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How to Start an Affiliate Business Using Loans and Venture Capital

How to Start an Affiliate Business Using Loans and Venture Capital

Affiliate marketing is one of the best ways to start an online business on a tight budget.

However, just like any other business model, affiliate marketing requires some initial funding.

In this article, I’ll be discussing two ways to get the money you need to start your affiliate business – loans and venture capital.

We’ll also take a look at the pros and cons of each option so you can fully understand which is the best for you.

Let’s get cracking.

1. Work out the costs

Affiliate marketing is among the money-making ventures with the least startup and operational expenses.

As an affiliate marketer, you won’t need to spend money on creating a product, renting space, buying inventory, hiring people, setting up customer service, etc.

Nevertheless, before venturing into affiliate marketing, make sure that you do your due diligence and determine the approximate amount of expenses that might incur, such as:

  • web hosting
  • advertising
  • training
  • outsourcing
  • marketing tools
  • etc

Taking the time to educate yourself about the costs of starting and running an affiliate business beforehand will separate you from the majority of amateur affiliate marketers and significantly boost your chances of achieving success.

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2. Find the right loan

Finding the right loan is key to starting your affiliate business on the right foot.

There are many factors you should evaluate when choosing a loan, including the amount of money you need to borrow, the terms of the loan, the interest rate, and your credit history.

If you’re using a loan to pay off debt, make sure that you go for one with a lower interest rate than the interest rate on your existing debt. Moreover, you’ll need to be aware of the terms of the loan, as this can impact how much money you ultimately end up paying back.

On top of that, you’ll need to consider the collateral you have to offer.

Collateral is something you can offer as security for a loan, and it can be anything from property to inventory. If you have no collateral to offer, you’ll probably still be able to qualify for a loan, but you may have to pay a higher interest rate.

By taking the time to do your due diligence and educate yourself appropriately, you can rest assured that you’ll eventually land the best possible loan deal for funding your affiliate business.

3. Consider venture capital

Some people might come across difficulties and setbacks while trying to secure a loan. Traditional lenders are often reluctant to take on new businesses. Lending from friends and family is never a good idea, but even if it were, they’d probably lack the amount of money you’ll need to invest.

Enter venture capital.

Venture capitalists are investors who’re after funding opportunities with promising growth potential in exchange for equity stakes. If your business measures up, you might be able to close a deal with a venture capitalist who’ll provide you with all the required capital to get your affiliate business off the ground.

Nonetheless, just like loans, taking on venture capital has its downsides too.

Typically, venture capitalists want to see high returns on their investment as soon as possible. This might put a lot of pressure on your shoulders and lead to making bad decisions in favor of short-term gains that are not in line with your affiliate business’s long-term goals.

4. Create a budget

Once you’ve gotten your hands on the required funding, it’s time to start planning how you’ll be spending it.

Creating a budget is one of the best ways to keep track of your expenses and make sure you’re not overspending. Once your budget is in place, it’s important to review it on a regular basis to be sure you are staying on track.

5. Launch your affiliate business

After determining your budget, you can finally embark on your affiliate journey.

The process of getting started with affiliate marketing consists of the following four simple steps:

  1. Pick a niche
  2. Build a website
  3. Grow your audience
  4. Promote products

Here’s a step-by-step guide on how to successfully implement those four steps toward building an affiliate income online.

Tips for growing your affiliate business

Getting started with affiliate marketing might seem simple, but growing an affiliate business to success requires significantly more work than randomly throwing a few affiliate links here and there.

Here are three tips that could help you scale your affiliate business and maximize your affiliate earnings properly:

1. Go for a profitable niche

Take your time and research different niches until you find one that has enough demand for the products or services you’ll be promoting. That’s the first step to achieving success as an affiliate marketer.

2. Post valuable content

The content you publish on your blog should deliver value to your visitors. If not, they won’t trust you enough to stick around for long and purchase the affiliate products you promote. A few examples of valuable content include but aren’t limited to guides, listicles, product comparisons, polls, whitepapers, eBooks, downloadable resources, and more.

3. Experiment

Once your site’s up and running, you’ll need to start promoting it. There are tons of ways to do that, such as search engine optimization (SEO), social media marketing, guest blogging, email marketing, or pay-per-click (PPC) advertising. Experiment, gather feedback, weed out any underperforming practices, and focus the majority of your resources on the ones that generate the best results.

4. Get training

According to statistics, lack of proper training is the main reason aspiring affiliate marketers fail.

If you want to stand a chance at affiliate success, you need to seriously consider signing up for a high-quality affiliate marketing course that’ll point you in the right direction and help you sidestep all the major pitfalls that lead to failure in the industry.

Affiliate marketing FAQs

(Click each question to expand)

Affiliate marketing is an online business model that involves promoting products or services created and distributed by third-party online merchants in exchange for getting paid a commission for each sale you refer.

In layman’s terms, affiliate marketing is the process of being compensated for helping businesses sell to more customers.

Read more…

Here’s a bird’s eye view of how affiliate marketing works.

  1. You join a merchant’s affiliate program
  2. The merchant gives you a unique affiliate link that points to their e-shop
  3. You promote your unique affiliate link online (blog, forums, social media, paid ads, etc.)
  4. Every time someone clicks on your unique affiliate link and makes a purchase on the merchant’s e-shop, the merchant pays you a commission

The Affiliate Marketing Process Overview

Read more…

There are thousands of successful affiliate marketers all around the world. Some of the most well-known ones are:

  • Pat Flynn
  • Matt Diggity
  • Matthew Woodward
  • Doug Cunnington
  • & more

You can check out a roundup of my 17 favorite examples of affiliate success and their backstories right here.

  1. Billion-dollar industry
  2. Very low startup & operational expenses
  3. Huge income potential
  4. Flexible & versatile
  5. Passive income
  6. Simple to implement
  7. No technical background
  8. No customer support
  9. No physical setup

Read more…

Affiliate marketers can be divided into five main income groups:

  1. Total beginners: $0 – $20,000 per year
  2. Low-level affiliates: $20,000 – $50,000 per year
  3. Intermediate affiliates: $50,000 – $100,000 per year
  4. High-level affiliates: $100,000 – $500,000 per year
  5. Super affiliates: $500,000+ per year

According to PayScale, the average annual income for affiliate marketers in the US is over $54,000 per year. Statistics reveal that 13% of affiliates earn more than $75,000 per year.

Some of the factors that influence how much you earn as an affiliate marketer include:

  • seniority
  • target niche
  • available resources
  • previous experience
  • marketing efforts
  • & overall mindset

Read more…

Here’s a rough income growth timeline of a typical affiliate marketing business:

  • months (0-3): no earnings
  • months (3-6): first affiliate sale
  • months (6-12): $100-$500 monthly
  • months (12-18): $1000 monthly
  • months (18-24): $3000+ monthly

This timeline isn’t a guarantee of future performance but rather a mere approximation of the income growth of an average affiliate business. Your own timeline could be shorter or longer than projected.

Over the years, I’ve seen aspiring affiliates striking a gold vein just a few months into the industry. On the other hand, I personally know people who’ve been struggling to grow their affiliate revenue to $1000 per month for several years.

Read more…

Affiliate marketing is one of the most affordable money-making models out there.

Here’s a breakdown of everything you need to get started as an affiliate marketer along with their associated costs:

  • web hosting & domain name: $2.95/month (Bluehost)
  • keyword research tool: $49/month (Jaaxy)
  • expert guidance: $49/month (Wealthy Affiliate)
  • email autoresponder: Free for up to 1000 subs (MailerLite)

Please note that on top of expert guidance, Wealthy Affiliate also provides free access to hosting and a keyword research tool so you don’t have to purchase them separately.

Yes, you can do affiliate marketing without a website by promoting your affiliate links on other marketing channels, such as:

  • Social Media
  • Paid Ads
  • YouTube
  • Podcast
  • etc.

Read more…

The process of getting started with affiliate marketing can be broken down into the following four simple steps:

  1. Pick a niche
  2. Launch a blog
  3. Build an audience
  4. Promote affiliate products

Read more…

No, you don’t.

Affiliate marketing is very simple to get started with by virtually anyone regardless of age, education, background, available capital, tech-savviness, professional network, etc.

In fact, most 6-figure affiliate marketers were no more experienced than you currently are when they first ventured into the affiliate marketing industry.

Nonetheless, being knowledgeable in fields like marketing, sales, content production, business management, etc., could help you reach your financial goals somewhat faster.

The Bottom Line

There’s no right answer when it comes to whether or not you should take out a loan or venture capital for starting an affiliate business. It all depends on your individual circumstances and needs.

However, as a general rule of thumb, taking out a loan will allow you to have much more control over your business and how it’s run.

With venture capital, you’ll be giving up a portion of the equity in your business in exchange for the funding you receive.

Do your research, weigh both options carefully, and go for the one you consider the most likely to take you closer to your goals better, faster, and with the least amount of stress and obligations.

Written by:

Harry is the founder and creative director of Dear Boss I Quit. His mission is to inspire and help as many people as possible escape the 9-5 grind forever by building a passive income online just like he accomplished a few years back.

You can read more about Harry’s story right here.

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