You have a seed inside...
Waiting for you to water it.
This is a reprint from my Forbes.com article here.
Inside each of us is the seed of an idea just waiting for us to water it.
You have such an idea in you — that business or startup that the world must experience. You’ve mocked out the plans, come up with the name, branding and website. Everyone loves it. But do you know how to fund it? It turns out seed watering isn’t cheap.
Have you seen the before-and-after Jeff Bezos meme? He’s not superhuman. He’s super “human.” We all are. We all start in a garage (Jobs), in a dark dimly lit office (Bezos), in our parents’ basement (Branson). The key is simply to start. So whether you’re trying to jumpstart your business or you need to boost the capital to take it to the next level, here are five ways we’ve seen hundreds of founders begin their ascent to the long mountaintop of entrepreneurship.
He's not superhuman.
He's super "human."
Self-Fund Or Bootstrapping
If you aren’t invested in you, who will be? Self-funding your business will force you to be more strategic. The main goal here is growth, which is typically cash flow, reach, users or client acquisition. Make sure that you’re generating a consistent stream of revenue or adding new clients before you start experimenting with other ways to grow. I’ve built most businesses by re-investing in them. Make a little money, hire a marketer, make a little more money, increase your Google AdWords spend, make a little more and bet on your business.
If you aren't invested in you...
Who will be?
Incubators And Accelerator Programs
If you choose to go with either an incubator and/or accelerator program, make sure that you have a viable product first.
Incubators will help you along in the early stages of your business … for a fee. You can look at an investment like this as a type of business school that provides a myriad of resources, such as office space, legal counseling — not to mention more money to help get your business off the ground. To get this money, investors need to believe your idea or product has enough juice for them to help nurture and grow. In my experience, the top tier incubators are absolutely worth it. The lower tier are absolutely not.
Once you’re up and running, you have to keep that momentum going. Some join an accelerator program once they’ve successfully launched their businesses. These programs typically last from three to six months. So if that’s the route you’ve decided to take, take advantage of the resources and funding to get the most out of your mentoring experience.
Not all accelerators or incubators are created equal.
You’re not required to take an incubator program first, but getting into an accelerated program prematurely with an underdeveloped business will be a waste. It’s unlikely that investors will take a risk on a company with no clear direction.
Disclaimer: Question everything, including me. Not all accelerators or incubators are created equal. Do your homework first.
Sell Your Product Using Pre-Orders
Don’t have a viable product? No problem. Explain that by telling potential customers about your idea. Ask if they want to buy when you build it. Consumers like to help innovators. It’s as easy as creating a prototype, taking a few pictures and posting a link to buy on your networks. Mary Shenouda at Paleo Chef funded her entire startup PhatFudge with a pre-order plea posted on her social media accounts. That led to $50,000 in pre-orders and what is now a fast-growing business. Don’t make the rookie mistake I made. If you can’t get at least five people to buy before you build, then save yourself a world of pain.
Just how well your idea sells is a good indication of whether or not you’re on the right track. Setting your product up for pre-orders gives you a view into the future.
Grants And Small Business Loans
You know, there is such a thing as free money. Or I suppose, almost-free money.
If you are a minority or have a special niche, there are grants that are targeted to you. You just need to find them. Research what kinds of small business loans are available. Look to the Small Business Administration and your local Chamber of Commerce to learn about what kinds of grants and business loans you qualify for. If you only need $10,000 or less, then you could apply for a microloan. That said, microloans could leave you with an unsustainable amount of debt that could bankrupt your business. I’m always super careful with loans.
Strategic Angel Investors
Up until now, your business has been growing like a hockey stick — up and to the right. You started off with enough capital to kick off your business, and sales are good. If you had some extra money to advertise, market or add a few hires, the game would absolutely change. Your saving grace may be in the land of angels. Angel investors are partners who are willing to invest their money into your business in exchange for owning a percentage of your company. It’s up to you to determine how much you’re willing to sell to the investor. And it’s ultimately up to that angel investor to decide if they want to take the financial risk. Just remember, the average equity received by angel investors is only 12.3% and an angel investor recipient raises on average $328,500, according to Fundivo. These won’t be big checks, typically.
Whichever path you choose to fund your startup, there are more ways than ever to scale. It’s going to take plenty of diligent research and follow-up on your end, but the end result may just be OPM (other peoples money). That has a nice little ring to it, doesn’t?
Let's chat on instagram @CodieSanchez