Need Money To Fund Your Business? Here Are Five Ways You Can Get It…..

Need Money To Fund Your Business? Here Are Five Ways You Can Get It…..

Posted on 03. Jun, 2013 by in Archived Post

It doesn’t matter how successful you think your business will be if you cannot get the money you need to start it. How far do you think your business will go if you have a budget of zero and no funds? It will go somewhere like……out of business. Before you get started with searching for startup funds, you should have an idea of how much money your online business needs to produce and that typically falls into the following categories:

1. Product or Service Development
2. Marketing Cost
3. Sustaining your business
4. Living expenses

Product or Service Development – This speaks for itself. This cost is very much dependent on what you intend to sell. If it’s a service, then your only cost will be time. For example, if you are an Article Writer and you are offering your services on Elance or Fiverr, then your cost will be time associated to doing any needed research and writing the actual article. Wait, if it’s a software-based service (such as freelancers offering SEO services), then your cost will be any software cost/upgrade cost and your time. If it’s a product (or product line) that your are offering, then of course, the following costs will need to be considered:

  • The product itself
  • Packaging
  • Shipping
  • Your time

Marketing Cost – You will probably market your business online only. Your primary cost-based marketing methods available are Google AdWords, Facebook, and Bing Ads (formerly known as the Microsoft adCenter). The best thing about utilizing these services is that you will have a level of control when it comes to your daily budget and spending. You can spend $5 or $500 a day. It’s up to you. It is your responsibility to identify your conversion rate (the percentage of users who click your ad and then proceed to buy your product or service). From there, you can pinpoint your conversion cost. Afterwards, you need to get a feel of how many potential customers your marketing campaign is going to send you. Which takes us back to the importance of identifying keywords and the implementation of keywords in your marketing strategy. Regardless, your goal at this point is to get a feel of the cost it will take to drive potential customers to your site. This will take some time and research, but I can’t emphasize enough how important this is.

Sustaining Your Business – This is the ongoing, day-to-day cost of running your business. Things like stationery, office expenses, web hosting, legal expenses, CPA, marketing cost, etc. Sit down and write out these cost. Review them with a family member or friend – having them review those cost may expose you to additional business operation expenses that you may have overlooked.

Funds To Support Your Living Expenses – If your online business is not your primary source of income, try your best to keep it that way until you can find a source of funds that can cover at least six months or more of living AND business expenses. Your online business should be strong enough to consistently generate enough funds to pay both your monthly housing and business bills before you should even consider leaving your full time job or the job that is your primary source of income. Don’t even think about it until your business consistently hits that revenue goal. So, until then, try not to pull out any funds from the business….if you need to (I do understand that Life Happens), please keep it at the bare minimum.

“So Dave…..I thought this article was about getting funds for my business?”

I can see you now with arms folded and tapping your foot….ok, here we go:

Use Your Current Job – This is probably the best source of funding available. I’m currently using the income from my job to fund my online business ventures. Do I expect to leave my job any time soon? Probably not. I enjoy my day job, yet I do understand what my family goals are and will do everything it takes to reach them. Plus, what I’m doing online is a natural fit for my skill set and I enjoy it just as much as my day job. I try to set aside five percent (5%) of my monthly income for business expenses. It may not cover all of my business expenses, but what it does cover allows me to stay operational. Please note that my Amazon sales cover any Amazon sales-related expenses – that’s one of my online ventures. What I’m talking about is funding my other ventures which require hosting, software/SEO tools, etc.

Borrow From Family Members – This can get touchy if you don’t know your family members that well. It’s amazing how messy things can get between family once you mix in a business or money, so be wise and careful when deciding whom you will go to for funding. If a family member donates money (with no strings attached), that’s as good as it gets. Take it with the mindset that you will still return their funds with interest. Why? Because it’s the right thing to do. I would recommend a family loan with a repayment schedule set to begin in six months. And included in those payments is interest which should be at a fixed rate. Going this route may make your family feel a bit more comfortable as they will be receiving a return on their investment and you will not have to give up a share of your business. It’s a win-win situation which is always fair to both sides.

Borrow From A Local Bank or Credit Union – This is getting harder and harder nowadays. Opening a small line of credit is nowhere near as easy as it was a few years ago. The credit market continues to tighten up which limits our funding options. Even so, local banks or credit unions tend to be more lenient than some of the more established national banks. If you have been a member for a year or more with your local bank/credit union and you have some sort of collateral, then your chances of obtaining a small credit line increases dramatically. The local banks will review your account, credit report, and collateral prior to extending you credit or making you a personal loan.

Borrow From The Lending Club – Oh, I can hear it now….”Big Dave, aren’t you a Lending Club investor?” “Isn’t this a conflict of interest?” Yes, I am a Lending Club investor and, no, this is not a conflict of interest. How so? My professional and personal interest are in line in the sense that I want to present what I consider the best options for you when it comes to starting and running an online business. I believe the Lending Club is a good source for funding. Will your credit history play a role in funding? Yes. Will your interest rate be based on your credit history? Yes. Will your job history be important? Yes. Will income be verified? No. What makes Lending Club attractive is their low rates which is a result of bypassing all the cost associated with traditional banking. Don’t take my word for it….do some research and check it out yourself.

Get A Second Job  This speaks for itself

Next Steps:

  1. Identify your product/service cost
  2. Identify your marketing cost
  3. Identify day-to-day business operations cost
  4. Determine your monthly living expenses – what’s the absolute minimum you can live on
  5. Go “all out” in your search for funding – your efforts will be based on the belief you have in your business’ ability to succeed. Don’t let fear rule your mind. Be Bold and Courageous! Know and understand your business as best as you can. Be able to explain it with ease and passion. Believe in yourself.

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30 Responses to “Need Money To Fund Your Business? Here Are Five Ways You Can Get It…..”

  1. Alissa

    08. Jun, 2013

    I’m new to your site and I’m probably missing something that was included in a previous article, but what is the Lending Club? What is the difference between borrowing from the Lending Club and borrowing from a bank/credit union?

    Thank you.

    Reply to this comment
    • mpibadministrator

      mpibadministrator

      09. Jun, 2013

      Hi Alissa, within the next month or two I will be posting an article on my experiences with the Lending Club. I think you will find it very informative and intriguing…..

      Reply to this comment
  2. Alissa

    12. Jun, 2013

    Ok thanks! I’ll keep checking back!

    Reply to this comment
  3. James

    12. Jun, 2013

    What percentage of your earnings would you say you should put back into your business?

    Reply to this comment
    • Big Dave

      Big Dave

      13. Jun, 2013

      James, I try to put 50% back into it….sometimes I’m unable to, but I try. How much would are you looking to put back in your business?

      Reply to this comment
  4. VahnCross

    13. Jun, 2013

    I agree. Online income may be convenient but it is in no way that is easy. The hardest part is how to start it up when it comes to online business. And having a day job as a primary source of income stabilizes your life.

    Reply to this comment
    • Big Dave

      Big Dave

      13. Jun, 2013

      Like your comment “…stabilizes your life” because it truly does. IF things don’t work out, at least you have something to fall back on….and you can try again w/o too much financial pressure.

      Reply to this comment
  5. Sky

    13. Jun, 2013

    Even businesses that first appear “free” to start up always end up with hidden costs. You have to spend money to make money. While I usually rely on my own sources of income (my job), these are good suggestions for future endeavors.

    Reply to this comment
    • Big Dave

      Big Dave

      14. Jun, 2013

      True…there will always be some sort of cost associated with starting a business. There’s a tendency to minimize the value of ones time…that’s one of the hidden cost. Time is money……

      Reply to this comment
    • VahnCross

      18. Jun, 2013

      Exactly. Hidden costs are really annoying but you have to expect them. Even starting out as a freelancer would have to cost something like a credit/ debit card or opening a bank account that connects to PayPal.

      Reply to this comment
      • Sky

        18. Jun, 2013

        This is true. Though I think that the biggest hidden cost for a freelancer just starting out is definitely time.

        Reply to this comment
        • Big Dave

          Big Dave

          19. Jun, 2013

          Time is money…..

          Reply to this comment
          • SharonJ

            23. Jun, 2013

            Starting out with an online business you need to build up experience and that takes up a lot of time for not a lot of money. But it’s an investment, just like any other!

  6. James

    14. Jun, 2013

    Hey Dave, to answer your question, I was thinking more along the lines of 35%. Do you think I could still be successful with only holding that much back to reinvest?

    Reply to this comment
    • Big Dave

      Big Dave

      14. Jun, 2013

      Of course you can….it’s about how you reinvest those funds. Reinvest wisely….

      Reply to this comment
  7. Paolo

    17. Jun, 2013

    I just have to ask, do you think Freelancer.com and Freelancer.ph are legit sites worth the time? I’ve been reading reviews of users, and they are brutal. What do you think?

    Reply to this comment
    • SharonJ

      18. Jun, 2013

      Have you tried elance.com? Ive had a lot of friends that have had luck with that site.

      Reply to this comment
      • Paolo

        19. Jun, 2013

        Hi SharonJ.

        Yes, I’m currently on Elance.com and it’s been great. But I’ve been also searching for other sites because you don’t always get to land a job in Elance. A number of people suggested I try Freelancer.com too but searching the net, a lot of complaints were thrown around.

        Reply to this comment
  8. SharonJ

    23. Jun, 2013

    I’ve had someone randomly call me for a job after finding my info on guru.com. Have you tried that one?

    Reply to this comment
  9. McKenna

    25. Jun, 2013

    Time is definitely the biggest investment when just starting a business.

    Reply to this comment
  10. Sarah Harris

    12. Jul, 2013

    Agreed, I’ve been trying to crack into the Elance sphere and found it SO time consuming trying to land my first job with no references on my profile. I’ve got a friend who’s aced it and earning up to $1000 a week off elance. With a bit more time I hope to get close to that!

    Reply to this comment
    • nomansalehzada

      16. Jul, 2013

      Certainly, it takes time to get a project on Elance when you are new to the site, mainly because most of the client’s prefer trusted members of the website and don’t want to risk there time and money

      Reply to this comment
    • Sky

      24. Aug, 2013

      $1000 a week from Elance?! That’s incredible. Is it her full-time job, then?

      Reply to this comment
  11. Ali Raza

    19. Jul, 2013

    Well for me, i never want to start any business with out having enough money in my own pockets , i would like to expand from little

    Reply to this comment
  12. Sarah Harris

    20. Jul, 2013

    So do you have any tips on how to crack into the elance market as a fresh freelancer?

    Reply to this comment
    • nomansalehzada

      20. Jul, 2013

      Sarah, If you think you are a professional , you can can prove your skills by taking tests , that is turning out most effective trend on Elance these days to impress your clients, i have noticed that many client’s respect Free- lancer’s skills test though being newbie, plus this will place you up in search results.

      Reply to this comment
  13. John

    20. Aug, 2013

    What do you think the start up costs would be for an Amazon store? Aside from the product costs of course.

    Reply to this comment
    • Big Dave

      Big Dave

      22. Aug, 2013

      Outside of the regular monthly cost, it really depends on what you are selling…

      Reply to this comment
  14. Charlotte

    20. Aug, 2013

    I think using your own money and getting a second job should be your first move. I don’t know about everyone else, but I am much more careful with money I’ve made then money someone gives me. You’ll make better decisions and build a strong business that others will want to invest in.

    Reply to this comment
  15. Harvey

    12. Feb, 2014

    Funding other future lines of income is the only thing that keeps me sane at my current job. I’m working as much as I can to gather enough money to get some things started so I can leave!

    Reply to this comment

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