Money can be tight, but it’s about locating the right resource for the right amount. Tapping into varying sources for capital may sound like an incredible amount of labor, but it can be the difference between bankruptcy and taking your business to the next level. The most creative business owners consider their entire network as a potential investors and/or contributors, including customer management system.
For entrepreneurs, it’s important to note that having “skin in the game” gives financier a sense that you are taking success seriously, which leads us to:
Begin small and control what exactly goes on in your company. You possess more freedom to veto or to pivot into a different strategy. Figure out how to grow without outside funding and investors will be more understanding of when to pull out their checkbooks.
Tax Increment Financing (TIF)
Is a program that has subsidies that aim to develop certain real estate areas. Typically, it’s an area that is considered underdeveloped and would not see development if it were not for some type of governmental intervention. How does it work? A portion of the city’s property taxes goes toward the investment fund. It makes sure investment also goes to business owners within those communities. Check to see if your city or area has a TIF program, or something similar.
Friends and family
They may be nice enough to sell you back their interest at a nominal rate. Also, they might know a friend who knows a friend…
Have you already established ties with different companies from previous work relationships? Find suppliers and build your growth. Suppliers can minimize the costs you have to make for production (or non-production) items. While they may not provide you with cash, they can give you materials, labor, or other materials needed to build your product or service. Here are three principle ways a vendor can help:
1. Purchase on credit
If you already have good credit history—especially with the particular vendor—you could receive goods and/or services via credit. This is a particularly helpful strategy if you move product fast—most vendors don’t charge until 30 days (or sometimes 60 days) past the date of purchase.
2. Purchase on consignment
With this strategy, pay for only what you use. The rest of the goods can be returned to the vendor. If the product, unused and in new condition, is returned, the vendor can sell it to another customer.
3. Vendor manages the inventory (not you)
Materials and services needed for your product is all directed by your vendor, not you. They hold the inventory and simply deliver it to you on a weekly or on specified schedule. You would pay a premium to allow someone else to manage your products, but you will not have to build out your own warehouse or whatever facility you would need.
Think of resources like Indiegogo and Kickstarter. Before making your product, have customers put down their money before delivery. If they want to see a certain brand in your nail salon, think of ways to involve the customer to bring in the highly-coveted, but scarce product. Here’s where entrepreneurs examine their internal customer management system: your business thrives because there are people willing to buy the product and/or service. If you present an item or service that would further compliment what you provide already—and it would make their lives easier—consider ways how to foster this investment relationship.
Going to a bank for a loan should be only for adding momentum to a healthy state of growth (not quick upshots of a fad product). To start a business, a bank loan is not the wisest financial option. Billionaire tech investor, Mark Cuban, once said “Only morons start a business on a bank loan”. He may have only been addressing companies that trying to do innovative work, but it’s worth contemplating before filling out a form.
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