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Secure Financing For Your Product
And This is How YOU Can Take Advantage
Having a product in the market is not cheap. From production to presentation, money has to be spent to ensure that the best is given in the best possible way. As much as sustained relationship with the buyer and profit make for the aim of marketing, proper financing is vital to its success.
Ways to secure financing for your product will be discussed below:
Credit card financing can be helpful. When credit cards were first introduced, they were for personal use. However, the usage has been extended for commercial operations. Though the interest rates for some credit cards may be quite high, there is an advantage for the administration of small businesses as detailed records of all charges may be easily transferred to an accounting process.
You can utilize business line of credit. This works like credit card transactions. Business owners can get the needed capital to manage cash flow, fund day-to-day operations and take advantage of new opportunities. This could be secured or unsecured depending on the amount to be borrowed. Interest rates also differ. You can draw and refund as you wish as long as you don’t exceed your credit limit.
Public order financing (PO financing)is a short-term finance option that advances capital to business owners to make verified purchase orders. You can conveniently take an order you would have otherwise declined because of depleting cash reserves or cash flow challenges with PO financing. It enables the business owner to accept unusually large orders. This saves the business owner from missing out on favorable deals and new supplies.
Subscription sale is a business modelwhere the customer pays a recurring price at regular intervals for access to a product or service. This is a brilliant product financing method that keeps the cash flow regular. This will work with products such as magazines and other products where their issuance is periodically structured. Payment options can be made flexible to accept annual or quarterly subscriptions for products offered by the seller. For example, a lawn mower operator can take subscriptions from people in a neighborhood to mow their lawn weekly. This will supply funds for the operator to grow the business and the subscribers are getting value.
Presales can bring a lot of funds in to finance a product. Several industries, particularly the real estate sector, make use of this. They sell out units before the real estate project is finally completed. By selling this units before completion, there is money, readily available, to finance the project. Though presales may not work for every product, but in the sectors at which it is operative, it can be highly helpful in securing financing for a product.
Trade or vendor credit is another option which operates on a business to business agreement. It basically operates with a retailer purchasing goods without upfront payment but with an agreement to pay the supplier at a later date. A trade credit is advantageous in the sense that the retailer can pay after selling the products. This method pays both retailer and supplier as the retailer is encouraged to buy more as the payment plan is flexible. Discounts can even be introduced by the supplier if the retailer pays within stipulated deadline.
You have to understand the cost associated with your product launch. When launching a product, a lot goes into it. Branding, advertising, market research, positioning and strategy, product design, and digital marketing cost a lot of money. Though, the end is to make profit, profit can’t be rushed as the price of the products may be too expensive in the market. This is where budgeting comes in. As a retailer, you may need to consult a business expert or your accountant to know how much you can put into launching the new product.
You have to develop your personal credit. For you to get a loan or some financing from a reputable financial institution, you need a proof of credible credit. You can do this by applying for a secured credit card which would have to be backed by a deposit. You can also apply for a credit-builder loan – the main purpose of this is to help people build credit. You can also get your credit report which will show how you have used credit in the past and can predict how you will handle credit in the future.
You should validate your product through testing. Product testing gives your potential customers confidence in your products. When your product has been tested and shown to be effective, it helps in the marketing of the product. Industries like the beauty industry engage in this a lot. They buy customer confidence through product testing.
There is a lot to benefit when you work with your supplier and build a relationship with him. You can benefit from presales, discounts, and a lot of promotions which may be available. Suppliers get souvenirs and can easily pass this to retailers they have relationship with.
You should consider the lifecycle of your product. The lifecycle of your product matters a lot. It shows how long your product can stay on the shelves. If the lifecycle of your product is short-term, you should consider marketing strategies that can sell it as fast as possible or get strategies to get subscriptions for the products.
It can be to the benefit of your business to get an investor. An investor puts resources into your business to enable it grow. The investor will anticipate profits but with proper management of the business, profit making should not be an issue.
One way of having control over your business is financing it yourself. You can look into your personal accounts, or get friends, family, and acquaintances to loan you some money. Many businesses started with the personal funds of the owner. Even if investments from outside will come, the place of personal financing should not be left out.
There are a lot of ways to secure financing for your business. You should however get the advice of a business consultant or an accountant to know which option is most suitable for you.
The Independent Hair & Beauty Association is here for all of your beauty industry needs. Hopefully you have found value within this article on the Secure Financing For Your Product. We are interested in what you would like to learn more about, please let us know in the comments below.