How do start up business get enough money to pay their workers and get profit?

Question

E.g. I know Amazon.com didn't make a profit for 3 years! They must have only paid their workers, but how can they afford to do this as a start up business, if they have hundereds of workers?

Answer 1

A business is started by people that have enough money without starting the business.So first if they don't have money the take them at the bank or win them in another job so don't even think to start a business without having money for a year for the payments

Answer 2

There are a number of ways. You could approach the bank with a business plan however you would normally require some collateral in order to secure the loan. Another way is to invite business partners to join in the venture in return for a percentage of equity in the business. Don't count on being profitable or even break even in the beginning. Start up costs can be enormously high given that you will need equipment, need to pay salaries, advertise and spend money to attract customers. Make sure you have enough financial resources in order to weather the storm. Companies like Amazon grew from small organizations to large ones also. They are able to do so because they are publicly traded companies and they use the cash from the sale of stocks in order to finance their business operations.

Answer 3

It all works around investors. Say you are a millionaire, and someone comes to you with a business plan and says that this new business will generate X amount of millions a year. You as the millionaire can finance the business for a percentage of equity in the business. Say that this business can generate $5 million a year with an investment of $1 million for 30% of the business. Your new investment is making you $1.5 million a year.

Answer 4

Most start ups are not profitable in the start up years. They run a loss, funded by their investors.

Their investors (both debt and equity holders) invest funds into the company, in hopes of future returns on their investment.