This is a guest post from Kevin Weeks at Payability.
It’s hard to believe, but now is the time to prep for your Q4 sales strategy. Specifically, how you are going to meet the robust holiday demand that’s right around the corner. You could stock up on inventory now, start researching new products to add to your arsenal, plan a Sponsored Product campaign — or all of the above. Regardless, you’re going to need cash to make it a reality. To help you figure out how to get that cash, here are 7 ways to finance the holiday sales surge.
1. Personal Savings & Credit
Many Amazon sellers look to their personal savings or credit cards — after all, funds are immediately available and the cost is free (assuming, of course, you consistently pay your credit card balance in full and on time). The downside here, however, is that you can only spend so much until you run out of savings or hit your credit limit. And if you miss a credit card payment, you’ll be charged interest and put your credit score at risk.
2. Crowdfunding, Friends & Family
You could ask others to invest in your Q4 strategy through a crowdfunding site like Kickstarter or Indiegogo, or by asking a family member or close friend. You’ll avoid paying interest, and instead “pay” by giving equity or rewards to your investors. But there’s no guarantee you’ll see any funds, since most crowdfunding sites have a minimum fundraising requirement and your friend or family member may not feel comfortable mixing business with pleasure.
3. Traditional Bank Loans & Lines of Credit
If you’re a well-established Amazon seller, you may have luck getting financing from a bank, whether it’s a term loan (one lump-sum of cash) or a line of credit (a revolving pool of funds to access as you need). Banks offer high loan amounts and low interest rates, but the process is onerous. Think endless amounts of paperwork, a manual review process (often including an on-site visit or two), and low approval rates for small businesses.
4. Alternative Financing
There is a relatively new industry known as alternative or online financing with lenders that promise higher approval rates than banks, a more seamless online application, and fast funding. But the loan offers often come with high interest rates and/or fees, short payment terms, and daily or weekly auto-payments that start right away.
5. Amazon Lending
Amazon offers loans to qualifying marketplace sellers through Amazon Lending, but you can’t apply directly for one. Instead, Amazon will notify you in your Seller Central dashboard if you’ve qualified for a loan. And it’s an “all or nothing” offer — you can’t negotiate the terms they provide. In addition, your repayments will generally come directly out of your earnings, making the repayment process simple but potentially less flexible than other options.
6. Negotiate With Your Suppliers
Do you have a longstanding relationship with any of your suppliers? Do you always make your payments on time, or better yet, early? If so, you may be able to negotiate a better deal on both pricing and payment terms. Talk about your inventory needs for Q4 and see if you can get a discount for buying early and in bulk. Alternatively, you could ask about extending your payment terms during the holiday season.
7. Advance Your Amazon Income
Imagine what you could do if Amazon paid you when you actually made a sale. To bridge the two-week payment gap that most Amazon sellers have to wrestle with, consider a service like Payability that advances your Amazon income. For a small flat fee, you’ll have daily access to your funds the next business day after making a sale.
Hopefully by now you have an idea of the right financing solution for your Q4 growth. And if you’re interested in learning more about how Payability could help your business grow, visit www.payability.com.
