I bought $5,000 worth of equipment. But it’s going to cost me $20,000 because I’m an idiot. I listened to the finance comany’s sales pitch. I looked at the dollar signs. I stretched my loan payment out over 6 years to keep the payment low, which is a mistake that lots of people make when buying cars and campers, even houses. At least houses tend to appreciate in value.

You see, I had this crazy notion that I was borrowing money; $5,000 to purchase equipment. Not so. They don’t care about the equipment or the $5,000. They want the payment. With a finance company, they purchase the equipment, on the agreement that you pay them for x amount of years, so they can profit an insane amount. Like an idiot, I signed up for a high interest rate, over a long term. It’s a fair deal if you like getting screwed. Yeah, yeah, I know, read the fine print.

Already tired of the payment, I called them to find out how much it would cost to buyout the remainder of the loan. In a cheerfully evil voice the nymph on the other side of the line told me that to buyout the loan would cost $11,500.

After the room stopped doing it’s vomit-spin, I said “What?”. I meant shout the word loudly, and angrily, but it came out more like the sound a mouse makes after its skull has been crushed by the high velocity snap of metal. Like the mouse, the lure of cheese lead me into a trap from which there is no real escape. I’ve heard of mice surviving the metal, but they live on for a short while without their noses. So that will be me. My escape will not be without its permanent scars.

It’s funny. It’s a mistake that I was aware of, as it pertains to other types of purchases. I always said that I would never be upside down in a car loan. For those of you unfamiliar with the term “upside down”, it’s when you owe more money on an item than what it’s actually worth. I’m upside down in my equipment by about $6,000, given the cost of a buyout. I’m upside down by about $15,000 if I go the life of the loan.

What I Should Have Done?

I should have started small like I’ve been encouraging new screeners to do. I didn’t need $5,000 worth of equipment. You can read this post for more on my ridiculous startup mistakes.

Go With A Credit Union Instead - Preferrably A Non-Profit Credit Union.

Credit unions are the anti-bank, anti-finance company. My initial plan of action, until I made the heartbreaking discovery above, was to refinance the loan through my mother’s credit union. That’s what I should have done in the first place. They offer a low interest rate, about 10.5% based on my mother’s credit. The payments would have been about $150 lower every month, and it would be paid off in half the time.

Credit Unions have of the benefits of banks, and all the borrowing power (for small startups) of a financing company, but without the heart-stopping, money-grubbing, fee scheduling that takes place within both.

This post, like most other posts on this site, is geared for a certain start type of startup: the low funds, low experience screen printer. My preference for you is that you don’t purchase equipment through any type of financing. Use my screen printing cheapo startup buying guide instead. You’ll save yourself a load of headaches, even if it does take a little more time to assemble what you need.

If you do finance don’t go through a bank. Don’t EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, EVER, go through a financing company. Satan made them. He did. I’m convinced of it, and nothing will change my mind.

I was dreaming. I saw myself getting up every morning, putting on cleanly pressed Mercy shirt, and heading out into the shark infested waters of screen printing competition, power-brokering massive-shirt deals, hammering out the details that would make me sore above the competition.

“I can compete” I told myself. “But I have to be able to do everything. I have to be a diverse provider, in a diverse market.” That is a seductive line of reasoning, and in spite of everything I’ve read to the contrary, I still bought into it. It’s not only the biggest bunch of crap, it’s also the single biggest mistake that all new business owners make. It caused me to purchase equipment I can’t afford, and extend myself beyond the constraints of what my family, my faith - my life - can bear.

I should have taken my own advice.

If you’re a small startup, then do the right thing; Be a Small startup. When researching your market think small. Think tiny. Think Infinitesimal. Then strip it down even more. When you get to the point where, if you remove any more markets you’ll be out of business, you’ve found a niche small enough for you can handle - at least till you can hire someone to help you.

Allow yourself to rethink the idea of the niche. Many people believe it’s just about finding a select, untapped microcosm of people, and it can be that. But that’s not an easy thing to just do. A better way to think of Your niche is to consider who you are to your customers. How do you stand out? Finding a niche of untapped people who need a screen printer is unlikely, since everyone who needs a screen printer has probably already been approached by a salesperson from a larger company. So quit trying to find that perfect niche group and get personal.

I did it like this. I can’t be the biggest, the greatest, fastest, most efficient screen printer in the valley. I would be lying to my customers if I said I could. However, I am the only one who uses a great portion of my profits to support missionaries around the world. That means anyone who holds the same desire will likely go with me, even if it means they have to spend a little more to do it.

Carve out what this business means to you, and then stick to it.