One of the most common struggles for someone wanting to start a business of their own is getting the initial money to get started. Thanks to the power of the internet, it's now easier and cheaper than ever to get started with an online business of your own. However, there are still plenty of costs involved. This is especially true if you're attempting to hire employees from the beginning, find a retail location, order inventory, or invest in an existing venture.
At the same time, there are also plenty of ways to finance your business idea outside of traditional bank loans. To help with this process, here are some of the most common methods for raising money for your existing business or startup:
Gone are the days of finding yourself heavily in debt, only to then realize there was never a market for your product in the first place. Thanks to sites like Kickstarter and GoFundMe, anyone can come up with a product idea and test the markets need for it.
Some of the most successful campaigns have already been pre-funded with over a million dollars. However, don't be fooled — only a small percentage of submissions actually turn into huge success stories. To get ahead of the competition, be sure to check out this article on Kickstarter success tips.
In the offline world of business, “factoring” is a finance decision many companies use to sell their debt in order to bring in new money to the company. The process of factoring improves cash flow by eliminating collections and building up excess costs.
An invoice factoring company can help with this process in that they buy your existing invoices, collect the receivables due from your customers and also remit the reserves back to you. The end results of this process is that company cash cycles are reduced and allows for the increase of sales. To better understand how this process works, be sure to check out the invoice factoring infographic below.
Personal Funds or Loans
For entrepreneurs who want to start a business on their own and not get stuck with the responsibility of paying someone back, or left with high-interest rate fees, there is always the option for self-investment. While this might seem ridiculous to some, this could be one of your best options if you have the time, focus and patience to grow a business on your own.
Investing in your business with your own money is now more effective than ever, simply because the internet has made it extremely easy for anyone to start a business online for under $100. A perfect example of this is anyone who has ever created a website, blog or content based business and then sold it for millions. A simple domain name and web hosting will cost you less than $60 a year!
Pre-Selling Your Product
Similar to crowdfunding, another option to finance your startup is by pre-selling your product or service before even creating it. This is something you commonly see in the world of online marketing — and the concept it quite simple.
A perfect example of this would be if you mastered the art of Facebook Advertising and wanted to create a resource guide or video course on this topic. Instead of creating it and hoping for the best, you could simply start an ad campaign where you would host a webinar and sell the idea to a live audience. The goal here is to get enough people interested and signed up, so they get limited and early access to the product once it's live. The model works extremely well and eliminates the risks of starting a business without having a solid customer base.
PayPal Working Capital
For any business currently accepting payments through Paypal, the option is also there to receive capital through their site. Through Paypal Working Capital, you can simply log into your account and click on the finance option to see how much you might be able to borrow. This amount will vary based on how much business you are currently doing through their service, and the history of your account.
Fees will also vary based upon how fast you want to pay back the loan as well. The exciting thing about PWC is that all payments are sent back to Paypal through any incoming payments to your account and that applying for capital is quick, easy and won't tarnish your existing credit score.