Success in business requires mastery of skills in dozens of areas. While entrepreneurs must be creative in thinking of a market niche to exploit, they also need great people skills, organizational skills and financial skills. One part of starting a business, though, can take all these skills, all at once — finding funding.
Funding a new business plan can be harder than creating a business plan
Creating the perfect business plan can be a lot of work; nevertheless, the process is clearly within the control of the individual attempting it. The same can’t be said of finding financial support. As movie after movie on startup challenges has shown, it can be fiendishly difficult getting banks, lenders, venture capitalists or anyone else to grasp the value of a good plan and take a shot. Often, entrepreneurs need to run after funding from multiple sources for years before things begin to stabilize.
Bootstrapping is planning a business launch with as little money as possible, and moving forward on sheer willpower. It’s been a favorite of entrepreneurs for decades, and it’s known to work. It does take creativity, though. The basic idea is to tap people and businesses not for money, but for the services that they provide.
The skilled bootstrapping entrepreneur knows how to speak to all kinds of service providers to get them to defer payment. Whether it is a provider of legal services, server and hosting services, office space, PR services or anything else, it takes the entrepreneur’s vision and self-belief to rope multiple providers in. The best part of bootstrapping is that unlike with obtaining funding, you end up owing money to no one.
At some point, you will need to seek funding
Before you actually bring outside partners in, it’s always sensible to truly test out your idea as far as you can with very little money invested. One way to go about it would be to simply advertise using Google AdWords — even if you have no product, at all. To simply see people click on your PPC ad can give you some sort of idea how much popular support your idea may have if it actually makes it to market.
Crowdfunding, putting an idea up on sites such as Indiegogo or Kickstarter can be an even better way to test your ideas. If your idea actually strikes a chord somewhere, you’ll begin to collect dollars. While you may not make as much as you need, you’ll be able to show future investors how your ideas have a great deal of popular support. This sort of proof alone can help bring a number of serious investors your way.
Get a startup business loan
Banks and other lenders do more than simply lend to established businesses — they offer capital to entrepreneurs launching businesses, too. Of course they usually do need collateral and a high credit score. In many cases, though, I they tend to even lend money when they have proof of purchase orders for a future product.
In many cases, businesses have been started with nothing more than personal credit cards belonging to the entrepreneur. Cisco, the networking giant, is one such example. It can help to look to web portals such as EpsilonBusinessCredit.com for in-depth information on how to find such funding.
Look to venture capitalists or angel investors
If you’ve succeeded on the crowdfunding sites, chances are that angel investors and venture capitalists will be interested in what you have to offer. While there will be equity to share, it’s only fair. Not only will venture capitalists bring capital, they will usually bring a considerable wealth of connections, as well to help truly launch the business.
You can use other kinds of eligibility
If you have served in the Army, your service record alone may qualify you for a special veterans’ loan. If you are woman, and belong to an ethnic minority, there are business loans available there, as well.
Find a startup incubator
Places such as Y Combinator are built by large businesses, major universities and so on. They help offer not only free office space and advice, but funding to startup businesses with promise, too.
Find a grant
The government sets aside grant money for new startups in areas considered important to the country — social causes, education, new technologies and so on. Grants.gov has a comprehensive directory of hundreds of federal grant programs. Certainly, it isn’t easy to find funding in this way. If you can work hard at qualifying, though, it’s free money.
Ronald Marie is a business consultant helping startups achieve their best. Having worked in the industry for 20 years he occasionally contributes to business blogs sharing his wisdom.