In this industry, unless you rely on free traffic from SEO, viral, or word-of-mouth – it takes money to make money. And although it’s certainly doable to start out on a shoestring budget, it definitely helps to have as much start-up capital as possible.
Having sufficient funds from day one gives you room to test and experiment more with various traffic sources, broader split-tests, longer test runs, etc. Just remember: True entrepreneurs are not afraid to take risks. Calculated risk that is. If you find yourself constantly questioning whether or not you should spend (or perhaps in your eyes “waste”) more money on campaigns – then this business is not for you. Yes – you MAY lose some or all money you invest in the beginning, that is just life. But if you’re hungry enough for success, loss of capital will not hold you back. In fact, it will only make you more thirsty for blood!
So what can you do to solve those cash flow worries? Inject your affiliate marketing business with the DNA of profits: Cash Money!!
The first remedy – Friends and family
This is perhaps the first place many turn to as it is relatively easy to obtain for most, and carries little risk. Explain to your family member or friend that you need a small short-term loan for a new business you’re starting out. Let them know that they will get their money back guaranteed, and even for good interest, or a “bonus” when you pay them back.
And yes, you you will probably face their skepticism or questions such as “what – are you some kind of drug/porn-hustler on that internet place now, son?”. To which you say – “yes dad, go check out my first site MakeMoniesOnline…” 
No seriously – it’s important to be honest and upfront with close friends and family. You don’t wanna jeopardize their trust in you.
Give them all the reassurance they need that they indeed will be paid back and then some, once you are able to pay them back (which, if you’re working with the right affiliate networks anyway, won’t be difficult!)
Rule of thumb; Always, always pay back borrowed money – on time, and in full.
The second remedy - Get thrifty
Every one of you reading this have belongings you could sell for some chunk of change right this very minute. Get on eBay or Craigslist and start posting that shit up! Game consoles, furniture, a comic book collection, an autographed baseball, a guitar, a pair of nice sneakers, even your car. It really comes down to this: how bad do you want success?
It should be so bad that almost any ol’ thing you have laying around your place shouldn’t really matter. (Apart from the flat-out necessities obviously. Watching tv on the floor with no chairs or tables sucks – trust me I’ve been there..). After all, things just are inanimate objects with some monetary value. Wouldn’t you rather part with those surround speakers you blew $900 on three years ago – and instead enjoy the zesty flavors of fresh campaign clicks to your new landing page? Heck yes! Or think of it this way… do you HAVE to have that sweet ride of yours parked outside as you’re reading this? Couldn’t you downgrade to a clunker for a while, or just get a bike? Sure you could!
Don’t worry – you can have all the hot cars you want later when you’re ballin’. When your bank account is floating digits so large your tax accountant gets diarrhea. That’s when you can treat yourself to a RIDE. But now, today, your focus should be on spending money to make money. Not holding onto things because they’re cool or you FEEL you “need” them.
Action step; Think hard right now and ask yourself; “If I were to have a flash yard sale of all my stuff…how much money could I collect?“. I bet you the value of all its worth, that it’s more than enough to pay for some good traffic to launch your first, serious campaigns!
The third remedy - Get paid fast!
This is another obvious one, yet it baffles me how few newbs still take advantage of it. I’m talking about working with affiliate networks that will help you out with your cash flow by paying weekly. Up until a few years ago, it was unheard of for most networks to offer weekly payments to new affiliates. This was unless they could bring in a steady $1000 in daily commissions. But unless you struck gold from day one (which VERY few do), this was an almost impossible feat. Luckily for newbs today – more and more affiliate networks offer weekly payments – without any volume requirements from day one.
The fastest paying network I have ever dealt with, is Profit Kings Media. Not only do they pay out all affiliates weekly – but payouts go out each monday. Being an affiliate marketer outside the U.S., I am used to waiting a couple of days for international wire transactions to get to my account. But somehow, PKM manages to often get myinternational wires to me by monday evening. Now that’s fast!
For you – this means that you can start running your first test campaigns on sundays, and have your revenue back in your bank account the following day… All the sudden, it gets easier to ask for that borrowed money (see The First Remedy above), since you can pay back almost right away if you must. By the way – I’m not saying you should only stick to networks that pay weekly. Keep other networks in mind too, but at least when you’re starting out and feel somewhat strapped – first go for the ones that will help you grow quicker.
Action step; Ask your network / affiliate manager if they can help you out with earlier payments, or even set you up with a pre-pay for a limited time.
The fourth remedy - Get busy!
So you feel that you’ve now exhausted your financial resources and borrowed (or couldn’t borrow), but you’re still having a hard time getting things profitable? Weeks or months go by and you see no light at the end of the tunnel? Fear not my friend – we have all been there. Just remember; YOU are destined to be successful, aren’t you? You are the one who will make this happen, no matter what.
And now you feel you’ve spent all the money you can spend and you’re at wits end. But you’re not. Because there isalways a way to make a little bit of extra money on the side. Get creative and get yourself a part-time job. I don’t care what it is. Do something. “but the economy is bad and no one is hiring“, you say? Pfft.. Excuses, excuses. “but the job market where I live is in the toilet“, you say? Go cry somewhere else…
Man up, and find or create your own part time job offline to fund your business online. There is always someone, somewhere needing something done. And if they don’t think they need it – make them think they do! You’re a marketer. And yet, that doesn’t mean you can’t mow lawns, do paint jobs / yard work, wash cars, do pc repair and troubleshooting, fix stuff, sell stuff, you name it.
All this is temporary anyway. I don’t wanna hear you moan and complain about how you’re “too good” for that stuff, or that you wouldn’t “sink so low” as to do these types of jobs on the side.
All self-made millionaires and billionaires in this world went through a phase like this at one point or another anyway. So get busy – and do your job with a smile. Because you know that some day, you will be VERY, VERY well rewarded for your hard work.
The fifth remedy – Take Advantage of Credit
So many businesses have been started up from the ground (or failed to do so) based on credit cards and small loans. In many industries offline and online (including affiliate marketing) this can be a risky move, as you can quickly end up with nothing but debt if all fails.
However, you can reduce your risk significantly by careful and smart use of credit cards.
The key things you need to keep strictly under control are;
- Make sure you can rely on quick cash flow turnover, meaning fast and frequent payouts from your affiliate network (waiting 30 days for your gross revenue won’t cut it), see The Third Remedy; Get Paid Fast!
- If you’re having trouble staying profitable in the beginning, at least do what you can to break even. If it means cutting down your ad spend and volume, do it. This so you can at the very least repay everything you have spent on your credit card on a regular basis.
- Avoid getting to a point where you have to start making monthly payments on previous ad spend. If you can’t recoup your losses quickly (at the very least by breaking even), this could end up bad.
So what credit card is best suited for affiliate marketing?
I’m not gonna get into a detailed write-up of cards here, and some cards are better suited for different individual needs, but the two most popular credit cards used by many affiliate marketers are the American Express Plum card, and the American Express Starwood card.
VISA/Mastercard vs. American Express
Amex cards are preferred mainly because they can be paid off at any given time and as often as you wish, without waiting on the monthly billing cycle to end before you can access your full available balance. The downside to Amex cards is that if you’re just starting up your new business or have bad/no credit history, you will be hard pressed to be approved for one at first. American Express will prefer that you have been in business for minimum 12 months before they will approve you.
Visa and Mastercard on the other hand are easier to get approved for but often don’t have the same benefits you would want for quick cash flow. It is still an option to consider however, provided you can manage your spend carefully and have patience for things like waiting for available balance, etc.
Here are some pros and cons to consider if you’re deciding among the most popular choices;
American Express Plum card
PROS: Cashback on every dollar spent. Relatively easy to get your limit raised once you have a proven track record of payments.
CONS: Only 1.5% cashback versus 2% of some other cards. 0.5% will make a big difference when you start racking up large spend, so this is something to consider. Also with the Plum card, your cashback rewards are taxed, unlike with the Starwood card for example.
American Express Starwood card
PROS: A nice mix of cashback bonuses and non-taxable rewards
CONS: Harder to get a limit raise, or sometimes as high limits as with the Plum card
Schwab Visa card
PROS: 2% cash back
CONS: Available balance resets only once a month, even if paid off before
Others to be aware of;
Avoid cards like Capital One (low limits and high interest rate) and Visa Black (high annual fee and no benefits worth smiling about). American Express Gold or Platinum will give you point rewards for things like flights and hotels if you prefer this instead of the cashback reward with the Plum card.
The sixth remedy - Outside investors
I would recommend this mostly to people who already have been running profitable for a while and who want to take that next big leap. I know many guys who do big numbers with a lot of campaign volume, but have too low margins (such as less than 20% ROI). This leaves them with little room to re-invest into new and bigger ventures. The same goes for people who may be doing well profit-wise, but for some reason or other (e.g. family-needs, unforeseen expenses, paying off debt, etc.) are forced to limit their current re-investment into business.
Investing and expanding your business should always be your goal. (Don’t settle!) And sometimes, you will see great opportunities arise that will require a good chunk of cash in order to get a foot in. A big media buy, purchasing an online asset, getting into an office building, launching a new product, or scaling out a profitable campaign to several traffic sources or countries within a short time. These are times when you could consider seeking help from outside investors.
One of the best places to start is the Investment Network, which is a chain of sites in different parts of the U.S., in Europe, and worldwide. Their purpose is to connect angel investors with businesses like yours in need of capital.
Once you set up your profile, write up a good proposal that briefly explains (in plain english) what your business is about. You need to tell potential investors why you need the money, when you need the money, and how muchtheir return will be.
You will also need:
- a registered business name/license
- to prepare a professional business plan
- to prove that you know what you’re doing and that you can forecast predictable profits
Be honest and open with potential investors who may contact you. Let them know what you plan on doing with their invested funds upfront, but also be clear on that their insight your marketing campaigns, traffic sources, creatives, etc. will be limited.
Now that we’re done I would like to hear comments or questions about this. How did you solve your own cash flow issues? Have you tried any unusual ways to get some capital?