Financing A Business: 3 Ways To Find More Money

Financing is critical to the success of any business

. Finding money for starting a business can be a challenge. Even if your business is up and running you always need cash. Here are 3 ways for financing a business

Asset Sales

Selling off company assets, even a division of your company, is a tried and true method of raising capital. You might have equipment that's not being used, or a building and land that has a higher value to someone else than it does to you. You can sell off an entire product line that doesn't fit well with your company's focus. You can sell intellectual property such as patents, formulas, customer lists, or trade secrets.

Consignment

If you have a retail shop and need inventory, you can approach potential vendors or suppliers to consign their products to you. You sign an agreement that you will sell the items at the price the vendor specifies. You do not own the items. You don't pay the vendor until the customer buys the item. The offset is instead of the normal keystone or 100% markup (you buy the item for $5.00 wholesale and sell it for $10.00 retail) you only receive a commission of between 10% to 25%. But you don't have to use precious cash to get merchandise for your store.

Advertising Pay Per Response (PPR) and Pay Per Order (PPO)

If you have a product, usually a consumer product, that requires heavy advertising to reach customers, try to convince advertising mediums such as magazines, newspapers, radio, and TV, to accept payment based on the orders generated in their publications, radio or TV broadcasts.

Let's use Metro Newspaper as an example. You place a display ad for your product that says please call 123-4567 to order or for further information. That phone number goes to an answering service that tracks the number of incoming calls. The only place that particular 123-4567 phone number appears is in the Metro Newspaper ad. For every caller (Pay Per Response) you then pay Metro Newspaper a $1.00, or whatever the agreed to rate is.

You can also pay per order rather than per response.

You benefit because you don't have to find the cash to pay for the ad before it runs. You pay only when it produces results. Metro Newspaper sells space it wouldn't have and has the opportunity to get more for that space than the regular ad rates if it's successful.

We used a newspaper as an example, but you can use the PPR or PPO with TV and radio as well. You can also use a coupon with a code on it as the response mechanism rather than a telephone number. Make sure you can track and identify the responses/orders generated by the ad placement. Usually the advertising medium will demand independent verification, or that the responses/orders go through an independent third party or fulfillment house. Occasionally, the advertising medium will handle the orders, receive payment from the customers and then forward the payment (less their charge) and the order to you to be fulfilled.

Consider all the ways there are for financing a business before you choose the best way for your company.

by: Dee Power

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