Financing A Business: 4 More Ways To Find Money
It isn't easy starting a business and finding money for starting a business can be even more of a challenge
. Here are 4 for financing a business.
Trade And Barter
Barter is probably one of the oldest forms of commerce. It is simply the exchange of goods or services for other goods, instead of using cash as the medium. The trade can be directly between the two parties or the trade can go through a barter exchange.
The barter exchange usually works on a point system, one point for every dollar. The exchange has members who have agreed to barter their services and products. Let's say you need a new lap top, but the computer store doesn't need your product/service. You earn points by bartering with those individuals and businesses who do need your product/service. You accumulate points through the exchange. When you have enough for the lap top, you 'buy' the lap top with your accumulated points. The exchange sometimes takes a small percentage of the points as a fee for their services.
Don't be limited in your thinking as to what can be bartered. Approach bartering as you would any other sale or purchase. Deal with reputable companies. Don't feel you have to discount your product. The barter purchase is reflected on your income statement as an expense. The barter sale (what you trade) is reflected as revenue.
Barter organizations can be found on the web, just put in trade and barter organization. Many cities have locally operated barter organizations. Contact your local chamber of commerce. The yellow pages give listings as well.
Customers That Prepay
If you have successfully demonstrated to your customers that you deliver your merchandise to them on time, as ordered, you may be able to persuade one or more of them to put a deposit on their future orders, perhaps as much as 50%. You can add an incentive by decreasing your price a bit in exchange for the deposit. Or you can throw in a bonus: if they've ordered 100 items you give them 10 extra. New customers can also be asked for a deposit, especially if it's a large or custom order.
Franchising
You can franchise your business to raise capital. You are selling the rights to use your business, name, practices, and methods. You basically are selling a clone of your business and the method to reproduce your success. In exchange, you receive a cash payment up front which can range from a few thousand dollars to substantial amounts of money. You may receive an on-going percentage of the franchisee's revenues.
Every kind and type of business has been franchised. If you want to see a wide variety of examples, Entrepreneur Magazine has an annual issue devoted to the top 1000 franchises.
You can retain control of how the franchisee operates, how and what they advertise, and their product quality. You can even mandate what suppliers the franchisees must purchase from.
Franchisees get a proven method of doing business.
Franchising must be done with the advice of an attorney experienced in franchise law.
Be creative and look beyond the usual sources of financing when you're looking for money to start a business.
Licensing
Licensing is less complicated than franchising. It is primarily selling the rights of either a product or a business name. Fashion designers often license their name to a company that has a product that doesn't compete but would benefit by the association with the designer. The company sells more product, the designer receives a percentage of those sales. The major sports leagues generate billions of dollars annually from sales of licensed products with their logos.
You can also license an individual product. You can sell exclusive rights to a geographic area or industry or the rights can be nonexclusive. You can demand a minimum level of sales to maintain the licensing agreement. Your payment can be in a lump sum, a sum of money now and a percentage of sales throughout the time period of the agreement, or just a percentage of sales.
There are attorneys and agents who provide licensing arrangements with companies for your product. You can also contact companies directly yourself. Be leery of scams that focus on inventors and promise that they will market your product for you if you pay them a hefty upfront fee.
Don't give up in your search for capital. There are lots of ways to find financing for business.
by: Dee Power
Urgent Cash Loans-fulfilling Your Money Deficiency Instant No Fax Cash Advance: Prompt Finances To Bid Adieu To Short Term Needs Textbook Buyback - Sell Textbooks for Quick Cash - Get 50%-70% Cash Back - Free Shipping! Is Offshore Business The Right Business For You? One Social Media Activity Business Owners Must Do Bpo Outsourcing Services Will Continue To Help Businesses Business Strategies For Small Business Bookkeeping Is An Essential Feature To All Type Of Businesses Small Business Start Up: Now's The Time! Temptations Of A Home Based Business Why Employ Email Marketing Tracking Software For Your Web based Business How I Started My FIRST Successful Home Business Same Day Loans No Faxing Get The Cash On Day Of Your Need