Creative ways to finance a business
Q: I’m looking for some creative alternatives to raising money from investors to finance my business. What is one thing I should explore?
Partner with a sponsor. “Partner up with one of the leading services already within your industry. This can usually be done through a simple sponsorship. A good example of this is if you had a service or app for email management, then approached the top email hosting companies to see if they would sponsor your project, while also gaining attention.” —Zac Johnson, Blogging.org
Bootstrap. “As co-founder of a profitable, bootstrapped business, I have a bit of a bias. In most cases the best source of funding is revenue from paying customers. Try to get that first dollar from that first sale before you worry about bringing investors on board. There are few things that cannot be started at small scale. Capital restrictions force smart decisions. Build it; sell it — simple, right?” —Michael Rheaume, SnapKnot Inc. Try debt financing. “In the entrepreneurial world, we often discount debt financing at first glance because it’s ‘for small businesses, not entrepreneurs.’ But SBA (U.S. Small Business Administration) loans or micro-loans can be an option worth exploring, especially if you have good credit or collateral to offer. If you don’t, organizations like Justine Petersen can help you build credit and become a more attractive prospect for a loan in the future.” —Melissa Roberts, Free State Strategy Group LLC
Set up a crowdfunding campaign. “A well-executed crowdfunding campaign will not only give you capital; it can also give you a whole set of new customers and a lot of marketing momentum.” —Lisa Curtis, Kuli Kuli
Ask friends and family. “While it’s never easy to pass the hat around to friends and family, they are your biggest supporters in life. A majority of startups that I meet with started by raising $20,000 to $50,000 through friends and family — enough to get them started and provide proof of concept in order to pitch angel investors or venture capitalists.” —Cyril Agley, Talon Ventures LLC
White label. “White labeling for growth is an awesome way to not only get money for your business, but also improve your product on someone else’s dime. The ideal opportunity is when you can create a complementary product and leverage your platform to convert users back to your own solution.” —Jon Bradford, Colab