"You want me to loan you the money to buy supplies to operate a car wash?" mused Lisa. "Is your credit good? Do you have any collateral? What kind of return will I get? Have you made a list of the capital you'll need? Will your price cover all your costs? Have you even done a market survey to see if the neighborhood would use your car wash???"
"Ahahaaa Lisa," whine Tim. I don't know any of that junk, we just thought it was a good idea."
"Well, I didn't say it wasn't!" snapped Lisa. But it takes more than a good idea to run a successful business, even for a summer. Get some paper and a pencil. Iīll help you guys, but it's going to cost you!"
Before Lisa would lend Tim a penny, she insisted he canvass the neighbors to see what they would be willing and able to pay for a car wash. Next, they made sure that $6, the price most folks picked, was enough to more than pay for the soap, water, wax, and other costs they would have providing the service.
After a trip to the hardware store, Tim and Tina decided that $60 would be enough to get them started. Lisa explained that the bucket, 25-foot hose, and pressure sprayer were capital for the business. She willingly agreed to loan them the $60. "One of the main types of loans that lenders like to make is to businesses wanting to buy tools and equipment. If a business is successful, this is a very good investment."
"Oh, and, by the way, Tim," Lisa said matter-of-factly, "I'm holding your CD player as collateral. If you don't pay me back, it's mine forever."
Lisa's loan to Tim and Tina was indeed a very good investment. Tim paid the $60 loan back the second week of business. Plus, Tim agreed to pay Lisa $1 for every car washed as a return on her $60 loan. Lisa even pitched in to help wash over the busy 4th of July weekend.
"Don't count on me doing this again, even if you do get backed up," Lisa sniffed. "I like to make my money work for me, not work for my money!"