The Pros and Cons of Three Ways to Finance Your New Start-Up
Unfortunately, due to initial government closure mandates and ongoing social distancing restrictions, many businesses have been forced to close permanently. As a result, the pandemic has opened up a whole new world of entrepreneurship.
Have you become unemployed or underemployed due to COVID-19? Do you have a hobby, skill, or idea that you would like to monetize?
It is entirely possible to start your own business today. Once you’ve settled on your idea and how to implement it, you just need to find an initial funding source to get it up and going. First, figure out how much money you need to get started. Then, explore the pros and cons of the following three very different funding sources for entrepreneurs looking to start a small business, from the office of David Offen, Esq., a busy Philadelphia bankruptcy lawyer.
1. Conventional Business Loans
Conventional business loans from the bank, often backed by the Small Business Administration, are available for entrepreneurs with good business credit. However, new businesses created by entrepreneurs with no experience will find it difficult to qualify for a conventional business loan. Any entrepreneur regardless of experience must craft and present a strong business plan to convince a lender that you and your business are a good risk.
Pros: low interest; favorable terms; can be refinanced; builds business credit as you pay off the loan.
Cons: difficult to qualify for if a new business or a business owner with no experience or business credit; will often require a personal guarantee by the business owner.
Individuals with little business experience but great ideas are increasingly turning to online crowdfunding sources to realize those ideas. With the right spin and social media exposure, projects can be pre-paid entirely by individual investors or donors through a virtual crowdfunding campaign.
First, you will need to source a manufacturer for your product, then calculate the cost of manufacturing and mailing your product at different amounts (for example, 100 pieces, 500 pieces, 1000 pieces, 5000 pieces). Ideally, you will be able to price your product for an amount that can fund continuing production or over-production so that future sales will fund more production and profit.
Next, you must have a prototype manufactured. Be sure your prototype is of the quality you can expect from your first production run because your prototype is going to feature prominently in your crowdfunding campaign.
Finally, you will have to publish your campaign on one of the many online crowdfunding platforms. Each site provides tips and tricks on how to make your product more appealing and your campaign more successful. Detailed photographs of the prototype and a video of the prototype being used work well. Ideally, your donors pledge to your campaign, it is fully funded, and you manufacture and send out your product.
Pros: Anyone with internet access can set up a crowdfunding campaign; crowdfunding sites provide tutorials on how to set up your campaign and market your product; there is a no-risk option you can select that if the campaign is not fully funded, the project will not go forward, and investors/donors receive a refund.
Cons: You must be comfortable with social media and able to commit the time to get your campaign noticed; if you select the option that the project will go forward even if not fully funded by donors, you may have to pay to complete the project and deliver your product to your investors.
3. Mortgage on Your Home or Charge Credit Cards
These are the easiest yet most risky way to fund your project initially. Are they a good idea? The answer is, it depends.
Using Credit Cards for Quick Cash
If you have good credit, you probably have some lower-interest credit cards you can tap, and this is the fastest way to obtain cash. The thing is, the low interest for a credit card is somewhere around 12% and most have credit cards with much higher interest rates. Do you have the means to pay the monthly payment on that debt other than your new business?
Pros: Quick cash, appropriate for small projects when you have a steady income stream to pay the debt down without having to wait for proceeds from your new business venture. Most appropriate if you need only a couple of thousand dollars quickly.
Cons: If you cannot afford more than the minimum monthly payments on your credit card debt, it will quickly spiral out of control due to the exorbitant interest. You must be able to pay off this debt quickly.
Mortgaging Your Home to Fund Your Start-up
If you’ve been paying on your mortgage a while, it is likely you have some equity built up. It may have occurred to you to tap into that equity to fund your new business project. While not as quick a process as using a credit card, you can get a second mortgage or open a home equity line of credit (HELOC) to liquidate some of that equity. The interest rate will be much, much lower than the interest rate of any credit card.
Pros: You can tap into the equity you’ve built up in your and get much more cash than you would by using a credit card, and the interest rate will be very low comparatively.
Cons: If you do not have a steady income stream and ability to pay this additional debt each month, you risk defaulting on the second mortgage or HELOC, putting your home at risk of foreclosure due to business debt.
If your business is up and running, you have enough income to pay the debt each month, and you need a quick couple of thousand dollars, credit cards or a HELOC may be realistic temporary sources of financing. However, if your business is operational and you find you are periodically looking for more cash, consider whether you are optimizing your cash conversion cycle. There are free small business tools online that might help. The pandemic has unexpectedly opened up myriad entrepreneurship opportunities. Good luck with yours
What’s Amazon ASIN And How Do You Get One? Here’s Everything You Need To Know
Amazon is the world’s leading online marketplace. According to Statista, they have 213.4 million unique website visitors each month.
That’s a lot – accordingly, it’s no big surprise that every merchant wants to sell their products through Amazon.
If you also want to sell your products on Amazon, you need an Amazon ASIN.
But what is an ASIN?
ASIN means Amazon Standard Identification Number. It is an Amazon internal number that helps them keep track of your products.
Every product on Amazon has a unique Amazon Standard Identification Number.
In this article, you’ll learn everything about Amazon ASIN – what it is, why you need an ASIN and how to get one.
What Is Amazon ASIN?
ASIN stands for Amazon Standard Identification Number and it’s simply the product identifier used by Amazon. A product identifier is a scannable number like a UPC (barcode) to identify a product.
If you don’t know what’s a UPC, here’s an example of it:
ASIN is Amazon’s internal unique identifier to keep track of all the products sold on Amazon. With over 2,734,713 active sellers on Amazon, it would be impossible if every seller has their own unique identifier for their products.
There’s only one exception – if you want to sell books on Amazon, you don’t need to have an Amazon ASIN. That’s because every book has it’s own ISBN as an identifier. Amazon uses this ISBN to identify books, they don’t use their own ASIN.
I really don’t know exactly why, but I think it’s because Amazon started as an online bookseller in 1995.
When Do You Need An Amazon ASIN?
First of all, if you want to sell your products through Amazon, you need an Amazon ASIN. You need one unique ASIN for every product you sell on Amazon.
Second, if you sell the same product on two different marketplaces – for example, Amazon US and Amazon Germany, you need two different ASINs.
If this in case, you need two one ASIN for the US marketplace and another one for the german Amazon marketplace.
The next thing is that you need different ASINs if you sell variations of your product. If this in case, you will need a parent ASIN for your initial product and different child ASINs for all your variations.
For example, suppose you sell a T-shirt in different sizes. You need an ASIN for the first product – the T-shirt – and further children’s ASINs for all variations, e.g. for a blue, yellow and pink shirt.
When You Don’t Need An Amazon ASIN…
If you want to sell a product that’s already on the Amazon marketplace, you don’t need to register a new ASIN because every product that’s sold on Amazon already has one.
If this is the case, you only need to research the ASIN. If you don’t know how to find the ASIN of a product, read on, I will explain in the next chapter how to do this.
However, if you’re a new seller and want to sell a brand new product on Amazon, you’ve to register a new ASIN for that product.
What you need to know is that there’s a limit for new sellers on how many new ASINs they can create. If you want to create more ASINs in the near future, you need to sell more products and increase your sales on Amazon.
I highly recommend checking out this site to find out more about Amazon’s restrictions on the creation of new ASINs.
How To Search For A Product’s ASIN
Looking for a product’s ASIN on Amazon is super easy. All you have to do is to search for the product on Amazon.
Then, navigate to the product detail page and scroll to the end of the page.
You will find the ASIN of the product at the end of the listing with the product information.
But there’s another opportunity to get a product’s ASIN even faster. What you can also do is to take a look at the URL entry of your browser:
The ASIN is usually at the end of the URL of the product page. Just make sure that there’s no referral code and you’re good to go.
How To Get A New ASIN
If you’re starting as a private label seller, you will probably sell a product that nobody else sells on Amazon.
If this in case, you need to create a new Amazon ASIN so that Amazon can identify your product.
But you only need to do that if you sell a unique product under your own private label brand.
If the product you want to sell is already on Amazon, you don’t have to create a new ASIN.
Here’s how to create a new ASIN for your product on your own:
First of all, you need a GTIN (Global Trade Item Number) for your product.
What is a GTIN?
Global Trade Item Number (GTIN) can be used by a company to uniquely identify all of its trade items. GS1 defines trade items as products or services that are priced, ordered or invoiced at any point in the supply chain.
Where do you get a GTIN?
You can get it from the GS1. The GS1 is a worldwide organization which distributes GTINs, UPCs or ISBNs.
There are different packages and you should choose a package that isn’t too expensive but fully suits your needs.
There are a lot of online sellers that also sell GTINs. However, I highly recommend not to buy a GTIN from another seller than the GS1 since it will only make you problems in the future – trust me.
Once you have a GTIN for your product, it’s relatively easy to get an Amazon ASIN.
All you have to do is to head over to Amazon Seller Central and click on “Add a new product” and then on “Create a new product”.
Then, you’ve to upload your product’s GTIN and Amazon will automatically generate a new ASIN for your product.
It is necessary to have an ASIN to sell on Amazon. However, you only need to create a new ASIN if you want to sell a product on Amazon that does not exist yet.
Anyway, taking care of the ASIN is only an administrative task. Focus more on increasing your sales to succeed in the long run.
About the Author
Moritz Bauer has over 5 years of experience in eCommerce and Marketing. On his blog smartminded he writes about Amazon FBA.
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