Creative ways to fund your startup

In an economy with high unemployment, many graduates with business degrees are opting to start their own businesses. An entrepreneur will need money for overhead costs like rent, office equipment, supplies, product production and advertising, but it is harder than ever to qualify for a business loan. While it may not seem like entrepreneurship is plausible in the current economic climate, there are creative ways to finance a business even if the banks are not willing to take a chance on your venture.

Financial institutions may have shut their doors and coffers, but entrepreneurship is still possible. There are more inventive methods to generate seed money when loans and grants are not feasible. Business fund raisers such as crowd funding, pre-selling, gift certificate sales, silent partners and used or homemade item sales can help people generate enough cash to start a business.

The kindness of strangers

Crowd funding is actually an old concept that has been made new again via the Internet. The basic idea is to gain financial backing from a group of people such as friends, family, classmates or even complete strangers (Dell, 1998). Entrepreneurs can use the Internet to recruit investors. There are professional sites where you can learn more about crowd funding, including Peerbackers, Profounder and Kickstarter. In addition to dedicated crowd funding sites, robust social networks foster entrepreneurship by allowing users to promote their projects through widely used social media sites like Facebook®, Twitter® and LinkedIn®.

There are many different types of business investors, and one interesting option is a silent partner. This is a business partner who provides financing and resources for the venture but leaves the management and actual work to others involved with the business (Oxford, 2009). In most cases, only the business owners know the identity of this person.

Sell what you have — and even what you don’t have

Preselling involves selling a product before it is actually created (Mauriello, 2011). This method commonly used with video games and new technology. The incentive is usually an exclusive pre-order discount. While this idea is used mostly by big companies like Nintendo® or Apple®, it could work in entrepreneurship as well. If a business owner is able to successfully market a product for pre-sale, the funds gained can finance production of the product.

Offering gift certificates for goods or services at discounted prices can attract customers and generate a little startup cash at the same time (Mauriello, 2011). Business owners can sell customers coupons or certificates for an item at a discount. For example, a photographer who charges $100 for a portrait package would offer a certificate for that same package for $85. The customer brings the certificate to the studio and presents it during his or her appointment. The photographer can use the money from the pre-sold certificates to purchase camera equipment and other supplies.

Finally, don’t discount the idea of a virtual garage sale. You can list used items on auction sites like eBay®, or create products to sell online through other sites. Creative individuals can sell handmade items or craft supplies on sites like Etsy™. You can also sell digital products like stock photographs, original graphics or e-books at sites such as iStockphoto®, Lulu® and Zazzle®.

Regardless of the state of the economy, now is the time to put your business degree and entrepreneurship skills to good use. Even if the lenders are not biting on that new idea, it is possible to earn seed money using alternative methods and resources that will not carry a huge interest rate. It is worth the time and effort to research new and inventive ways to raise funds when loans and grants are not an option.

References

Dell, K. (2008, September 4). Crowdfunding. TIME Magazine.

Mauriello, D. (n.d.). 5 creative ways to fund your dream business. BizTechDay.

Silent partner. (2009). In The Oxford Pocket Dictionary of Current English.

Link List:

http://www.kickstarter.com/
http://peerbackers.com/
https://www.profounder.com/
http://www.etsy.com
http://www.zazzle.com/
http://www.lulu.com/
http://www.istockphoto.com/

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