6 Ways to Fund Your New Startup (That Actually Work)

Like it or not, money is everything in the world of startups. Without it, you are never going to make your dreams a reality. Funding your startup is the first big obstacle you have to overcome, before you start to think about product development and marketing.

There are many ways to potentially fund a startup. And this guide is going to show you some of the ways you can go about it.

Friends and Family

Most entrepreneurs acquire their first customers through their existing networks. The same principle can apply to finding people to fund your business. So many successful businesses have started off because they raised money from friends and family members.

You may decide to fund your startup through accepting donations, personal loans, or just using their skills to help you get things done. The best practices here are to just ask because you’ll be surprised at how many people are willing to help.

Private Lenders

There’s nothing better than getting a private lender to give you money. This way you don’t have to accept any involvement from government startup schemes and you don’t have to feel guilty about taking money from family. There are so many private lenders in the world today that you really are spoiled for choice.

Do your research because it’s not always the case that all lenders are created equal. Check their terms and check whether they have a good online reputation. You don’t want to have a private lender that becomes an obstacle because they are always asking for money.

Crowdfunding

The growth in crowdfunding has led to an incredible number of businesses getting off the ground. Sites like Indiegogo, Kickstarter, and GoFundMe are just the tip of the iceberg in this growing niche. This is about startups reaching out to their target audience to make them a part of the journey your baby is about to take.

Not only are you getting money you are getting a community that’s going to be interested in your product. The community is often more valuable than the actual money because it makes it far easier to create a buzz.

Angel and Seed Investors

Angel and seed investors can be found from practically anywhere because they want tofund smart people with great ideas. You may find them in your personal network or they could come from the Internet. Your angel or seed investor provides you with far more than an injection of capital. They are there to make sure that your business gets off the ground. You suddenly have access to an established network of business expertise.

Be aware that the main quality angel investors want to see is a solid business plan to convince one of these investors to take a chance on you. Remember that you are going to be taking up their time as well as money.

Credit Cards

If you need money now, a short-term option is to eat into your credit card balance. Use your personal credit card balance to do this. Don’t borrow off the credit cards of other people because this can easily come back to bite you. Be careful when using credit cards because it can easily go wrong.

Take note that this is a short-term option only. Take up too much of your balance and you could find yourself with a credit score that’s in the gutter.

The Bootstrapping Option

The term ‘bootstrapping’ is applied to businesses that are starting from a position of a lack of investment. They are terminally short of cash and they have to get creative in order to get things done. For the entrepreneur, this can teach them some valuable lessons and can actually reduce the overall costs of starting up a business.

It also comes with the benefit of no responsibilities. If you are self-funding your startup, you have nobody to pay back and you have no need to worry about reporting your performance after a particularly slow period.

It’s becoming an increasingly trendy option for many startups, with 80% of startups self-funding.

Conclusion

Regardless of the way you decide to fund your startup, make sure that you have taken your product for a test drive first. The worst thing you can do is to fund something that has no chance of gaining any traction with customers. This is why many entrepreneurs decide to create a small prototype and then commit to some basic market testing prior to seeking out any investment.

Source: inc.com ~ By: A.J. Agrawal

 

7 Ways to Bootstrap Your Business to Success

Most first-time entrepreneurs seem to believe the myth that they need a minimum of a half a million dollars to start a business. At least that is usually the lowest number I see requested from our local angel investment group. In reality, over 80 percent of successful new businesses are self-funded for much less — often as little as $10,000. I’m convinced this also reduces risk.

Starting a new business on a limited budget without investor involvement is called bootstrapping, and it’s the only way to go if you don’t want to spend months on the investment pitch preparation and delivery circuit. Also, with bootstrapping, you won’t have the added pressure and risk of an investor boss hanging over your shoulder and second-guessing your every move.

Over the years, I’ve accumulated a list of common startup practices from entrepreneurs who have managed to avoid the ironic pain and suffering of comfortably starting a business with a large cash stash from a rich uncle or a vulnerable investor.

1. Stick to a business domain you know and love.

Starting a new business in an area where you have no experience, just because it appears to have great potential, is a recipe for failure. There are unwritten rules in every business, and your lack of insider’s knowledge will cost you dearly. Good connections can get things done for very little cash.

2. Find team members to work for equity rather than cash.

People working with you need to understand their failure means startup failure, rather than expect money up front. Managing employees and contracts is difficult and expensive, and new entrepreneurs aren’t very good at it anyway. Equity is your best assurance of commitment and focus.

3. Build a plan around your budget, rather than around your wishes.

Entrepreneurs who start without a plan spend more money. Likewise, those who feel compelled to keep up with the popular media will spend most of their time courting investors. Most investors agree that too much money leads to poor spending decisions and lack of controls.

4. Defer your urge to find office space until you have customers.

Remote startup team members are the norm today and can be very productive with smartphones, video and the high-speed Internet. Office space costs money up front, requires equipment, staffing and travel expenses. With a website, your business can look as big as any competitor.

5. Ask for advance on royalties and vendor deferred payments.

If you solution has real value, future partners will jump on discounted future royalties, and many vendors and existing partners will understand your cash flow challenges. You may also be able to barter your services to offset theirs. It never hurts to ask. Practice your sales skills early.

6. Negotiate inventory management with suppliers and distributors.

For many products, suppliers or distributors will direct ship your product to eliminate your inventory. For services, don’t be afraid to ask for a retainer up front to offset your costs. Business terms are negotiable, but new entrepreneurs with plenty of cash don’t bother to ask.

7. Choose a business model to optimize your revenue flow and timing.

Popular examples include monthly subscription fees and optional service fees, versus one-time product sales. Another is the use of an ecommerce site, rather than retail, to facilitate product sales seven days a week, around the clock and around the world.

One of the biggest ways to reduce your budget and your risk is to use social media, which essentially is free, to find our whether you have an attractive solution, before you invest your time and limited resources in creating the product or service. Social media is also an invaluable and inexpensive marketing approach, since no one buys a solution they can’t find or don’t know anything about.

A limited budget can be viewed as your biggest constraint, or as an incentive to do things more creatively. With startups, there is a big premium on creativity and innovation. Big competitors are quick to copy a conventional solution with minimal risk. Let a limited budget be your driver to winning, rather than a curse.

Source: entrepreneur.com ~ By: Martin Zwilling

11 Pieces of Rebel Advice That Will Catapult Your Startup Success

By Andrew Medal

Nothing like a little Ben Affleck in Boiler Room to get us going. (Watch it right now here so you get a grasp on the tone of this piece.)

These are strategies that have worked for me, but may not necessarily work for you, so take them with a grain of salt. Let’s get to it:

1. Take time off

Make sure the timing is right. I work my butt off — more than 12 hours a day usually. My only true rest day is Saturday afternoon after I do CrossFit for a few hours.

The past two weeks I’ve been stressed out with some major project deadlines looming, Entrepreneur writing deadlines, juggling my other startups, planning for my wedding in October and planning for a trip to Europe in August. I’m not usually that stresed out guy.

I never play video games anymore, but randomly I downloaded this game called Boom Beach on my Android tablet, and have been playing it the past couple days. The game is similar to the old Command & Conquer. It’s been awesome to free my mind, and just f**k off a little.

Guess what happened? My projects were accomplished. My writing is on point. My startups are moving forward and Europe is not going anywhere.

Know when the time is right, and go f**k off — whatever that means for you. It will help your brain to disconnect.

2. Work for free

Last year, Mark Cuban was persecuted for an old rant about not being able to hire free interns. Apparently, working for free goes against the majority’s thinking. I’ve used it to my advantage my entire life.

Early in my career I worked for free all over the place. It was the single most important activity I did. My experience doubled over night, and I learned how to create enough value at each internship that I eventually was offered a position. I typically turned it down and moved on at that point because I learned as much as I could.

To this day I’m not afraid to work for free if I see an upside. Also, most of the startups I build are bootstrapped. Guess what that means? I work for free. Yippee!

Working for free turns you into a value creating machine. You learn how to create assets that did not exist previously, and it can afford you all sorts of opportunities to work with people you may not have had the chance to otherwise.

3. Work on multiple projects

Most of the advice out there will tell you to focus on one thing, use all of your energy, blah, blah, blah. I disagree.

To clarify, I’m not talking about multi-tasking, I’m talking about working on multiple projects simultaneously. For example, I have my main digital marketing company (that is spinning out a sister company that focuses on experiential marketing, guerrilla marketing and publicity stunts). I have a handful of startups, and am focused on building my personal brand. I’m writing a book, and constantly helping and mentoring other entrepreneurs.

There are always sticking points and risk with startups. Having multiple things going on at once helps you to constantly move rather than get stuck, and helps mitigate risks. I’ve learned how to prioritize effectively, and allocate more of my time and energy to the projects that demand them.

4. Work whenever you want

My workload fluctuates, but I tend to keep a full plate. One perk of being an entrepreneur is that I can work whenever I want. Granted, I have clients and troops that I have to communicate with and be accessible to, but I can choose when to work for the most part.

Some days I’ll stop working in the day and go see a movie, or hang out with my fiancee and puppy. I like to work at night, and tend to stay up late. I use this flexibility to my advantage to accomplish my objectives during my peak hours.

5. Work wherever you want

I used to have really nice office space, and then I shut it down. It was a waste of overhead and made me feel like I had a job.

I love the nomadic entrepreneur lifestyle. Everything I do is online, and it affords me the luxury to work wherever I want. This is another perk of being an entrepreneur. Take advantage of it. Go work at the pool or beach or at a co-working space with other entrepreneurs. You can even travel the world and use Nomad List to figure out the best places in the world to work.

6. Ask for more

If you don’t ask, you don’t receive, right? Push the envelope, any envelope, all the envelopes.

I do this in life and as an entrepreneur. For example, a few years ago I was flying somewhere for business. I saw that there were some empty seats in first class. I went up to the flight attendant, turned up my charm  and asked, “What would it take for me to ride up here where I belong?” She chuckled, and gave me a seat. Maybe this is a shallow example, but you get my point.

Don’t be afraid to ask for more. Ask for more from yourself, your team, investors, clients and the Starbuck’s barista serving your double shot mocha venti latte. A funny thing happens when you start asking, you usually receive.

7. Bend the rules

Of course, this would be in this list somewhere. Look at this awesome quote I got from Tucker Max:

As an entrepreneur, you always want to learn the rules, but only so you can know exactly how to bend and break them when needed.

Bending the rules will allow you to think outside the lines, and allow you to see the world through a different lens. It is that unique lens that can separate you from the herd, which will empower you to be a stronger entrepreneur.

8. Don’t take yourself seriously

This is important. Taking yourself seriously is a sign of inflated ego, and inflated ego is a weak character trait. Make fun of yourself. Share your quirks and awkwardness. Nobody is perfect. This will help build authentic relationships with people and show your true self.

9. Embrace your haters

You will have many haters if you follow my advice. Sometimes they’re undercover haters, sometimes they’re out in the open and most of the time they like to hide behind the anonymity of the Internet.

I have lots of experience with this. Have you Googled my name? Yep. Thanks haters. Who cares. I’ve learned to embrace them. If it wasn’t for the negative online slander against me, I probably wouldn’t have ever started writing. So, thank you haters.

10. Be controversial

Don’t be controversial just for the sake of being controversial. That’s lame and a waste of everyone’s time. However, if you’re passionate about something, stand up for it. Even if it goes against the norm.

Nobody in their right mind would write the type of articles I write, such as “6 Life Hacks Learned In Prison That Will Maximize Your Productivity” or “How My Life As An Entrepreneur Shaped My Time In Prison.” In fact, some of my closest friends and contacts urged against me sharing so much. Personally, I felt the risk was worth the payout though.

And guess what? It has been.

My “6 Life Hacks Learned In Prison” column has afforded me all types of opportunity. It was picked up by TIME.com, FOX and other notable media outlets. I earned new business. I picked up a new contribution role for another media company and I continue to build authentic relationships with people through my brand.

11. Take a stance

Almost in the same vein of the above point, don’t be afraid to take a stance. Too many people are afraid to stand up for what they believe in these days.

This is my favorite Steve Jobs quote:

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

Here’s the plain truth, not everyone is going to like you. Who cares? Get over it and live your life without regrets.

This has turned into more of a motivational speech than I planned for. My editor rushed me to finish though, so this isn’t the right time to f**k off. Remember, life is short. Take risks, live without regrets and go download that Boom Beach game (you’ll thank me, it is seriously fun).

Source: entreprenuer.com