Sales channels to reach your customers
Selling through retailers, wholesalers and other distributors
Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly.
If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses.
If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.
Other distribution channels may also reach your end-customers. For example, technology suppliers often sell to resellers who can configure and install the technology to suit end-users’ particular needs.
Managing your distributors
You need distributors who will value your product. If they sell competing products, what will make them push yours?
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Think about how you set your prices. Distributors will be more enthusiastic if they can make a large profit – but setting too low a price will eat into your own margins.
Effective advertising and promotions can be vital. As well as marketing to the distributor, you can promote your products directly to end-customers. Distributors will be keener to stock and sell products that their customers are asking for.
The key terms of the supply relationship should be covered in a written contract. Key issues might include:
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how much stock the distributor will hold
what the distributor will do to promote your products
how quickly you can resupply and minimum order levels
whether the distributor has exclusive rights to your product (for example, in a particular territory)
what happens if either you or the distributor want to end the relationship
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Types of Business Funding
Home » Business Model » Types of Business Funding
June 19, 2013 Ervin Quinto Business Model Tags: asset, business, business funding, business loan, business model, cash, cash flow, commercial mortgage, equity, mortgage
If you have a great idea but you dont know how to put it to practice or have the money to do so, then you might be interested in learning the types of business funding. There are several ways to get a hold of sums of money to start your business and we are going to present them here so you can decide which one is most suitable for you. Keep in mind that not every type of funding is possible for every type of business, so it is up to you to recognize which one is applicable to your idea.
Some types of business funding are more difficult to access than others, and youll be surprised to know that not all of them come from the bank or the government. The information you will find below is merely basic, and is meat to orientate you towards finding more information and researching in order to see what type of funding your business could benefit from, and which options are available in your area.
Asset finance This term refers to a variety of funds that one could get, all of which include the business physical assets. Through this type of financing, you improve your business cash flow by releasing money caught up in physical assets; many companies could benefit from financing like this, but not too many business owners are aware of this option. Among other common types of asset finance, there are asset-backed loans, hire-purchase agreements or other leasing options.
Cash advance This is a good option as well, but your business needs to be on its feet already, just like with asset finance. This type of funding implies selling a part of the companys future debit in order to get up-front payment; this is usually done with a finance company. The arrangement ends when the company pays back the sum agreed upon which is obviously bigger than the sum that was initially borrowed. Nevertheless, this can be quite a good momentary option, because it allows a business to improve its cash flow and keep afloat until better times come.
Commercial mortgage Exactly what it sounds like, a commercial mortgage is a loan generally given by a bank secured against business property or assets. This type of business funding works much in the same way as residential mortgages; the entity which needs the loan uses a company asset or premises to secure a loan, and it must also pay a deposit representing a percentage of the price. Thus, the companys cash flow is improved, and the business pays mortgage rates until the loan is completely paid back. However, know that this type of endeavor can be used both by businesses that wish to expand their property ownership, but by businesses that want to release tied-up capital as well.
Equity investment While it is accessible to most types of business, equity investment is difficult to access to most. This is where you divide your business into shares and sell a part of those shares while keeping most of them to investors; you get the cash flow you need, and the investors are entitled to a part of the business future profits. The only way you can attract investors is by promising them a money return bigger than the sum they invest initially, or part of the proceeds when the company is sold.
Grants This is the best type of funding anyone can hope for, except very few businesses can actually get it. A grant is a sum of money offered to a business with nothing in return, and it can be offered by the government or an organization. However, usually the types of businesses that receive them are those doing something with direct impact in society or in the community, such as academic research or a non-profit organization. The sums of money involved are also quite small compared to other types of loans.
Business loan This is similar to a personal loan, and it involves one person or entity lending a sum of money to the business. The agreement can be short, medium or long-term, depending on how those involved agree, and a business can use it to expand or to improve its capital.
These are the basic types of business funding that you need to learn more about; one of these opportunities may be the right one for you and it may serve to save or help you expand your business.
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