What you need is a financing entity to fulfill your orders because that’s what they do. They charge you an interest rate to finance your orders up front. Not inject capital, that’s for the other guys. However, financing purchase orders up front (purchase order financing) is a dangerous business because the financing entity doesn’t have a guarantee that the goods will be made properly, if you’ll ship late, etc. For this reason, they will charge you a very high interest rate that will eat away your margins. If, however, you had the money to manufacture the goods and simply needed interim cash before the customer pays, that is much easier and attainable through a factoring company, who is similar to a bank but specializing in these types of transactions.

This is called accounts receivable financing, which you can get at a very respectable interest rate, because you have taken the manufacturing risk away, and then it becomes their job to check the credit of the customer to decide whether or not they are worthy of a credit line for the order. But that’s a mute point because you don’t have the money to manufacture the goods (it will take a lot more than your $150,000 profit), so you are stuck in the mud. So now what? Without the financing in place, you will be unable to grow and the investment you secured will be useless if you don’t have the fuel to go forward. Think of it as the investors bought you your car, but you need fuel for it to move. Financing is the fuel that keeps your engine running, and the more fuel you have, the farther you can travel.

So how are you going to get purchase order financing at an interest rate that doesn’t swallow all your profits? Certainly not from a bank in this day and age. This is where forming strategic alliances come in which I will fully discuss in detail in my next article. To give you an idea what a strategic alliance is, it is where go to manufacturers in your industry who are already doing what you are doing and look for your financing there, because they can control risk by making the product in their own factories, so your interest will be much lower.

The best possible scenario however, and your most probable, will be that you kill two birds with one stone and get both the investment and financing all under one roof. Bottom line, they are doing what you are doing and they are succeeding so why wouldn’t they? Most of these companies have a built in turn-key model that makes it infinitely easier to create a successful business model. But don’t think you’re going to hold on to all your equity. Anyone that does, doesn’t understand that 20% of something is worth a heck of a lot more than 100% of nothing.

Bottom line, strategic alliances most often end up far more profitable for you, then if you got the investment in one place, and the financing in another. True, it also makes the manufacturer you aligned yourself with more successful, but then again, they deserve it!

These are just a few of the questions you need to ask yourself when you are in the strategic planning phase of your product launch. Get yourself small start-up capital in order to get the consulting you need up front so you can eliminate the majority of your mistakes before your business starts. Don’t wait until you are too late and already in the game when the dollars are high and the stakes are high. Again, remember, your business plan is first and foremost important to help you understand your business better. When you fill in all the areas that are required in a business plan, you will be forced into answering these questions. Remember, this is a good thing. To find out the appropriate format, Google “Business Plans” or, “Business plan format” on the web and it will be easy enough to find.

I hope the above article provided you with some insight into what it takes BEFORE you take the leap into the world of the entrepreneur. Again, good luck!

WARNING: IF THIS REMINDS YOU OF YOU, THEN STOP WHAT YOU ARE DOING AND KEEP READING THIS ARTICLE UNTIL YOU FINISH IT.

Entrepreneurs, re-directed in the right direction, can and should start as many businesses as they want, but you need to know there is only one thing that puts them in the right direction, it’s called purpose. If the purpose of starting your business is to re-pay your parents and friends the money you lost, well, then, the purpose of your business will lead you to yet another failure and you will keep starting new businesses for all the wrong reasons. After that business fails, now, the next business you’ve started you’re not only doing it to pay back your friends and family, but also you are trying to PROVE to everyone that you can in fact make it, and you want to especially prove it to those people that never thought you could make it in the first place. Now this is where it gets dangerous. Your motives start becoming similar to that of a desperado. Now you’ve completely lost the purpose that entrepreneurship is supposed to give you. You’re in a dark place. You don’t care about WHAT your business is, only that it needs to serve the purpose of blanketing all of your mishaps.

Now here’s the good news… You ever heard the saying, “If you love your work then you’re not working?” Well if you haven’t learned it, it’s time you did. Especially if you are in one of those dark places. To get the right purpose back, let’s look back to when you started your first business. If you are like most entrepreneurs, when you start your first business, you are bright-eyed, ambitious, confident, excited, and most importantly, PASSIONATE about what you are getting into. Sound like the person you used to know? Well that’s where you need to go back to. Me personally, I always am always driven when customers call to say they are very pleased with the product or service I provided. Even in these blogs, I feel great when I receive positive comments people make on how my articles help them, and am equally as attentive to hearing about ways I could have helped them more. I am excited about camaraderie. Motivating people. Learning how to be better… and yes, my bills are being paid while this is happening!

Why are they being paid? Because this time, I planned in advance what I needed for the business to sustain itself during its growth period, thus I had the cash on hand to survive the initial bumps and bruises along the way. If you do this, you know the investment that it’s going to take to get your business running, and you are not going to start until you have the start-up capital you need. You don’t want to be bleeding money when you start! And if you are telling me, NO! YOU MUST START NOW! I OWE THIS PERSON, AND THAT PERSON… believe me, these “people” you owe will be much better served if you take the time to plan this next venture with clarity and not haste. Your chances of paying them back will increase exponentially.

It all comes down to purpose. Without a meaningful purpose and excitement in what you are doing, you will never have the focus you need to get things done properly. I lost my focus for a long period of time. I lost the house, the car, and many other things to boot! Luckily I caught myself just in time. I understand the ventures I am in and am certainly aware they can lose their luster at any time, but I choose to accept that possibility and make the necessary changes to prevent them from happening. And if things happen to be faltering in one area, I can leverage myself by capitalizing where I am profiting in other areas. That’s another thing that a clear mind gives you. Foresight. Seeing the mistakes before they come, but that’s for the next lesson! If you have the focus and clarity, I am confident that you will be surprised how quickly you achieve your level of success that you have been trying for so long! And remember, given what we know now, having a sense of purpose, we can now be proud to say, “Entrepreneurs never give up!”