Getting the necessary financing, both to start your business and for its further development, is one of the biggest obstacles that every entrepreneur faces. However, if you don't have the money right now, it doesn't mean you should give up.
If your business is more than five years old, you could turn to traditional financial loans. But if you are a start-up business, these options may be useful:
It is the process of creating a company with little or no external funding. Some data estimates that in 2016, 98% of U.S. startups started this way and at least 14% of the 500 fastest growing companies started with less than $1000.
Common strategies to save money include using your home as an office, printing business cards at home, creating your own website, investing part of your salary in your business, not buying what you can afford to rent, among others.
Companies like Microsoft, Apple and Coca Cola started this way. Bootstrapping shows how much appetite you have and what resources you have, other than financial, to accomplish your mission.
There is always a close friend willing to invest in your idea or a family member who will feel compelled to contribute to the cause.
Whether it is a loan or an investment, it is recommended to document it in writing. Don't lose a valuable relationship because you couldn't pay back the money or pay dividends to someone who trusted you.
It consists of collaborative economies used to raise capital, usually through websites. Crowdfunders support with money in a philanthropic way, expecting to receive profits or some kind of benefit in return. Kickstarter.com or Kiva.org are two examples of such sites.
Last year, The Travel Line was one of the projects launched on Kickstarters and raised $5.2 million. This brand designs versatile bags to suit any type of travel.
They are usually successful entrepreneurs with savings and an appetite for riskier bets. They expect equity in return for the money they invest.
Participating in organized competitions is a good way to meet these investors, who are often judges or in the audience. They might be interested in your project and end up making an investment or, at least, give you valuable feedback.
Regardless of the financing option you choose, keep in mind that you must have a defined business model and a solid elevator pitch before you start looking for alternatives. Be patient, don't get frustrated while raising the necessary funds, and don't let money be an obstacle to achieving your goal!
This article is based on an excerpt from the webinar "How can I finance my venture", given by Francisco Perez, Director of the Latin American Center for Entrepreneurs at INCAE. You can click here to watch the full recording.
