It’s estimated that about nine out of ten startups will fail. Some won’t succeed because they make a product that no one wants or their leader lacks direction, but many will fail because of financial reasons.
Money is tight in the early stages of a business, and entrepreneurs will be forced to look for ways to fund operations until the business is turning a profit. But, if you don’t have access to investors, or simply don’t want too many cooks in your startup’s kitchen, how can you finance your dreams? Here are some of the ways:
Start a crowdfunding campaign
Thousands of startups have generated the money they need to launch their businesses with the help of crowdfunding websites such as Kickstarter and Indiegogo. Not only will this help you raise the money you need, but if you take the time to promote your campaign, it will also introduce your brand to thousands of people who could turn into customers.
Find strategic partners
Some startups find a manufacturer or wholesale distributor who believes in the product so much that is he willing to help pay for some operating expenses in order to do business together. This is rare, but if you can make this kind of connection, don’t pass up the opportunity to form a strategic partnership with the person or company.
Sometimes, the most effective way to finance your startup is relying on the little amount of operating revenue you generate in the early stages. This is a risky move and will require tight control over the budget, but it allows the entrepreneur to retain complete ownership in the company.
Small business loans
Instead of asking for help from an investor, seek assistance from the Small Business Administration (SBA). The SBA approves thousands of small business loans every year—in fact, they issued nearly $20 billion in 2014 alone. You will need to meet certain requirements, such as proving you are not delinquent on any other debt and that you are a for-profit business. To apply, simply visit the SBA website and search for a lender near you that frequently handles small business loans. While you’re at it, you could also take advantage of the SBA’s mentorship programs, which could teach you a thing or two about building your startup.
You may be able to negotiate to receive some goods and services that your startup needs for free. For example, if your startup desperately needs an accountant, but you don’t have it in the budget to hire one, reach out to small accounting offices in your area to see if they would be willing to make a deal. Offer the accountant free products or services in exchange for their services. This is not necessarily a way to finance your startup, but it is a way to cut back on costs so the little money that you do have can be allocated to other parts of the business.
Have you ever successfully launched a startup without the help of investors? How did you do it? Share your stories in the comments below!
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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