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Have you always had a passion for fashion? Starting a clothing business can be an exciting and lucrative venture, but it’s not without its challenges. You may be wondering what clothes you should sell, where to turn for manufacturing, and how to attract customers to your store. Well, good news—you’ll learn all of that and more in this complete guide. Read on to discover how to start a clothing business in eight actionable steps. Plus, find tips from entrepreneurs with years of hands-on experience in the fashion industry.

How to start a clothing business in 8 steps.

Whether you are eyeing online or brick-and-mortar, here are eight steps to opening your own clothing store. 

1. Jump through the required legal hoops.

First, before opening for business, you’re going to need to jump through a few legal hoops. Here’s a quick guide:

• Decide on the structure you want (e.g. sole proprietorship, LLC, S-Corp, etc.). 
• Select an available business name.
• Register your business in your desired state.
• Apply for an Employer Identification Number (EIN). which works like a social security number for businesses.
• Register with state and local agencies as necessary.

In short, be sure that you understand all the legal requirements to operate as a business in your city and state. 

2. Identify your ideal customer.

Once you have your paperwork in order, it’s time to start thinking about the audience your clothing store is going to serve. While it can be tempting to be a one-stop shop for everyone, the clothing market is saturated. To attract a loyal customer base, you need to appeal to a specific niche market.

For example, let’s look at the popular clothing brand North Face. North Face is a magnet for outdoor enthusiasts aged 14 to 45 who lead active lifestyles, particularly in areas with colder weather. The brand’s customers are happy to spend more on premium clothing products that stand up to the forces of nature. And, at the end of the day, they not only get the outdoor gear they need, but also wear the logo to communicate to the world that they are active outdoor enthusiasts. 

When thinking about your business’ ideal customer, you need to know exactly who they are, what they do, and how they want to be perceived in the world. Here are some questions that can help you with that process: 

• What gender(s) are they?
• How old are they?
• What are their profession and annual income?
• What is their marital/family status?
• What are their values and belief systems?
• How do they want to be perceived in the world?
• Where do they live and like to travel?
• What is their lifestyle like? What activities do they participate in?
• What’s their view of clothing (necessary, cosmetic, status symbol, etc.)?
• What pain points do they have regarding clothing?
• What style trends do they follow?
• What are their favorite clothing brands?
• Do they shop online, in person, or both?
• What influences the clothes they buy?
• What types of influencers do they follow?
• How much do they typically spend on clothes?
• How often do they buy clothes?
• What items do they buy?

The more specific your ideal target audience definition, the better you’ll be able to tailor your clothing products to their needs. 

3. Develop a brand identity.

Next, when starting any business, branding is going to play an important role in success.

Nathalie Neuilly, Founder and CEO of online couture service Dressarte, says “Before you start designing and producing your clothing, take the time to define your brand identity. What makes your clothing unique? Who is your target audience? What are your brand values? Answering these questions will help you create a brand that resonates with customers and sets you apart from competitors.”

But where do you start? 

“Research the market to see what other companies are doing,” says Neuilly, “Analyze the competition and identify gaps in the market that your brand could fill. This will help you create products that are in demand and differentiate your brand from others.”

Marketing agencies and freelance experts can help you with the branding process, or you can do it yourself with the help of online guides (like these from Shopify, Adobe, and Oberlo). 

The cornerstones of a brand’s identity include:

• A brand name (be sure to check if it’s available)
• A mission statement
• A vision statement
• Core values
• A brand personality description
• Brand voice/tone guidelines
• A brand story
• Buyer personas
• A slogan

Once you’ve defined the foundational elements of your brand, you’ll need guidelines on how to express it through visual and written assets. This requires developing:

• A color palette
• A logo
• Typography 
• Templates
• Graphic style guidelines
• Photography guidelines
• Style guidelines for content

All of your branding elements should be kept together in a single document that functions like the bible of your brand. Anything your company says or does should align to ensure a cohesive, effective presence. 

4. Pick the clothing products you'll sell.

Once you know who your brand is and who you want to sell to, it’s time to decide what clothing products you’re going to offer. You’ll need to decide on various factors, including:

• Clothing purpose - What purpose will the clothing serve? For example, athletic wear, formal wear, casual wear, business attire, etc. 
• Audiences and sizes - Will you provide clothing for various age groups and genders? Which ones?
• Garment types - You’ll also need to decide on the types of garments you’ll carry ( t-shirts, jackets, sweaters, pants, shorts, swimwear, socks, suits, dresses, etc.).
• Clothing style - Will the clothing you carry have a particular style or theme? For example, boho, biker, artsy, casual chic, gothic, grunge rock, haute couture, hip hop, or country. 

Sandhya Garg, a contestant on season 13 of Project Runway and the owner of a luxury online clothing boutique, adds, “Cohesion of the collection is also important—in other words, how products compliment each other so they can be bundled and bought together for the occasion they are meant for.” She adds, “For example, If you have a casual range with bottoms that match tops and jackets.”

To gain insight into what your audience wants, you can perform customer surveys, run ads and analyze the results, perform keyword and competitor research, and even test the waters with a small sampling of different products. 

A forewarning: It can take a bit of trial and error to discover what products your ideal customers like best. “The clothing industry is constantly evolving, so it's important to be flexible and adaptable,” advises Neuilly. “Be open to feedback from customers and be willing to pivot your business strategy as needed to stay ahead of the curve.” 

5. Source the clothes and fulfill orders.

When running a clothing business, a big question is, where will the clothes come from and how will you get them to your customers? Well, there are a few different approaches you can take, and each has its pros and cons. 

Design, manufacture, and fulfill orders yourself.

Are you a seamstress or tailor looking to design and create your own clothing? You can certainly go that route. However, you will still need to source your fabrics and other materials. Then, you’ll be responsible for storage, packaging, product fulfillment, and returns. 

While manufacturing your own clothes gives you the most control over your product and the experience customers have with your brand, it’s also the most labor-intensive. In time, if you’d like to scale, you can gradually outsource the various steps to other individuals or companies. 

Buy from manufacturers.

Clothing manufacturers are individuals or companies that produce clothing for other parties. If you can strike up a deal directly with a manufacturer, you can often get the lowest price point, as there’s no middleman. However, you’ll need capital to invest up front and will often need to buy in bulk to close deals. 

To ensure you buy clothing that your customers want, it’ll be important to have an understanding of their preferences. “One common pitfall of new clothing businesses is overstocking on certain items, which can tie up cash flow and lead to unsold inventory,” says Sophia Jones, a financial analyst at PiggyBank. 

Clothing manufacturers can be found here in the U.S. and overseas. You can find reputable manufacturers by speaking to other business owners at industry meetups, vetting them at tradeshows, searching reputable online directories like Maker’s Row, and performing your own independent research online. 

Buy from wholesalers.

Wholesalers work as a middle party between manufacturers and retailers. If you find a wholesaler that has the clothing products you want, you can buy in bulk to get a discount, and then sell items piece by piece in your store to earn a profit. However, the price will likely be higher than if you go directly to a manufacturer (the wholesaler marks up the price to earn a profit). 

You can find wholesalers by performing your own research, getting recommendations from other retailers, and through online marketplace platforms like FashionGo, Alibaba, and AliExpress. 

With physical inventory comes the need for storage, packaging, and shipping. As the owner, you may opt to handle all three in-house or outsource one or more steps to a third party. Regardless, it will come with costs that should be considered. 

Buying from wholesalers gives you more control over the order fulfillment process, but again comes with the risk of buying inventory up front that you may get stuck with. 

Find dropshipping partners. 

The dropshipping model involves marketing clothing items online and then ordering them from a third party when orders are placed. As a result, you’ll need to partner with a clothing manufacturer, wholesaler, or platform that fulfills orders on an on-demand basis. 

If you’re interested in dropshipping products, you’ll need to locate reliable suppliers that offer the products you want to sell, provide the quality you want, and also provide the order fulfillment service your customers expect. Many turn to online supplier databases like AliExpress and SaleHoo to find partners. Further, if you want to sell clothing items with prints you design, you could use print-on-demand platforms like Printify, Printful, CustomCat, SPOD, or Apliiq. 

Dropshipping requires less upfront capital, as you often won’t need to purchase inventory, have storage space available, pack or ship orders, handle returns, or manage stock levels. You can also access a wide variety of clothing products from many suppliers and test product-market fit without much risk. 

On the downside, the profit margins are typically lower as the competition is high. A low bar to entry means more people come in and offer rock-bottom prices to win sales. You’re also putting a great deal of trust in your suppliers, so it’ll be important to ensure they’re delivering a quality level and service experience that aligns with your brand’s promise. You may also be limited in your ability to deliver a customized brand experience through packaging, tags, and details. Although, some companies do offer private labeling services. 

Buy from other retailers or personal sellers.

Another option is to source items from other retail clothing shops. If you’re going to sell vintage or second-hand clothes, you could turn to thrift shops, consignment shops, estate sales, garage sales, and online marketplaces like eBay. If you’re only selling new items, you could look to stores clearing out inventory to make room for the next season’s items. Some stores sell their items on liquidation sites like Close Out Central while others may be willing to make a deal with you directly. 

6. Decide where to sell: Online, retail store, events.

Next, you’ll need a place to sell your clothes. Nowadays, you can opt for an online-only storefront, a brick-and-mortar storefront, a traveling storefront, or a mix. 

Online

Wondering how to start a clothing business online? It’ll require you to establish a web presence. There are multiple ways you can go about building a website from having a website and store built from scratch, to using a platform to quickly get your store up and running. 

Many turn to platforms like Squarespace, Shopify, or Square to set up ecommerce stores. While they can make the process quick and easy, they do charge fees. However, the costs will be much more affordable than hiring a developer and designer to build a custom store.

Retail store

If you want to open a physical retailstorefront, you’re going to need to scout a location, rent or buy a space, furnish it, fill it with inventory and supplies, staff it, and have security measures in place. This option comes with a much higher bar to entry and many more costs. 

Traveling storefront

You may also want to start by going to events. You could put together a booth and attend local farmer’s markets, pop-ups, and other community events your ideal customers attend. 

While opening an online store is often the easiest and most affordable route, any one of these options (or a combination) can be a viable way to reach your ideal customers. 

7. Plan your marketing strategy.

You’ll also need to decide how you’re going to get on the radar of your target audience, attract them to your clothing store, and start making sales. The approach you take can vary a bit depending on where you plan to sell your clothes (online or in a physical store). However, in either case, online marketing is a must.

“In today's digital age, having a strong online presence is essential for any business,” says Neuilly. “Create a website and social media accounts to showcase your products and engage with customers. Consider partnering with influencers or running paid advertising campaigns to increase visibility and drive sales.”

You can also build an email marketing strategy that helps you collect the email addresses of potential customers, so you can guide them through the buyer’s journey. Furthermore, a blog on your website can help you attract customers from search engines.

You may also want to market offline by attending community events, sending direct mail to your local audience, or advertising in local public spaces. 

“One of the most important keys to success that I've learned so far is networking. Networking allows you to build and maintain relationships with people in your industry or related industries. These relationships can help you find new opportunities, learn about industry trends, and gain valuable insights from experienced professionals,” says Neuilly.

Business owners today have no shortage of marketing opportunities. It’s important to take time to create a plan, execute it, monitor the results, and make adjustments as needed. 

8. Determine your pricing method.

Lastly, you’ll need to determine where to set your pricing. To start, figure out your cost per unit (CPU)—how much it costs to manufacture, obtain, store, and deliver each item. From there, you can decide how much you’re going to mark it up. 

Two common retail markup approaches are the Keystone Markup Method and Absorption Pricing. 

With the Keystone Markup Method, the cost per unit (CPU) is doubled to get the wholesale price and doubled again to get the retail price. 

The Absorption Method is a bit more complex and takes your overhead costs into consideration. Once you have your CPU, divide your overhead costs by the number of units you have in your inventory. Then, add that number to your CPU. From there, you can determine your desired profit margin and add it to your overall cost per unit to get your wholesale price (50% is common). After that, you multiply the wholesale price by a number between 2 and 2.5 to get your retail price. 

You’ll also need to decide if you’re a budget brand, a luxury brand, or something in between—and consider that when setting your prices. 

“Pricing is vitally important. I suggest a thorough analysis of your competitors and a meticulous cost sheet for your products to figure out the optimal price,” says Cynthia Wylie, former CFO of BCBG Max Azria and current CFO at Bloomers Edutainment LLC.

Open your new clothing business. 

By completing the above eight steps, you’ll be well on your way to opening the doors of your clothing store—whether online, in-person, or both. From there, the entrepreneurial journey of raising brand awareness, earning the trust of your customers, and keeping them coming back will begin. 

“Starting a new clothing business requires hard work, dedication, and a willingness to take risks. By following these tips and staying focused on your goals, you can build a successful brand and achieve your entrepreneurial dreams,” says Neuilly. 

Need help funding your new clothing venture? Check out Lendio’s retail business loans.

The term ‘mergers and acquisitions’ refers to the combination of two or more companies into a single business entity. This joining-together of multiple companies can take place when two or more businesses form a new legal business entity (aka a merger) or when one company purchases another and absorbs its resources into an existing business entity (aka an acquisition). Acquisitions are the far more common of the two M&A options. 

Whether you’re forming a new entity or preparing to combine an existing business with your own, the M&A process can be complex. But if you execute mergers and acquisitions properly, they could represent a chance to accelerate your company’s growth and add value to your business at a much faster rate than you might be able to accomplish on your own. 

Below is an overview of 10 basic steps in the merger and acquisition process that could set you up for success. You can use the broad details below as an inspiration to conduct deeper research.

1. Acquisition strategy

Before you begin the M&A process, it’s important to define the goals you’re trying to achieve. Write out details about what the ideal business acquisition looks like for your company. For example, how much capital is your company is willing (and able) to invest to acquire another business? What benefits and assets does your business expect to gain in return for purchasing another company?  
Perhaps your business wants to expand its product line or broaden its access to new markets in an effort to boost its profits. Or maybe your company desires to eliminate the competition it’s facing in a particular area. Whatever your acquisition motivations may be, take the time to define them on paper so you’ll know what you’re looking for in advance.

2. Evaluating potential targets.

Next, it’s time to outline the criteria you would like potential acquisition targets to meet. As you make a profile of potential companies you might want to consider for acquisition, here are some key details to consider. 

• Customer base
• Geographic location
• Profit margins
• Company size
• Products and services offered
• Company culture

Once you have a list of companies that meet your criteria, you can perform an initial evaluation of those businesses. From there, you (or a representative on your behalf) can reach out to your top choices to gauge potential interest. 

You’ll also need to decide whether you’re open to the possibility of hostile acquisitions. A hostile acquisition involves making an offer to the company’s shareholders without the knowledge of the company’s board of directors (also known as a tender offer). Hostile acquisitions can be more difficult to navigate in the post-closing phase of the M&A process. So, it’s an important detail to consider.

3. Letter of intent.

If one of your target companies expresses sincere interest in a purchase, the next step in the M&A process is typically to send over a letter of intent (LOI). This document expresses your official interest in moving forward with a merger or acquisition and may provide a summary of your initial proposed offer. 

At this stage most acquiring businesses will also request additional financial details from the target companies with which they’re negotiating, as well. And it’s standard for both parties to sign a confidentiality agreement that agrees not to disclose details of the M&A offer nor the company’s financial information with the public. 

4. Valuation

Once the business you’re interested in acquiring provides its current financial details, you’ll be in a better position to assess the value of the target company. In addition to financial data, you should also consider any external factors that might impact the success of the deal and whether the target company would be a good fit with your existing company culture.

Valuation of a merger or acquisition can be complex. Nonetheless, it’s one of the most important steps in the M&A process. For that reason, many companies seek expert assistance and may hire outside consultants to perform or assist with the valuation process. 

5. Making an offer.

After completing the valuation process, you may be ready to make an initial offer to the shareholders of your target company. The offer you present might propose a cash purchase, stock ownership, or some combination of the two. 

The selling party will take some time to review your M&A offer and may present a counter offer of its own. Negotiations could go back and forth for some time until both parties agree on terms that everyone can accept or the deal falls apart.

6. Due diligence

Assuming negotiations are successful and the selling party accepts your purchase offer, the next step in the M&A process is due diligence. Due diligence is a review period that often lasts 30 to 60 days (sometimes longer). You can (and should) use this review period to confirm that every aspect of the deal is in order before you move into the final steps of purchasing another business. 

As you perform due diligence of a target company, you’ll want to review details such as:

• Financial statements
• Assets, liabilities, and equity
• Products and services
• Key performance indicators
• Customer base
• Human resources
• Company operations
• Etc.

It’s important to leave no stone unturned during the due diligence process. Your goal should be to verify that there are no inconsistencies in the information the seller provided you earlier in the M&A process—the information on which you based your offer. 

If you discover any conflicting details—such as financial statements that don’t match up with the information you were given, for example—it might be cause for an adjustment in your offer. In extreme cases, problems that arise during the due diligence phase might result in a decision to walk away from the transaction altogether.

7. Purchase agreement

Once the due diligence process is complete (and assuming there are no issues), you can begin to draft a purchase agreement. The purchase agreement should detail the cash and/or stock that shareholders of the target company will receive once the sale is complete. The document should also outline when said assets would transfer to the target shareholders. 

It’s important to confirm that your agreement complies with all federal and state regulations and doesn’t violate any antitrust laws. Some M&A transactions may require approval from the state and/or federal government before you can finalize your purchase agreement. So, you may want to consult with an attorney with experience in M&A transactions for guidance. 

8. Closing the deal.

Assuming you receive government approval of your purchase agreement (if it’s necessary), you should be ready to close your M&A transaction. All of the parties involved will need to sign the purchase and sale documents for the deal to be considered closed. At this point, ownership of the target company should officially transfer to the acquiring company.

9. Financing strategy

As an interested M&A buyer, you should begin researching business acquisition loan options long before the ink dries on a purchase agreement with a company you want to buy. However, you will likely finalize the details of your business financing terms after you sign those purchase and sale documents. 

10. Post-closing

After a business acquisition closes, the management teams of the target company (aka the seller) and the acquiring company (aka the buyer) will cooperate together during the transition process. The teams will work to combine the two companies into one—merging finances, organizational structures, company culture, and more. This integration process can take months or even years to facilitate, and you should closely monitor for any potential hiccups along the way. 

Are you ready for your first business acquisition?

Business owners are motivated to consider mergers and acquisitions for a variety of reasons. Whether you’re interested in buying out a business partner, acquiring new technology, removing a competitor from the marketplace, or finding a unique way to expand your company’s geographical footprint, the right M&A deal could present plenty of potential benefits. 

At the same time, it’s important to approach the M&A process with eyes wide open to the possible downsides as well. Acquisitions and mergers can be time-consuming and often take months and sometimes years to complete. Not only can the M&A process be tedious and time-consuming, it involves a significant amount of risk as well. More than two-thirds of mergers and acquisitions fall short of producing their desired results according to PwC. 

Nonetheless, the right M&A deals could represent an opportunity to grow and expand your business at a faster rate. Consider the triumphs of famous acquisitions like Google and Android, Disney and Marvel, and Exxon and Mobil as examples. Analysts also point out that although M&A activity tends to decrease during seasons of market volatility, those times can often bring forth attractive value propositions for deal makers who are willing to take a risk. 

So, if you think you’re ready for your first business acquisition, be sure to do your homework. Take the time to learn from the examples of other mergers and acquisitions and review the guide above to help improve your odds of success. 

Key Takeaways on Factor Rates

• A factor rate is a simple calculation to indicate the total amount that a borrower will pay back on certain types of business financing. 

• To calculate payback, multiply the total borrowed by the factor rate (i.e., $10,000 borrowed x 1.5 factor rate = $15,000 total payback).

• Factor rates are used primarily in short-turnaround, higher-risk financing, like business cash advances.

What Is a Factor Rate?

A factor rate represents the total payback amount of specific types of business financing. Factor rates are expressed as a decimal number (ex: 1.5) and are typically used for business cash advances and other, similar business financing options. 

While both factor rates and interest rates help determine the cost of money borrowed, they’re not the same. 

• A factor rate is applied only to the original amount borrowed and acts as a flat fee for borrowing, which is then incorporated into the loan repayment schedule. 
• Interest rates “compound,” which means the amount of interest owed is calculated based on the remaining balance. The amount paid in interest varies somewhat through the life of the loan.

How Are Factor Rates Calculated?

When a business borrows, it owes the principal amount and whatever the lender charges to borrow that money. The factor rate is part of the formula that helps determine the total amount the borrower will pay back.

Borrowed Amount x Factor Rate = Total Payback Amount

For example, if a business takes out a $10,000 short-term small business loan (borrowed amount) with a factor rate of 1.3, the total repayment would be ($10,000 x 1.3) = $13,000 which means you’ll pay back a total of $13,000.

What’s the Difference Between Interest Rate and Factor Rate?

Interest rates and factor rates both relate to the amount a lender charges to borrow money. However, interest rates and factor rates differ as follows:

Factor Rates and Interest Rates are Expressed Differently

The most obvious difference between interest rates and factor rates is the way lenders display them. Factor rates are expressed as decimals (1.5) and interest rates as percentages (50%).

Factor Rates Don’t Change

One key difference between interest rates and factor rates for business loans is how—or if—they change. Factor rates are fixed and do not fluctuate during the life of the loan. Borrowers know up front exactly how much they’ll pay back, whether they pay early or on time.

Interest rates, however, can be either fixed or variable. When borrowing money with a variable interest rate such as a 10-year SBA loan, the variable interest rate will fluctuate as the prime interest rate changes. Additionally, total interest paid can be reduced through early payoff.

Compounding Interest Rates

Factor rates are static and based only on the amount borrowed.

Interest rates on business loans may be compounded daily or monthly or at other pre-disclosed intervals. Compounded interest is calculated by taking the percentage rate and dividing it by the number of times it “compounds.” For example, an annual interest rate of 10% that compounds daily would compound 365 times each year.

Compounded interest is calculated based on the total amount owed rather than the initial amount borrowed. So a $200,000 loan at 10% annual interest compounded daily would look like 

• Day 1: $200,000 owed
• Day 2: $200,000 + ($200,000 x .10/365) = $200,054 owed
• Day 3: $200,054 + ($200,054 x .10/365) = $200,108 owed

Remember, interest charges are based on the total amount owed. When a payment is made, total owed is reduced, which also reduces the amount of interest charged.

What Types of Business Financing Products Use Factor Rates?

Factor rates are often associated with less traditional, shorter-term, higher-risk financing, including the following:

Cash Advance (Business Cash Advance and Merchant Cash Advance)

Both business cash advances and merchant cash advances are common examples of financing products that use a factor rate. In both cases, lenders “advance” a business money based on future, anticipated income.

Business cash advances are tied to the overall financial performance of a business. Merchant cash advances are linked solely to credit card deposits. Both are paid back as a portion of daily sales, although a business cash advance’s specific repayment amount is calculated upfront and based on a “fixed daily percentage.” Payments can be structured as daily, weekly, or through other arrangements and are almost exclusively processed through an automated withdrawal of funds. 

Other Short-Term Business Loans

Other “short-term business loans” may use factor rates, if that’s how the lender structures the financing. Note, however, that financing will not use both a factor rate and an interest rate. 

Because the total payback amount can vary between factor rates, interest rates, and other repayment options, it’s important to fully understand the conditions of a short-term business loan before signing. Work with an expert, like a Lendio funding manager, to understand all of the terms, conditions, and payback amounts of each option presented.

Does Business Loans Charge an Interest Rate on Top of a Factor Rate?

Short answer: no. Business financing will not charge an interest rate on top of a factor rate. 

Note that the money you borrow with the help of a financing platform like Lendio, where a single application delivers your information to more than 75 different lenders, is required by law, in select states, to disclose all costs and fees upfront so you’re never wondering what you’ll pay.

If you have questions about financing offered through Lendio, please talk to your Account Executive, who can help you sort through the details, the overall cost to borrow, repayment schedules, and other information.

The real estate market is always changing. Currently, the threat of a “housing crash,” skyrocketing interest rates, and faltering housing prices is looming. Despite this, however, it’s still a great time to break into the real estate market business.

The past few years have caused many to pursue careers that are steady and stable through economic challenges. Real estate is a great recession-proof career path, as today’s buyers and sellers need help in the current market. Inevitably, they’ll look to experts like you to assist with their real estate needs.

Here are real estate business ideas and tips to consider if you’re looking to start a career in the field.

Real Estate Business Ideas

Real Estate Business Ideas

1. Residential Real Estate

2. Commercial Real Estate

3. Real EstateInvestment

4. Home Cleaning And Staging

5. Property Management

6. Real Estate Development

7. Real Estate Photography

8. Real Estate Coaching

1. Residential Real Estate

Helping others purchase or sell a home, also called residential real estate, is a common real estate business idea. Residential real estate agents assist sellers with marketing their properties to potential buyers and assist buyers with finding the right properties that align with their needs and budgets. The residential real estate industry continues to grow each year and provides great opportunities for experts in the field. 

To become a residential real estate agent, you should be well-versed in administrative work, research, and marketing, and check your state’s licensing requirements to ensure compliance. On average, residential real estate agents earn $50,000 per year.

2. Commercial Real Estate

Similar to residential real estate agents, commercial real estate agents assist with buying, leasing, and managing properties for businesses. Because the commercial real estate market is more data-based, this career involves more research to identify trends. Additionally, commercial real estate deals more heavily with leases than residential real estate does. 

A commercial real estate career is an attractive option for many real estate professionals because of its financial benefits. The average annual salary of a commercial real estate agent is $94,383—almost twice as high as that of residential agents. However, licensing requirements are typically the same as those for residential real estate agents.

3. Real Estate Investment

Another common real estate business idea is investing in a pool of real estate properties through crowdfunding or real estate investment trusts. 

Real estate investors can earn between $70,000 and $124,000 per year—and even more, depending on the number of deals you strike and the time you invest. Salaries also depend on the area of real estate in which you’re investing. 

For instance, rental property investing typically earns a lower salary ranging between $27,500 and $121,000. Home flipping averages at $62,900 per flip. Short-term rentals earn you between $35,120 and $61,097. Wholesaling earns you between $21,500 and $98,500. Essentially, the more work you put into your career, the higher the salary you will reap.

4. Home Cleaning And Staging

Preparing a home to be shown for real estate agents’ clients involves cleaning the home so it is “move-in” ready, as well as making it look presentable for potential buyers to walk through. Home staging aims to transform a house into an appealing and inviting environment in which potential buyers can easily envision themselves living. Those in the home staging industry say home staging can raise seller’s profits by anywhere from $10,000 to $75,000.

On average, a home stager can earn between $300 to $800 for a two-hour consultation at the potential client's home. If the client wants to proceed with home staging services, the potential to earn an additional $1,000 is the minimum threshold. A home staging project can see a price as high as $5,000 to $10,000, depending on the size of the home, its location, and the expertise of the home stager.

5. Property Management

The need for a property manager often comes when the owner does not have the time or expertise to manage their real estate properties. A real estate property manager generally works full-time and is responsible for the daily operation of properties, including but not limited to residential, commercial, or industrial properties. Property managers meet with potential renters and show them properties, collecting monthly fees from tenants, paying bills, arranging for repairs and maintenance, complying with fair housing laws in the area, and more. 

In recent years, the average property manager grossed $54,183 in the United States. Although that is the average, salaries have been as high as $79,000 depending on the manager’s education level, certifications, experience, and the property type they are responsible for managing.

6. Real Estate Development

Real estate developers are responsible for overseeing the new construction or renovation of residential or commercial properties. Job responsibilities may include securing financing, working with construction companies to ensure timely project completion, and marketing the new development to clients.

If you’re interested in real estate development, start by taking on a role as a land development project manager. The average land development project manager salary is $99,100, with salaries expected to increase to $112,100 in the next five years.

If you’re looking to establish your own real estate development company, your take-home income can be largely influenced by both the project and the broader market. Assuming you can sell a property at full occupancy, you can get a return on investment of between 16% and 20%.

7. Real Estate Photography

If you have an artistic eye, you might consider starting a business in real estate photography. A real estate photographer takes high-quality pictures of properties for marketing purposes, working closely with realtors, designers, architects, and other professionals. They are also often responsible for pre-photo and post-photo work—such as staging rooms, adjusting the lighting, and editing photographs—to create the best possible final product.

To get started in real estate photography, you’ll need some background knowledge in photography (whether through a degree program, work experience, or self-study) as well as basic camera and editing equipment. You can make an average of $42,940 each year as a real estate photographer, with increased earning potential for high-end real estate clients or higher volumes of properties being photographed.

8. Real Estate Coaching

For experienced real estate professionals, real estate coaching can be a rewarding and lucrative career path. As a real estate coach, you can help new agents get the best possible start in the industry by providing feedback and professional insights. This career path also offers flexibility—you can take on as many or as few clients as you want.
Real estate coaches typically charge between $400 and $500 per month for individual sessions. Depending on your experience level and how many clients you have, you can make anywhere from $69,337 to $103,606 annually, with an average take-home pay of $86,002.

Why Real Estate Is A Lucrative And Worthwhile Industry For Entrepreneurs

• High Earning Potential: It’s no secret that owning real estate can pay off over time—roughly 90% of millionaires are real estate investors. By purchasing property, you can continue to work on your current business, while letting the investment earn a profit for itself by appreciating value, developing it, or renting/leasing it out to tenants.
• Flexibility And Independence: As an entrepreneur, if you’re looking for a place to house your next business, investing in real estate can offer a cheaper, long-term solution than renting with the added benefit of flexibility. Instead of paying money each month to an outside source, owning a property allows you to pay rent to yourself and make changes/renovations to tailor the property to your business’s needs.
• Tangible Assets With Potential For Appreciation: When you invest in real estate, you own a physical property with the potential to grow in value over time. As inflation rises and areas develop, your property’s value is likely to rise too—when it comes time to sell, your investment will earn you a higher profit than the cost you paid.
• Diversification And Risk Mitigation: By diversifying your portfolio with a real estate investment, you can mitigate risk by having additional assets and ensuring you maintain positive cash flow, even if one of your income streams dries up.
• Opportunity For Personal And Professional Growth: Owning property can lead to opportunities for growth because it offers entrepreneurs a chance to earn passive income through syndication deals, which can help cover mortgage payments or be used to invest in something new. Additionally, should you need an influx of cash down the line for your business (or personal reasons), your investment is a tangible asset with accessible equity for the funding you need.

Tips For Success In The Real Estate Business

Build A Strong Network

Networking is one of the most important aspects of a highly-competitive real estate business. As a real estate professional, connect with colleagues at your brokerage, participate in networking events, and join associations to build a positive reputation. Building relationships with other agents can lead to referrals, increasing your success. 

Additionally, build friendships with other related professionals—such as inspectors, appraisers, and mortgage officers—for advice and recommendations. Having an interdependent relationship with other agents can also provide clients with an elevated level of service.

Develop A Solid Business Plan

A business plan should outline your business’ growth and success and include:

• A mission statement
• An analysis of strengths, weaknesses, opportunities, and threats
• Specific and reachable goals
• Marketing and lead generation strategies
• Income goals
• A timeline for revisiting the plan. 

Defining these elements will help you achieve success by providing a clear path forward.

Continuously Educate Yourself

Real estate agents can differentiate themselves from the vast information the internet provides to homebuyers by becoming an expert in the field. Providing valuable experience and staying current with industry news and trends will set you apart from your competitors. 

Agents must also renew their licenses every one to two years by continuing education hours that cover the laws and required state regulations. Plenty of online real estate schools offer classes to help you fulfill these requirements.

Stay Up To Date With Market Trends And Changes

You’ll want to know the specific market you’re serving by researching and visiting properties in the area and analyzing real estate statistics (Ex: interest rates, price points, inventory, and days on market). Once you have an understanding of current market trends, decide on a real estate farm area to focus on and target the right audience of buyers and sellers with marketing materials.

Provide Excellent Customer Service

Successful real estate agents should prioritize building and maintaining customer relationships, regardless of busy schedules. Going the extra mile and putting in long hours should be the norm for agents striving for higher levels of success. Building lasting relationships with clients is crucial for success in the real estate industry, as it often leads to multiple deals with the same clients and their networks. 

As a real estate agent, listen to each client’s individual needs instead of focusing on only the financial gains.

Embrace Technology And Digital Marketing

Technology plays a crucial role in successful marketing campaigns for new real estate agents. Establishing a strong social media presence and creating a website is essential to reach a larger audience and differentiate yourself from more experienced agents. 

A website allows potential buyers to visualize the services you provide. Additionally, Facebook is a great way to advertise and showcase properties; LinkedIn is ideal for networking with real estate professionals; Instagram can reach a younger audience with visually appealing content; and Twitter can help you share updates and engage with followers.

Obtain The Funding You Need

Assess your financial situation to ensure you have the correct funding while building your business. Consider initial costs, such as education, licensing, and board fees. You are responsible for recording income and expenses, and those expenses will increase as your business grows. If you’re looking to apply for a commercial real estate loan, Lendio details everything you need to know during the process.

Additionally, account for your expenses that might impact profits—marketing, MLS fees, lead generation, and client meals. You can use accounting software like QuickBooks Self-Employed to help you manage expenses, track mileage, calculate tax deductions, and generate reports to allocate money wisely.

Bottom Line

Despite the current threat of a housing crash, high-interest rates, and declining housing prices, now may still be a favorable moment to enter the real estate market. Real estate is a great, recession-proof career path, and, now more than ever, today’s buyers and sellers need help from skilled professionals to navigate the market. 

Although specific salaries and pay per job will depend on expertise and experience in the field,  it’s clear that the real estate market presents a host of lucrative and satisfying business avenues for those ready to jump in.

Interested in commercial real estate financing? Learn more in our guide.

As a small business owner, knowing how to raise capital for your business is crucial to its longevity. Whether you need money for operating expenses or are looking to expand, there are many reasons you might need access to additional capital. 

If you're a small business owner, here are some capital options you may want to consider. 

Bank Loans

Bank loans and alternative business loans are both common ways for companies to raise capital. In fact, many businesses utilize business loans even if they have plenty of cash. Either they want to keep a certain level of liquidity for potential opportunities or they want to be prepared for a possible financial emergency. 

There are a variety of business loans companies can use:

SBA Loans

SBA loans are loans disbursed by financial institutions, but are insured by the U.S. government. Because of this, they come with some of the lowest rates in the industry. There are a few different types of SBA loans—such as microloans, 7(a) loans, and 504 loans—and each has a unique purpose. If you’re looking for working capital, a 7(a) loan may be the one you need. 

Term Loans

Term loans may be what you think of when you think of a business loan. Term loans are deposited in one lump sum and monthly payments are made until the loan matures. The money can be used for a variety of purposes, but how much you can borrow will depend on your creditworthiness. 

Equipment Loans

Equipment loans are unique in that they are used specifically to purchase machinery.  

Business Cash Advances

Business cash advances provide lump sums of money that are repaid in daily or weekly installments as either a percentage of credit card sales or as a fixed amount withdrawn from the business’s bank account. 

Accounts Receivable Financing

With accounts receivable financing, unpaid invoices are sold to a third party who pays up to 80% of the invoice’s value. That company then works on collecting payment from the customer(s). Once the payment is received, any remaining amount is distributed back to the company minus any fees. Invoice financing is a smart way to obtain working capital that is necessary for future projects or orders. 

Business Lines of Credit

A business line of credit is very similar to a credit card in that it is a revolving account. As the principal is paid down, those funds once again become available. It differs from a business credit card in that the borrowing amounts are typically much higher and the interest rates are usually much lower. However, unlike credit cards, business lines of credit have draw periods where funds are available, but many lending institutions will offer the chance to renew the line of credit if there were no issues with repayment. 

Because there are so many options on the market, there are business loans to suit just about any small business regardless of their credit score, income, or asset situation. 

Equity Financing

Equity financing is when a company sells ownership shares in exchange for capital. While a percentage of future profits go to the new owners, the benefit is that the company does not have to take on debt. Sometimes business owners offer partnerships, too, as part of their equity offer. When they do, they may not necessarily be seeking only capital—they may also be seeking that person’s expertise and knowledge. 

Companies looking to sell company equity will want to work through venture capitalists or angel investors, but another option is to sell completely to a private equity firm. Private equity vs venture capital boils down to how much of your company you’re willing to sell.  

Depending on the size of your company, you may even consider going public and having an initial public offering; however, to have a successful IPO, your company will need to meet certain financial requirements and show strong growth potential.

Crowdfunding

There are a few different types of crowdfunding, and, yes, the premise behind each is similar to the categories mentioned above. However, crowdfunding should be thought of as its own thing, because of the potential to reach a much bigger market. 

As a business owner, you can do the following types of crowdfunding:

• Donation-based crowdfunding
• Rewards-based crowdfunding
• Equity-based crowdfunding
• Debt-based crowdfunding

Donation-based crowdfunding is often utilized by individuals and nonprofits, but small business owners can take advantage of it, too. The benefit to doing a donation-based campaign is that any money raised is not taxed by the IRS. Of course, it can be difficult to convince donors to contribute to your campaign if your business is not philanthropic by nature.

Unlike donation-based crowdfunding, rewards-based crowdfunding is taxable by the IRS because there is an exchange of goods or services for money. However, if done correctly, it can be a great way to raise money and market your business—especially if your business is partially or 100% online.      

Equity based crowdfunding is when you sell company equity through crowd-based platforms. While you are giving up a percentage of future profits, the benefit of equity based crowdfunding is that you can reach a wider market of investors than you could through traditional equity financing. Plus, you’ll still be the sole decision maker and likely won’t have to communicate one-on-one with any investors.

Debt-based crowdfunding is essentially P2P (peer to peer) lending. It can be a good alternative to traditional bank loans if you’ve had trouble getting a business loan in the past. The downside is that you will likely have less favorable loan terms and higher interest rates and fees. 

Grants

Grants are available to small business owners, but they are extremely competitive. Unlike loans, grants do not have to be repaid, nor does any equity have to be relinquished. 

Consider looking for grants offered by your local community or state first, as well as any corporate grants that may be specific to your area. Keep track of which grants renew and when. Just because you were denied once doesn’t mean you will be denied indefinitely. 

Friends and Family

If possible, consider seeking the financial support of friends and family. Many successful small businesses have gotten the jumpstart they needed from personal relationships. To successfully do this, disclose why you need the money, how you intend to use it, and when they can expect to be paid back. To put them more at ease, you may even want to have legal paperwork prepared. 

Final Thoughts

Many small businesses don’t simply rely on one method to raise capital. To fulfill your current and future capital needs, consider a combination of the options discussed above. 
Compare business loan options today at Lendio. 

Buying into an existing business as a partner can be an incredible opportunity for both the new partner and the existing business. In addition to capital, the new partner may bring knowledge and expertise currently lacking in the company. In many situations, both sides see a good return when the pairing is right.  

How do you become a business partner?

To become a business partner, you must purchase company equity. The aim is not to buy a business outright, only a portion or percentage of it. To do this, you'll either need to use cash, take out a business loan, or do a combination of the two. 

Once you’re a partner, any future profits will be shared with you as a new part-owner. How much you receive will depend on your ownership percentage.

Why do businesses look for new partners?

Businesses open to new partners sometimes prefer selling equity rather than taking on additional debt, because the money they receive from the new partner doesn’t have to be paid back. However, the partner will receive a return on their investment via a percentage of any profits.

Sometimes companies are not able to qualify for the loan they need, or maybe the current owners are looking for someone who has a particular skill set that might help their business grow. Another option is that one of the partners is looking for an exit. Before you buy out a partner. make sure you fully understand why he or she wants to be bought out.

What is a partnership agreement?

A partnership agreement is needed when a new partner buys equity in the business. It outlines how profits and losses will be shared, what responsibilities and duties each owner assumes, and the overall terms between all parties. It’s similar to a buy-sell agreement, but a buy-sell agreement only establishes when one owner can buy out another.  

When becoming a partner, it’s important to fully understand both the partnership agreement and the buy-sell agreement. 

Can you use a loan to become a business partner?

Yes, you can use a loan to purchase company equity and become a business partner. You'll likely need to secure the loan with a personal asset, such as real estate, stocks and bonds, or company assets from a business you already own. Depending on the loan amount and the value of your assets, you may have to collateralize multiple assets to secure the loan.

What types of loans can be used to purchase company equity?

There are many ways to purchase company equity. Common options include:

• Traditional bank loan - If you have a strong credit score, a traditional bank loan can be used to purchase a partnership. Unlike the SBA loan, you don’t have to currently be a small business owner. 
• Seller financing - Seller financing is when the seller offers the capital needed to buy them out of their business. Instead of loaning money in the traditional manner, the seller is paid through monthly payments. Loan terms vary, and are whatever both parties agree to. 

Final thoughts

When purchasing equity to become a business partner, it’s important to understand why the company is looking for a new partner and what their current financials are. Complete understanding of the partnership agreement is also necessary. If everything looks good, a business acquisition loan may bring in a great return on your investment.
Learn more about business acquisition loans today at Lendio.

Researching how to get a government loan to start a business? Or have you heard that government business loans have some of the best rates? Government business loans do come with competitive rates, and some of them can even be used to cover startup costs. In fact, a government business startup loan may be the capital solution you’ve been looking for. 

Learn the different types of government business startup loans, their pros and cons, and things you’ll want to consider when searching for the best loan product for your business.

How Do Government Loans Work?

A government loan works the same as any other type of loan. First, the borrower must meet the eligibility requirements in order to qualify for the loan. Some loans have more requirements than others—meaning the borrower might have to work and conduct business in a certain location or have been in business for a certain minimum amount of time. Once the application is submitted, an underwriter reviews the application to determine if the borrower qualifies.

Interest and Fees

All government loans charge interest and have fees. Interest rates are usually capped at a certain percentage. SBA loans, for example, have maximum interest rates lenders can charge borrowers, which is why they are some of the most sought-after business loans on the market. 

Collateral Requirements

Depending on the loan product, collateral may be required to secure the loan. If there are not enough assets within the business itself, lenders may require that the borrower sign a personal guarantee and pledge any of their personal assets. 

Most lenders will not accept assets that have already been collateralized for another loan (such as a house for a mortgage). Lenders that will accept those types of assets likely already have a working relationship with the borrower and will still charge higher interest. Typically, lenders do not like to be the second lender in line for collateral, because it means they will be less likely to recoup any losses if the borrower defaults on payments. When a borrower defaults on one loan, they are more likely to default on another. 

Repayment

Like other loans, government loans have set repayment periods and require monthly payments to keep the account current. The length of the repayment period varies with the loan product and can range from a few months to 25 years. The longer the repayment period, however, the more the borrower will pay in interest over time. 

Loan Funds

One last thing to consider is that many government loans have specific purposes the money must be used for. Some are intended for large asset purchases and construction costs, while others are to be used solely for working capital, which covers any expense that helps or enables a business to generate revenue).

What Are The Different Types Of Government Business Loans?

There are many types of government business loans. Some of the more popular ones include:

SBA Loans

The Small Business Administration (SBA) is a government agency created to help provide resources to support small business growth and development. There are a variety of SBA loans on the market that may help your business. Borrowers often prefer SBA loans because of the favorable interest rates and repayment periods. 

USDA Business Loans

The United States Department of Agriculture has a few different types of loan programs aimed at helping businesses in rural areas. For example, there is the Business and Industry (B&I) Loan and the Rural Energy for America (REAP) loan. B&I can be used for working capital, construction, and business acquisitions, while REAP is intended to help companies invest in renewable energy. 

Community Development Financial Institution (CFDI) Loans

CDFI loans are intended for both individuals and small businesses operating in economically distressed areas. They are generally given by nonprofits to borrowers who are unable to get loans through traditional lenders.  

Export-Import Bank Loans

Shortened to EXIM, export-import loans can be used for working capital, but can also be used to cover both exporting and importing costs for both raw materials and finished products. 

State and Local Government Loans

Local banks, credit unions, and government websites may offer loans for small businesses. Not all locations offer them, so borrowers will need to conduct some research to see if there are any opportunities in their area. 

Note: Business grants may also be an option. Just keep in mind that you will be competing with other business owners for the same money, and there will be stricter eligibility requirements you’ll have to meet to qualify. 

How Many Different Types Of SBA Loans Are There? 

The Small Business Administration offers a few different types of SBA loans business owners may want to consider. Each comes with its own terms, eligibility requirements, and loan amounts. 

• 7(a) loan - The most popular loan option for small businesses because the borrowed money can be used for a variety of purposes, such as working capital, refinancing, and purchasing necessary equipment 
• Microloan - For small capital needs up to $50,000 to help businesses get established or expand
• 504 loan - For businesses making large asset purchases, with loan amounts and repayment periods greater than those of other loan products 
• EIDL - Low-interest loans for businesses affected by COVID-19 and natural disasters 
• SBA Express - Offers loans up to $350,000 for approved borrowers, with an easier and faster application process compared to other SBA loans
• International trade loan - Intended for businesses that are expanding into foreign markets 

What Are The Pros And Cons Of SBA Loans?

Overall, despite their cons, SBA loans are the loan of choice for many business owners. In general, all loan products have drawbacks. The trick is finding a loan with the strongest benefit. 

Government business loans can help businesses cover startup costs and save money in interest. The key thing to consider is that the application and review process can take longer than a standard business loan, and the eligibility requirements may be more difficult to meet. However, if you are not in a financial emergency, the extra time may be well worth your while because of the money you’ll save. 

Learn more about SBA loans today with Lendio. 

In today's fast-paced business world, companies are always looking for ways to access capital quickly and efficiently. One option that has become increasingly popular is invoice financing. This lending method allows companies to use their outstanding invoices as collateral to secure a loan, providing them with the funds they need to cover operating expenses, payroll, and other costs associated with running a business. In this article, we'll take a closer look at how invoice financing works, its requirements, costs, pros and cons, and how it differs from invoice factoring.

What is invoice financing?

Invoice financing, also called accounts receivable financing, is a lending method in which a company uses its outstanding invoices as collateral to secure a loan. Normally, lenders require some sort of company asset to act as collateral. However, with invoice financing, unpaid invoices are the asset. This process is usually faster than other small business loans, both in terms of application and receipt of funds.

One thing businesses should keep in mind about invoice financing is that the full invoice amount is not given. While it depends on the lender, companies are typically only able to borrow up to 80% of their accounts receivables. 

Invoice financing requirements

To qualify for invoice financing, businesses need to meet a set of specific criteria. First and foremost, your business must have outstanding invoices from reputable clients, as these will act as your collateral. Generally, lenders prefer invoices due to be paid within 90 days.

Second, it's crucial that your business has a solid track record of successful transactions with its clients. High levels of disputes or returns can raise red flags for lenders. In other words, a history of strong customer relationships can make your business more attractive to lenders.

Third, many lenders also require a minimum monthly revenue of $10,000 to qualify, ensuring a steady cash flow and loan repayment capability.

Finally, industry preference is also another factor that lenders consider. Some sectors are more favorable to lenders due to the predictability of their cash flow and lower risk levels. However, this varies by lender and it's always best to check with your potential lender about their preferred industries.

Remember, each lender may have their own set of requirements, so be sure to do your research and understand the terms before you apply.

How invoice financing works.

Here's what to expect with invoice financing. Once approved, you'll receive a cash advance based on a percentage of the outstanding invoice (usually around 80%). You can use those funds for whatever operating expenses you need, such as payroll or inventory. When your customer pays the outstanding invoice, you pay the lender back along with the agreed-upon fee.

Invoice financing example

Let's explore a concrete example to better understand the process of invoice financing:

Imagine you own a small tech company, "Bright Future Tech," and you've recently completed a large project for one of your clients. The client is happy with the work, but they operate on a net 60 payment term. That means you won't see the payment for two months, but you have bills that need to be paid now.

Bright Future Tech has an outstanding invoice of $100,000 from the client. You approach a lender for invoice financing. The lender agrees to provide you with 80% of the outstanding invoice amount, which is $80,000. This cash advance helps you to manage your immediate operational costs.

After two months, when your client pays the invoice in full, you then repay the lender the $80,000 you received upfront, plus any fees associated with the loan. In the end, invoice financing has enabled your business to maintain a healthy cash flow, despite the lengthy payment terms of your clients.

Costs associated with invoice financing.

You do have to pay the invoice financing company for getting the advance. Instead of a factoring fee (as you'd pay with invoice factoring), you'll pay an ongoing percentage of the invoice amount until your customer pays.

For instance, your financing terms might have you pay 3% of the outstanding invoice every month. On a $10,000 invoice, that would be $300 per month. These costs can quickly add up if your customer is extremely late in paying.

Invoice financing pros and cons

Companies in need of working capital—or who need help financing a purchase order—may find their borrowing needs met with invoice financing. However, there are other loan products on the market that may be a better fit. When choosing an invoice financing lender, make sure to compare its rates and fees with its competitors to ensure you get the best one. 

Ready to get paid sooner? Apply for accounts receivable financing today with Lendio.