Most entrepreneurs don’t have the luxury of unlimited funding to start and grow their businesses. In fact, many of them become entrepreneurs to find a way to make money while doing something they love. Raising money is not easy. However, nearly every entrepreneur needs money at some point, so don’t be ashamed that you need it to get your company off the ground or to grow to the next level!
Despite the inclination of reporters to highlight entrepreneurs who hit it big from the start, in my experience few businesses are immediate successes. It normally takes time, money, occasional sleepless nights and humility to grow a business.
Unfortunately, many businesspeople do not prepare enough. But if you plan to ask anyone to help fund your business – whether it’s a friend, family member, bank or venture capitalists – it is essential to have a written plan.
“It’s a mistake to go to somebody and say ‘I need $50,000’ or ‘I need $5,000’” said Nell Merlino of Count Me In, an organization that supports women launching small businesses by giving them micro loans. “Tell me what you’re going to do with it. Is it $2,000 for marketing and $3,000 for inventory? Just what is it?”
Once you know the importance of organizing your financial information and building a financial plan, it’s time to figure out exactly where you’re going to get that funding.
Before you can expect anyone else to invest in your business, plan to “bootstrap” and invest your own money first. This will help clarify your direction as well as legitimize you to the outside world. But if you’re already stretched thin financially, where can you turn? Here are a few simple but workable ideas:
- Use what you have. If you have even a little money saved, now may just be that “rainy day” you’ve been waiting for. For instance, Victoria Knight-McDowell and her husband, Rider, launched Airborne Health with personal funds, primarily the proceeds from a television screenplay that Rider sold to a Hollywood studio.
- Cut corners in your everyday life. What can you do without? A $20-a-month magazine subscription will cost you $240 per year. Or, cut out a $3 per day expense – one coffee latte – and you just saved over $700 per year! Dig up five “cuts” like this and you can quickly free up several thousand dollars – enough to pay for a prototype, brochure, trade show booth, etc.
