By: Jessica Louque
Red Tape Everywhere
If you’ve ever thought about starting your own agricultural business, from selling bee products to farmer’s markets, I would definitely recommend reading some of Joel Salatin’s books. He is definitely experienced in running a business with family and dealing with government bureaucracy and has a lot of advice for other people in similar predicaments. One of my favorites is Everything I want to do is Illegal because I feel the frustration that Salatin describes in that book. We have had so much frustration in starting up our company that I just honestly cannot fathom how any entrepreneur is able to build a successful business.
We started hitting roadblocks almost immediately. We wanted to build what would essentially be an ag building that also had some space for a kitchen, some offices, a conference room, and a couple bathrooms that also had a shower. The work we do is not the type where we have a lot of visitors, and normally we even discourage that because of confidentiality agreements during studies. Explaining what we do to the county did not go so well, and they decided we were an agrobusiness and gave us the same requirements for zoning and building as would be expected of a standard consumer business, like a Dollar General. We would have to build as commercial zoning with customer access that met all the regulations of a place that is typically frequented by the general public. There was no talking them out of this box we were now in, and we ended up not being able to move forward with this plan.
Our Plan B was renting office space and trying to renovate or secure one of the old buildings at my mom’s for storage. The closest town to where we were trying to work had exactly zero rentals that were close to anything we would need. Finally, a family friend happened to realize we were looking for a place and had an office suite available. We thought we were at least on the right path. We bought most of our furniture and lab supplies and started getting set up, only to start hitting the next series of problems.
We thought we wouldn’t have a lot of issues getting a business loan, but that was another entry into the “you are wrong” list. A large part of our issue is trying to explain what we do to people who have no idea people like us even exist. SO, try to imagine walking into a bank asking for an exorbitant amount of money, telling them that you have to buy thousands of dollars of equipment up front, but you will probably get enough work to pay for your loan within the year. Then you tell them that no, you don’t really have but one guaranteed contract, but you can’t get more work until you buy all of these things. Follow that up with trying to explain the science behind honey bee research and the cyclical nature because bees aren’t particularly happy about the wintertime. Explaining that to a bank is like telling them you need a loan to go to clown college but you don’t expect to pay them back at all. After about eight weeks of waiting for a response, they told us we were a giant pile of liability and they didn’t understand our business plan enough to take a risk on an idea they weren’t familiar with. There went a large majority of our expected starting capital. We tried a different bank after that and were able to get a credit card and a loan for a truck, but we couldn’t get an extended line of credit on our account because we didn’t fit a standard business model.
Our Plan C option was starting to kick into effect, which was more of a last resort, but in stages. It started by cashing out part of our retirement savings. I cannot possibly describe to you in a way that you could imagine the amount of cursing that is involved with how much of your money goes to the government. I am quite aware that there are penalties for taking out retirement early, but it does feel like everyone is trying to stop you when you can’t get a loan and you are penalized for using your own money. We were fortunate to have it there to use at all. If you are wondering, your retirement accounts DO NOT seem to matter when you are applying for a loan because they consider it untouchable.
We’re also running into other problems at this point because we have to move, put our kids in a new school district, and get our house on the market. Guess what we found out! If you start a new business, you pretty much can’t get a loan of ANY KIND because you don’t have two years of tax returns. Continuing on the trend of Plan C, we had to continue on the retirement cash-out train to be able to have a place to live. Now, I know we could have in theory done that a lot cheaper and just rented a place to live, but in reality, it was just not an option to give up all the turkeys, chickens, ducks, guineas, and quail, plus try to fit all of us and the indoor pets into a rental home. We looked for months to find a place that was even close to suitable, but there just wasn’t a lot on the market, or it would need more work than the asking price to be able to move in. In the end, we decided to build a house on land we already had. That’s a hassle in its own right, but hopefully the house will be done by the time the kids need to start school. It does seem to help when you’re paying with cash. As I mentioned before, we are both fortunate that we were able to save money in a retirement account to even have it for use or we would be in a terrible situation. I mean, our tax situation of paying out 40% or more of the original amount.
Now, everything is more or less running in some direction, and it looks like we can’t have too many more upsets – right? Wrong. Being a new company, we have to be put in the system as a vendor for every sponsor that gives us work. We have to have a facility audit by their inspectors to prove that we meet the criteria for conducting studies and are actually capable of producing a successful study. There’s also a quote acceptance and invoicing process that has to be followed. For one of our clients, being accepted as a new vendor took about two months longer than expected. We were a good few weeks behind in getting paid for a substantial amount of money (half the cost of the study to get it up and running) and had spent about a third of the money for the house on getting the study started and buying supplies. This was not the fault of the sponsor, but just another roll of red tape to wade through. We understood that and so did they, and our contact did their best to speed up the process. We were informed that if we could take a credit card, they could pay us almost immediately. I wasn’t sure how that worked, so I called up the bank. Four people and a waste of time in my life later, and I had the answers to questions I didn’t know I had. It turns out that the bank not only charges a more than 3% fee on any credit card transactions, including extremely large ones, but you have to have a business for over two years to be able to qualify to take credit cards as a form of payment. Let me reword that for those of you that didn’t quite catch the incredulity of that statement: We had to have two years of operations before we were allowed to receive money for our work by that payment type. Now, in what way would two years make a difference in somebody trying to give us money? I don’t care what’s happening, if somebody wants to pay my bills or give me money, the bank should welcome them with open arms. I promise, you have my permission! Long story slightly longer, we had to go back to the sponsor and tell them we couldn’t accept credit cards unless we used the Square app, which would still charge a 2.7% or higher fee on the transaction and may have a cap on the amount that they could receive. Hopefully, it comes through soon, but right now we’re still waiting on a payment because we had to revert back to the check form of payment.
We have been really fortunate to be able to have funds to fall back on, family and friends to support us, and some clients that have stuck with us over the years to give us work. Overall though, starting a business has been somewhat of a nightmare and there are obstacles at every turn. It is absolutely baffling to me how the average person could ever have a dream and grow it to anything more than that with the restrictions on business and the sheer amount of money it takes to get started and roll through the appropriate paperwork and deal with taxes and money owed to the government at which times. Obviously we’re happy to be in business and working on our own, but anybody who tells you it’s easy to work for yourself is lying through their teeth and their pants are on fire like a flaming inferno.
Jessica Louque and her husband, Bobby run Louque Agricultural Enterprises, a contract research business specializing in apicultural studies.