August 13, 2009 ( PowerHomeBiz.com )
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What entrepreneurs and business owners must do with regards to financing is
to take the same creative approach they often take when addressing issues in
other parts of their business. For example, for a company with minimal funds
who needs to launch a marketing and public relations campaign, guerilla
marketing and public relations tactics can vaunt the company’s exposure to
and standing among its target audience. Guerilla marketing requires a highly
creative approach and a concentrated effort. Take the same perspective with
financing your business and you will reap similar results.
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To get creative, focus on WHAT you need the money for, not the actual
money. Write down your uses for the funds and the anticipated cost.
Example of uses: Employ a general manager - $100,000; Marketing campaign
to increase exposure to target customers - $50,000; Deferred maintenance
on office and production area - $150,000; Software - $15,000. Next,
begin to brainstorm ways to get what you need and want. Again, do NOT
focus on the money.
Some creative financing options to acquire employees, marketing,
software, etc. are as follows:
- Co-branding - Combine efforts with a company offering a complementary
service or product to reach your target market. You can split the cost or
one can do the work and the other pay any external costs involved.
- Co-operatives - Pool funds with other business owners. Co-ops are relatively
common in agriculture and energy.
- Customer deposits or pre-pays – This is
self-explanatory.
- Employees (Employee Stock Ownership Plans or ESOPs) -
Sell the company or a portion of the company to the employees. Not only will
this option help you raise funds. It also engenders strong employee loyalty
as employees also become owners.
- Equity as payment - Obtain management
and other highly skilled personnel at below market rate pay by offering an
ownership stake in the company either outright or via stock options or
restricted stock.
- Economic development grants - These grants are
available in urban and rural areas typically through municipalities that
have received federal redevelopment funds from the US Department of
Agriculture (USDA), Housing and Urban Development (HUD), or another federal
agency.
- Licensing - Instead of providing your company’s service offering
directly to customers, license that offering to a company or other entity
that serves your market. Let the licensee(s) expand your market reach and
absorb the cost of acquiring new customers.
- Self-directed IRAs - Place
your money into an IRA that allows you to invest directly in private
companies. Companies such as Equity Trust support this level of
self-direction.
- Swaps or bartering - Barter your product or service with
that of another company. Bartering exchanges exist that enable you to move
beyond a one-to-one exchange.
- Consignment – Retailers and some
wholesalers can acquire inventory “free”. Instead of paying in advance for
inventory and absorbing the cost, agree to offer another party’s item for
sale in exchange for a significant percentage of the sale. If you do not
sell it within a specified period, the item will be returned to the owner.
These are just some ideas to get your creative juices flowing. There are
many other options available, some of which may be specific to your industry
or business type.
About the Author:
Tiffany Wright is a turnaround consultant and small business
advisor who has written several books and ebooks. She is the author of
Help! I Need Money for My Business Now!!, an ebook with easy-to-follow
examples, case studies, and templates that will lead you step-by-step
through the process of raising capital for your business available at
http://www.moneytogrowbusiness.com . She is also the publisher of
Equal Construction Record, a commercial construction newspaper based in
Georgia. She has helped companies raise over $31 Million in financing
and revamp their operations and financial structure. Also view her blog
at
http://smallbusinessfinanceforum.blogspot.com.
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