Funding is crucial for any new business. Without sufficient capital upfront, the business may not have the means to market to a wider audience, produce enough products, or expand its workforce.
While there are many traditional ways to seek funding, such as taking out a loan from a bank or finding an investor, there are unconventional ways that a start-up owner may not have thought of and that could help get his business off the ground. Below, six Fast Company board members offer financing options to consider as a new business.
1. FIND FLAGSHIP PARTNERS.
A creative funding option for new businesses is to reach out to potential customers and make them flagship partners for your business. They benefit from early access and contribution to what you create and they can participate in the upside as you grow. It’s about building credibility, track, and support with a partner you can trust. – Tony Martignetti, Inspired Coaching
2. LAUNCH A CROWDFUNDING CAMPAIGN.
Crowdfunding is a very powerful way to generate interest and prove the concept of a business. Even if you don’t raise a million dollars on Kickstarter, consider a crowdfunding campaign that will create an instant community for your business that people will be eager to invest in for your business’s success. With this community, you can leverage venture capital or other investment opportunities more successfully. – Catherine Merritt, Reel
3. USE BORROWED CAPITAL IF NECESSARY.
Think about the last time you went to the supermarket or paid for gas. How did you pay? More likely than not, you paid with a credit card. Buying things with borrowed capital is the norm in our society. Ironically, startup founders often avoid the prospect of raising debt as a form of financing new ventures, despite the fact that most startups are formed as LLCs, thereby limiting personal liability. – Danny Lohrfink, Wealth
4. TRY “CREATIVE FUNDING” SOURCES.
There are many ways to fund a business, even a term called “creative funding” where it is not just our loan, venture capital money, friends and family, etc. A one-time financing option could be monthly vendor-to-vendor credit terms, so if we are able to collect payment from our customers or clients before we pay our vendors, it will help self-fund a whole new business. – Royston G King, Royston G King group and companies
5. REDUCE PERSONAL FINANCES.
Assess your assets and identify ways to start your business yourself, such as downsizing your home or reorienting your priorities and spending habits. This will allow you to start your business on a small scale and test your concept locally before scaling it up. – Kelley Higney, Bug Bite Thing
6. USE A ROBS STRUCTURE.
Founders can use the unique structure of a ROBS (rollover for start-up companies) using funds from an IRA or 401(k). Although risky, if the business is genuine and the founder has significant funds in their retirement account, this method can be a quick source of cash without having to pay early disbursement penalties. Make sure to hire professional advice to avoid any issues. – Tyrone Foster, InvestNet, LLC