what has to be done, and I do it.  I know, it must seem completely foreign to think of a business that is operated in the moment, but it would work just as well, if not better.  I'll still know everything that has to be done and I'll still do it all, I just won't write out how I'm going to do it.

It just seems redundant and unnecessary to me.  I'll keep track of finances, of course, but planning out tasks that way is not for me.

It's quite obvious you have never taken on a large complex task before.  When you're asking for investors, though, you have to conform your working style to the demands of the task.

[repentance]

It's quite obvious you have never taken on a large complex task before.  When you're asking for investors, though, you have to conform your working style to the demands of the task.

You mean you don't think that securing a lease on commercial premises and doing everything else necessary to actually launch the business when the mood takes him is a viable business plan?

[Monster-Ant]

I don't limit the variable to 6 hookahs, I can have more than 6 sessions at a time.

The amount of hookas you plan to use are NOT unlimited. You are limited by space available. Even in hooka palaces in Turkey and the Middle East (yes, I've been to them) they don't figure "Unlimited hookas", they figure it by how much SPACE you have. A comfortable booth is roughly 10x10 for you to share with 3 other people, with the hookah in the middle. Now, you may see "See, I can fit SIXTY of them in my palace!" No. You cannot. Number one, you have to abide by firecodes for minimum aisle length, you are offering rooms, there will be a counter, stock room, bathrooms, etc offered.

Take your floorplan, and draw up a layout. I took a look at your graphic arts skill, you have the skill to do this, and make impressive isometric diagrams.

Start with that, Dank.

 If you'd like to make adjustments to the spreadsheet, feel free to make your own copy and share it so we can actually see the math going into it.

In other words, make you a completely working spreadsheet for your business plan for free?

Sorry, that isn't had the free market works. I am under no obligation to provide you with a self-calculating spreadsheet for all the variables just to see the math going into it when I already showed my work right in the thread.

Would you provide me with free artwork just to show me that you can do it?

As it stands, 72 customers/day (9/hour) would bring in $7,452.64/month profit, 80 customers/day (10/hour) $9,375.20/month profit, 84 customers/day (10.5/hour) $11,930.08/month, 96 customers/day (12/hour) $15,132.64/month, 112 customers/day (14/hour) $20,890.08/month.

That's assuming maximum capacity at all times, which rarely happens.

 Of course, this is without taxes, insurance and other expenses yet to be factored in.  Seems to me the margin will be high enough to cover those, though.

Seems like it, doesn't it. Better get your numbers so you know.

Repentance, I appreciate your comment, I really just don't operate by planning out the tasks for the next month.

You will fail dismally at any task in life, including living on your own.

Enjoy working for me.

 I don't make deadlines and I don't write step by step plans.

You will never succeed at a job where you work for other people, and will never graduate from a college.

 I learn what has to be done, and I do it.

They call those people "Homeless"

 I know, it must seem completely foreign to think of a business that is operated in the moment, but it would work just as well, if not better.

They're usually called: "Bankrupt"

 I'll still know everything that has to be done and I'll still do it all, I just won't write out how I'm going to do it.

You will secure no funding from anyone who isn't named Ivan or Hong.

It just seems redundant and unnecessary to me.  I'll keep track of finances, of course, but planning out tasks that way is not for me.

Then you will fail as a small business owner, or just reel month to month on the edge of bankruptcy.

I have yet to see a whole lot of helpful advice from these experienced businessmen.  Perhaps if Monster-Ant didn't have a negative tone to everything he says, I could take it as advice.

You think I'm being negative? Boy, I might as well be blowing sunshine up your baby smooth ass compared to a loan officer or when the employment department or labor board comes a-knocking. Not to mention OSHA. And my God, if you think I'm negative, the IRS agent will make you cry just looking at your phone number.

Or is it negative because I"m treating you like an adult who wishes to undertake an adult task instead of telling you how fabulous you are for having an IDEA and wanting everyone to finance you. Hell, you've stated people should finance your life and dreams.

Here's a hint: Dreams are worth nothing outside of motivation.

BorderBits, how many times do I have to repeat, it was a restaurant, that is still operating.  Thank you for judging me and telling me who I am and what I can do.  I, and you, are capable of being anything and possessing any ability.

Become a Navy SEAL or US Army Ranger by this time tomorrow and demonstrate the ability to eat coal and shit diamonds.

I've had enough of you all's doubt.

Then you'll run out of the bank crying.

 You don't know who I am or anything about me, yet you think you can tell me I can't do something because I want to do it differently.  I will prove you wrong, just as I have been doing to this very day.

Don't say stuff like this if you want to be taken seriously.

Dank, I was going to tell you that after looking at your other ventures, it looked like you have skill, experience, and an eye for graphic design, and might make an excellent graphic designer full time.

But since you can't make deadlines, so much for you being professional.

EDIT: Your freelance graphic design thread is what caught my attention on you. I decided to research your other business ideas/strategies/creations in order to be sure that you could handle long term work on a freelance basis.

If you can't handle a deadline, you can't handle instructions, and can't handle telling me step by step how you're going to approach a project, I'll look elsewhere for graphic designers.