The fastest way to change any circumstances in your life is to take responsibility for it. This means you are no longer a victim. When you are no longer a victim, it means you can do something about it. This approach pertains to your health, relationships, business, and income. Capital certainly plays a role in businesses, but to say, “I don’t have it therefore I can’t,” is a pathetic excuse.
During this episode of Freedom Fast Lane, Ryan Daniel Moran faces the excuses people make head-on and goes through 7 ways to fund your inventory and/or raise capital to start or scale your business or company.
Inventory & Raising Money
Inventory is often the bottleneck of scaling a business, and is the deciding factor in how fast you can scale a business. A lot of times this comes down to cash flow. Raising money and getting funding is a lesson in providing value. Just because you are asking for something does not mean that it stops you from being required to provide value. Ask yourself, “How can I make this a winning deal for the person investing in my business?”
1. Traditional Financing or Line of Credit
In a post-2008 world, we still have lots of access to lines of credit and traditional financing. If you open a business account and talk to someone, they will look at your assets and personal credit. If you need to have some cash in order to bridge the gap between the first and second round of inventory.
2. Borrow Against Existing Assets
If you have an E-Trade account, insurance policy, money in the bank you don’t want to spend, or any assets that can be quickly turned into cash. This is often called a collateralized loan. Take advantage of historically super-low interest rates, and put it to use in collateralized loans. These will be loaned at a ratio against the cash you have. For example, if you have $20K in a retirement or savings account, you can borrow against that at an LTV of about 40-70%. Take that cash, and put the cash into the business, and let your cash stay in the bank.
3. Put It On a New Credit Card
There are plenty of credit cards that have introductory zero percent interest for 3-6 months, or even let you put bonus points on if you transfer over. Not all manufacturers will allow you to put purchases on the credit card, but some will. This is a way to ‘float’ so you can start taking sales, even if you don’t want to spend the cash or put it at risk.
4. Amazon Lending
This is way under-utilized. Ryan has a line of credit for $500K. The total cost on the loan is 2%, with a 4% yearly cost. For $10K that needs to be paid back in 6 months, you can have a $500K line of credit. This is only available to accounts that have been successfully selling for a year or more. There is scope to work out a private deal with someone in order to leverage this.
5. Bring On an Outside Investor
People who have money sitting around often don’t like it that way and are looking to see it work.
6. Be an Apprentice for A Successful Seller
If you prove that you know how to run a business and know how a physical products business runs, you can go to the owner and ask for an investor to fund your inventory and cut them in on an agreed amount. Many entrepreneurs want to diversify and have other businesses that provide passive cash flow and are willing to put the cash they made in other businesses to work. If you prove your value and will follow the exact same model, you are likely to get a check.
7. Sell Your Way Out of It
This can be selling the product you have in business now or selling something else to fund what it is you want to build. We are in the internet age and can pre-sell things that don’t even exist yet. Presell the product and use the cash flow up front to fund whatever you just sold.
Links to Resources:
Scott Voelker (podcast)
Pat Flynn (podcast)
John Lee Dumas (podcast)