One of the toughest aspects of starting a franchise or other small business is the tricky business of finding funding for the startup phase or even to execute an expansion. Money isn’t unlimited and it’s not easy to come by under the best of circumstances. Fortunately, if you’ve written a solid business plan and have your elevator pitch tuned, you probably know how much money you need to fulfill your dreams. Now it’s just a matter of finding it.
We’ve talked before about common methods of raising capitol such as SBA loans and equipment leasing, so let’s take a deeper dive into more unexpected places to find money for your small business.
Begin with Bootstrapping
When first getting started, many crafty entrepreneurs turn to a tried-and-true method of raising funds known as “bootstrapping,” a concept that fundamentally means digging up whatever cash you can find. It’s not an easy method but it’s one that many skillful entrepreneurs embrace because it doesn’t hang them up with complicated loan terms and monthly payments that can bog down progress.
Where do they look? There’s whatever cash they’ve socked away, of course — we’ve known entrepreneurs who have simply been careful savers, and we’ve seen people sock away their side hustle cash until they’re ready to make the leap.
There are always credit cards and your stuff, too: filmmaker Kevin Smith sold his treasured comic book collection and maxed out a dozen credit cards to raise the $27,575 he needed to make the movie, Clerks, which went on to gross more than three million dollars. Remember, you’re investing in yourself.
You might also go to friends and family, a trusted mentor, or potential business partners. You have to lose your fear of asking for what you need. In her recent TED talk and subsequent book, the rock star Amanda Palmer says, ““American culture in particular has instilled in us the bizarre notion that to ask for help amounts to an admission of failure. But some of the most powerful, successful, admired people in the world seem, to me, to have something in common: they ask constantly, creatively, compassionately, and gracefully.” So, do your homework, and then, ask for what you need.
Delve into Crowdfunding
While it may still seem like a new concept, crowdfunding has become a mature, well-honed way for entrepreneurs and other dreamers to bring their ideas to life. The concept has grown well beyond Kickstarter to include wildly successful platforms like Indiegogo,GoFundMe, Fundable and even Patreon. Some have even evolved the concept to include ideas like equity funding and lending-based crowdfunding, moving the concept beyond charitable donations.
According to the Small Business Administration’s Office of Advocacy, crowdfunding offers a unique way to demonstrate to venture capital funders that they have already established an audience or market for their product or service. Taking a bold risk and succeeding with strangers might make a potentially risky investment worth a second look from VCs. According to the agency, a small business that can crowdfund as little as $50,000 can increase their probability of earning external financing by up to 50 percent.
Join a Business Incubator
Business incubators are one of the unsung success stories of this country’s business world. From small nonprofits like the Missouri Innovation Center in Columbia, Missouri to large corporate operations like AOL’s Fishbowl Labs or Samsung’s Strategy and Innovation Center, business incubators can offer entrepreneurs the mentorship, expertise, resources, and network to launch, market, and commercialize their businesses. Business incubators do have lengthy application processes and somewhat strict requirements for joining, but for certain small businesses, the rewards can be significant.