No Money No Problem Part II

iStock_000006667499XSmall (1)Last week we touched on a couple of basic rules to think about before looking for financing for your enterprise or project.

If you’re having trouble getting off the ground, is there another business you can start that doesn’t require as much money?  Can it wait until funding is easier to come by? Have you exhausted all available means? Guarantee you most people haven’t, and here’s why.

First, the more common sources of financing, like bank loans. You know … when you’re praying for them to say “Yes,” or on the flipside—when you don’t really need the money they give it to you anyway? However, credit is pretty hard to come by these days.

You can also find someone with collateral who would be willing to co-sign a loan; another standard method that tends to be forgotten. Lots of people started their finance history with a co-signed loan, didn’t they? Whether it’s school, your first car, or first credit card, yes? Another reminder to keep good relations with those closest to you.

Private lending parties are another option, or partnering with someone who has the collateral. The easiest way to get money is home equity. When you have some equity in your home or something else that they can take, getting money is usually not a big problem.

But now let’s go to something that can change the whole way you do business. This is going back to the basics of business, which is buying and selling. Only you reverse the order. Pre-sell your product or services before you have to buy or deliver it.

I have never had a problem with cash flow in my life because I insist on doing this before and during the enterprise. This isn’t just for initial financing but as an ongoing rule of business.

Think about it. Ask yourself, “Why should I pay for the product? If you want it, you pay for it.” The customer is just paying for it a little early.

The typical mentality of business is that people want to see the product before they buy it—even though they’re not really seeing anything except the product’s packaging most of the time, yes? Remember: the mind of a millionaire can’t think like everyone else.

Who says the money can’t come until the customer gets their product? People pre-order things all the time. The key is to create or take advantage of a demand, or even a perceived demand. That’s where marketing comes into play, which if done effectively can be much cheaper than actual production.

By reversing the buy/sell order, you also cut down on carrying costs. And let’s not forget the risks you cut down on by not over-producing and then not selling. Instead, sell to a high volume buyer from a sample or a prototype.

For goodness sakes: don’t produce 1,000 or 10,000 of something and then try to sell it! Sounds ridiculous, doesn’t it? But that’s exactly what a lot of people do, people who aren’t in business anymore.

Make that shift now! ‘People don’t have to see the finished product’. Some people will insist on it. Great! You insist, too.

See? You can jumpstart an enterprise with a little creative financing (and thinking!) that doesn’t have to cost you an arm, leg, or mortgage.

Best,

T. Harv Eker