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7 Basic Essential Web Marketing Tips
"It's Your Time
to Thrive On-line!"
Web
Marketing Tip # 2 - Use Creative Financing and Sales to Jump Start
Your Digital Business.
Unlike the traditional off-line world, were you usually need tens of thousands,
or actually hundreds of thousands of dollars to start a business, Internet
businesses usually require a lot less startup capital. Internet businesses
can be set up for a much lower seed investment. For a few thousands dollars
to buy a computer, software, an ISP, Web Site, payment system, autoresponders,
and a Web Presence Provider (WPP), you can be up and running your e-business
in no time. On the other hand, a successful e-business will cost you a
lot in sweat equity and promotional costs and training expenses.
Despite the low start up costs of an Internet business, you will have
to raise some capital to grow and develop your digital enterprise. The
first advice I would give you in an Internet business - is to not quit
your day job. It takes time and commitment to build up an Internet business.
Don't let any one convince you into thinking you will become an overnight
success in an affiliate program, viral launch, or e-commerce enterprise.
Like most businesses it will probably take you a few years to really see
the fruits of your labor. Therefore, you have to be in your Internet business
for the long haul.
There are a few ways to get your e-business off the ground financially.
Ask family and friends for business loans. Countless businesses have been
started this way but be clear with family members that it may take 5 years
for you to see a profit and 3 years or more for you to pay them back.
Make sure they have realistic expectations on your business progress.
Put every thing in writing. Family started and owned businesses can work
- its the American way. But be careful when using the money of family
members because you don't want money to ruin good family relationships
due to a bad business experience.
You can also use tax refunds to buy new office and computer equipment.
Rather than buying a new state of the art TV, DVD player, or home furnishing,
reinvest some of your tax refund into building your business. Next you
should also look into micro-loan programs in your area. Furthermore, in
some cities there are community loan programs for business where you go
through a training program and then are eligible for a business loan like
Project Enterprise
in New York or the Internationally acclaimed Accion.
In
community based business loan programs the initial business loans are
small, but you can build up a good payment record to get larger loans
later. Microloan and community loan programs usually give loans of 25,000
dollars or less. They have less paper work than traditional loans for
small business. If you need a larger loan check the SBA for banks that
offer loans in your area. Remember banks tend to be very conservative
in giving business loans. Furthermore, there are SBA loans now with more
streamlined paper work. Go to the SBA's web site for more info on its
financing programs at: SBA.gov.
Dr. Jawanza Kunjufu, a Ph.D. in economics, suggests that small business
people should buy a home first, and then build some equity that they can
use towards their business. Revolving home equity loans can be used to
help finance your business in slow cyclical and growth periods. Be careful
with this option because you don't want to loose the equity on your home
on a business venture gone wrong.
Another
way is to finance your business is with personal credit cards. Many business
people have financed their business with credit cards. I understand film
maker Spike Lee, financed his first film "She's Got to Have It"
with credit cards. Make sure you have a great product that will sell very
well, before you do this because the interest rates are so high - it will
be hard to ever pay the credit card loan back!
Despite the fact that the publisher Lesko has many business people anxious
about small and minority business grants, Dr. Brenda Johnson, a Ph.D.
in economics and entrepreneur who has secured grants in the past states
"grants are usually for non-profits and not-for-profit businesses."
Nevertheless there are some grants that target small businesses. These
are usually grants given to businesses in competitions. Two popular and
legitimate grant competitions are the Miller
Inner City Grants and the Ford
Business Grant. The winner of the Miller Inner City Grant receives
$20,000 dollars and the Ford Business Grants winners share a grand prize
of $100,000 dollars. Another great source for grants is Grants.gov.
Other sources for grants based on competitions are Small
business Notes however the grants located here are for very specific
things and uses.
Apply
for these grants however, since they are based on being in competition
with other businesses, make sure you have a good marketing and business
plan in place. Subscribers that I know of whom competed for the Miller
Inner City Grant commented on how the judges want detailed marketing and
business plans. Furthermore, don't put all you eggs in one basket. Make
sure you have other financing in place that we alluded to earlier.
Venture
Capitalists are firms that will help finance your business and aren't
as conservative as banks. However, you will still go through due diligence
(the process of checking all your business plan, marketing info, and doing
background checks to decide whether to fund you). Venture Capitalists
are using the money of other investment institutions therefore, they really
do their home work on your business before they invest. Usually Venture
Capitalists will want a spot on your Board of Directors, some equity,
a higher interest rate than banks to finance your business, and a way
to cash out. They are usually second stage investors (in contrast your
personal funds, family and friends investment, or angel investing being
your first stage of financing). A good place to start on-line for venture
capital are: New Enterprise
Associates
The
Black Enterprise web site also has good info on other types of Financing
sources like tapping into the Black Angel networks. Angels are private
financiers that fund developing businesses more from a mentor perspective.
Angel investors are usually business people who have a wealth of knowledge
to help your business in addition to money. They ideally want to be able
to cash out of your business in about 5 years. To find out more about
angel investors go to the Angel
Forum. They do not require the same criteria as banks and venture
capitalists who usually are sources of second round financing (especially
since they don't finance startups in most cases). Do a search on Black
Enterprise.com to find black angel investment groups.
The
Angels' Forum prides itself on diversity and has funded about $43 million
dollars in 50 business ventures. According to one of its participants
Caretha Coleman "I'm particularly interested in supporting Afro-Americans
who work hard on their dreams,..." The Angels' Forum describes itself
as a "culturally diverse group" that hopes its investments reflect
"our commitment to diversity" says Coleman.
If
you have a high tech company that shows plenty of promise Michael
Fields of the Fields group, who is a very successful business man,
is also an angel investor with New Vista Capital.
Don't
forget angels investors, venture capitalists, and traditional bankers
will not finance your venture if you haven't raised some of your own capital
from yourself, and your friends and family. They feel why should they
put their money on the line if you won't or can't. Furthermore, if you
can't raise money from your friends and family, you probably can't convince
people you don't know to invest in your business. You will have to learn
how to develop a good business plan to obtain business loans and grants.
A good source to learn how to do business plans is: It's
Simple Biz. They also have a good primer on getting financing for
your business click
here
Lastly, pre-selling your product is also a good idea and my favorite method
of getting capital via selling your products in advance. We will deal
with this topic in our next Web Marketing Tip.
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