So you want to be an entrepreneur. Trust me; you aren’t the only one. What recent college graduate wouldn’t prefer taking an idea they’re passionate about and using it to launch a business, instead of going to work for someone else? The problem is, not everyone has what it takes—either in terms of ideas, business savvy, or money—to launch a startup venture. Even entrepreneurs who have the first two attributes in spades can crash and burn if they don’t know how to raise startup capital.
In other words, when you are dreaming up your entrepreneurial venture—whether that means sketching out your product ideas or writing a business plan—you need to make money a core focus of your plans. How are you going to build the capital you need to get your business off the ground? Perhaps more importantly, how are you going to raise money without giving up huge shares of equity? After all, investors are important to getting your business off the ground, but they can also greatly dilute your potential earnings from a business.
Luckily, there are ways to raise money for a startup venture without giving away 50% of your company. Here are just a few strategies worth considering.
- Invest Your Own Money: You know that old mantra about putting your money where your mouth is? When it comes to entrepreneurship, there might not be a single truer statement. No one is going to invest in your venture if you aren’t willing to invest in it first. As such, pouring a significant chunk of your own money into your business is essential if you ever want to see it get off the ground. Sure, you’ll be taking a gamble by investing in yourself, but raising the stakes will push you to work harder and will show investors that you aren’t playing around.
- Get Your Hands on Some Working Capital: After the economic crisis of 2008, many financial institutions stopped lending working capital to small or medium-sized businesses. As a result, most startup owners don’t even think of taking the loan path to raise money for their businesses. However, there are lenders out there—companies like Mulligan Funding—who still appreciate the narrative of the small business. Look for lenders like these that might be able to put some working capital in your hands without requiring you to dilute your equity.
- Don’t Spend Capital You Don’t Have: Too often, startups shoot themselves in the foot by spending money they don’t have. The usual mentality is that entrepreneurs try to convince themselves that they need certain things to do business: a big impressive office space, a new set of computers, an expensive software suite, a big business trip. However, many of the most successful startup ventures in history began in garages and got off the ground largely because their creators used the resources they had instead of spending beyond their means. So work out of a garage; use the computers you have; opt for freeware instead of expensive software; do everything in your power to save on travel expenses. You’ll be surprised to learn what you can go without when you are in the beginning stages of a business, and perhaps more surprised at how long money can last when you are as frugal as humanly possible.
There’s no foolproof plan to keeping a startup venture alive or turning your entrepreneurial idea into a highly valued company. If there were a number one rule that all entrepreneurs should follow, though, it would probably be to keep money in the account at all times. The above strategies will help you to achieve that goal.