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How To Raise Money For Starting Your Amazon FBA Business?



You have a killer Amazon FBA product ideas but no capital. Well don’t get disheartened, everything is not lost. Here, we tell you 10 different methods to raise money for your business.

1.     Self-funding

Self-funding is the first and foremost way to start any business. If you have some capital of your own to spare to support your FBA business idea, go for it. However, you should take care that you are not dipping into your pension, children’s education, or any other essential funds. Even if you are 100% sure about the success of your business, using such funds is unadvisable. If your business idea is rock solid, you should be able to raise capital through other means. The other avenue for self-funding is to leverage equity in your home.  If you own your home, you can get credit against your home equity to meet your capital needs.

2.     Thrifting/Home Raiding and Reselling

Say you have a brilliant idea about selling through Amazon FBA, and your cash requirements are also quite low, may be $500, but you don’t even have that much. How do you get the required amount? 

Simple. Raid your house and get everything that you don’t need any more – old mobiles, kids’ clothes and toys, car accessories, TV remote, play station. Basically, anything that you can lay your hands on, categorize them, and list on online sites like ebay, craig’s list and OLX to sell them. Just take care to post good photographs and state the exact working condition. 

Credit cards and loans is another way to raise money. You also have the option of switching to a provider who can defer payments or give you more time for repayments.

3.     Borrow from friends, family

If you have people in your extended family or friends’ group who won’t mind lending, you can ask them. However, it may lead to strained relationships so you must tread with caution. Explain your business and its goals to them, and why you need the money. They should know what their liabilities could be in case you fail. Also, be sure that they can take the pinch if things go wrong.

4.     Business partner

 It’s not only about raising money, it’s also about taking capital risks. If you want to decrease capital risks, you can get yourself a partner. But you need to be cautious while taking a partner. Have everything done legally and always include a buy back clause in case there is a fallout later due to any reason.

5.     Working capital loans

 Most financial institutions have the provision of advancing business or working capital loan against your business accounts with them. These loans need minimum documentation and are processed quickly, often within a couple of hours. If you need short term loans, business advance can be a good idea. Online loan aggregator sites are coming up, where you can submit your loan requirements with the necessary documentation. They claim to get your loan processed within 24 hours!!

6.     Bridging loans

 Bridging loans are short term loans that many banks and financial institutions give for building infrastructure, purchasing machinery, fulfilling taxation requirements, paying insurance premiums etc. They are processed quickly, need minimum documentation, and hence are easier to get.

7.     Crowdfunding

 Crowdfunding is the latest trend in raising capital and funding start-ups. In crowdfunding you raise money from many investors – usually individual citizens – rather than a bank, who think that you have a feasible idea. May online platforms like Kickstarter and Indiegogo specialize in crowdfunding.
You need to post your finished product or idea on the platform and give something back to your investors – the product, a service, or anything else that you mutually agree upon – in return for their funding. Crowdfunding is a good option for products or ideas that are not suitable for traditional funding.

8.     Invoice factoring

 If you are into high priced products, where payments are made slowly in instalments, you could be having lots of invoice in your hands that would be paid in the next couple of months. If you can find someone who can pay you that much amount immediately, after a certain percentage reduction (usually anywhere between 8-12%), you can cash them out.
   
Summary

Whatever way you are raising funds, remember that it is not your own money and must be returned. Unless you are thrifting. Even if you are dipping into your own savings, you should replenish it so that you may use when the need arises again. In case of loans remember that you need to pay the interests as well as the principal amount. So go for fund raising only after you have ensured the success of your FBA selling idea.

Product Spy Pro provides Amazon listing analyzer to find good products to sell on Amazon.

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