Getting any business off the ground requires sufficient capital. However, all the financial stress doesn’t have to fall on you as the entrepreneur — there are other ways to secure funding for your startup without assuming 100% of the risk yourself. That’s why we asked the members of Young Entrepreneur Council (YEC) the following question:
“Starting a business is a big risk — especially financially. What’s one alternative to risking their own money an entrepreneur could consider when starting their business?”
Where to Get Alternative Financing for Business
Here’s what YEC community members had to say:
1. Solidify Your Business Model to Attract Private Capital
“If you have a solid idea, do not try to reinvent the wheel. Go with a business concept that is more proven to work so you mitigate your risk a bit. Also, when you raise private capital, if it’s a good idea, you will be able to find money easily. If you face challenges, usually the idea needs more refining.” ~ Julian Montoya, JM11 Investments
2. Tap Into Your Personal and Professional Networks
“As soon as you start thinking about starting a business, you should utilize your entire network, both personally and professionally, to see if you can drum up interest from potential investors. This can come from family, friends or other business owners who believe in your vision. Have a clear plan in place to show those people you have a viable business model.” ~ Justin Lefkovitch, Mirrored Media
3. Invest in Free or Low-Cost Tools
“See how far you can go just based on sweat equity and invest in the tools you need that won’t hurt you financially. It’s the best way to learn how to do things lean, and learn even more intimately what you actually need versus what you perceive you need — and that’s the best lesson you could possibly ever receive.” ~ Richard Fong, Ready Green
4. Build Something From Within a Company
“If the entrepreneur route is not a perfect fit for you (yet), try to build from inside a company. Be an “intrapreneur,” so to speak. Perhaps you could start a new branch, product or service. The downside is that you will likely need a high position, soft power, a track record and quite a bit of strategic thinking – but if your thing is good, the company will back you.” ~ Joey Bertschler, bitgrit
5. Pre-Sell Your Product or Service
“Pre-selling your product or service ensures that there truly is a market for what you are offering, and also provides you with the capital to then fund the development of your product. Crowdfunding platforms such as Kickstarter have become quite popular, but it could also be as simple as approaching a couple of prospective clients and getting signed contracts and deposits from them.” ~ Diana Goodwin, MarketBox
6. Seek Out Flexible Funding Options
“Before turning to traditional funding options, it’s important to consider all your options. There are so many sources of flexible funding out there today that can help you successfully launch your business, cover daily costs and support growth. A merchant cash advance, for example, is easy for startups to qualify for and does not add a burden of debt because it is a cash advance and not a loan.” ~ Blair Thomas, eMerchantBroker
7. Trade Your Time and Skills for Resources
“When I started my massage practice, I couldn’t afford to rent a space on my own, so I offered my therapeutic services for free at a physical therapy clinic in exchange for a free treatment room to build up my private practice. When you start a business you sometimes need to get creative, especially if you lack funds.” ~ Rachel Beider, PRESS Modern Massage
8. Share an Office
“When we first got started, we could not afford to pay our team and full rent. We found another small business in the area with an extra two rooms, and we rented them out. It saved us money, it saved them money, and after being in the same space for a few months, we ended up collaborating on some ideas with them.” ~ Zach Binder, Bell + Ivy
9. Launch a Crowdfunding Campaign
“Crowdfunding is generally viewed as a mixed bag, but there’s still plenty of good that’s come from this strategy. If you have a good idea, you’ll be able to connect to people who have similar interests, including your target audience. You can use these funds to get your business started, which could encourage bigger investors to step in to help.” ~ John Turner, SeedProd LLC
10. Partner With Someone
“One of the best ways to start a business without investing your own money is to look at your network. Consider who may be willing to partner with you (for instance, on a strategic alliance or equity allocation) so you can leverage their audience to build your own audience and brand. Just keep in mind, this approach needs to be mutually beneficial.” ~ Kristin Kimberly Marquet, Marquet Media, LLC
11. Consult First, Productize Later
“Whenever possible, build a business around consulting and productize later. All digital tools are designed to save time or optimize processes. Offer this as a service until you generate enough demand to invest in a product that handles that. Then you can slowly transition from a consultancy model to a product company and expand with the economy of scale.” ~ Mario Peshev, DevriX
12. Start Pitching Investors
“If you don’t want to risk your own money or if you don’t have the amount of money that is necessary to get your thing started from the ground, do what most startups do. Pitch your idea to the investors, involve more stakeholders with your project, and if you’re convincing enough, you’ll be able to raise enough funds.” ~ Solomon Thimothy, OneIMS
13. Do the Things You’re Good At
“You can reduce expenses and risk by doing things you’re already good at. Part of the reason why you’d need to invest in your business is to hire people to carry out other activities. Try to streamline your work and solutions so that it’s something you can do on your own, whether it’s coding or writing content. In this way, you’ll minimize your investment size and risk.” ~ Blair Williams, MemberPress
READ MORE ABOUT:
This article, "Don’t Want to Risk Your Own Money on Your Business? 13 Alternative Financing Strategies" was first published on Small Business Trends
July 7, 2020 at 08:31AM
via https//www.brucedayne.com/
The Young Entrepreneur Council, Khareem Sudlow
