Friday, July 11, 2008

Fun with Funding

You gotta spend money to make money, the adage goes. So what if you don’t have money. Scott Allen gives some outside the box ideas.

By Scott Allen, Guide to Entrepreneurs since 2002

Thinking Outside the Funding Box

The three basic ways to fund an entrepreneurial venture are 1) your own savings, 2) finding investors and 3) borrowing the money. When first starting, entrepreneurs usually look for investors and creditors among friends and family, or perhaps former business associates or previous investors. For larger sums of capital, they may turn to organized angel investor groups or bank loans.

But there are other alternatives, and you may want to explore some of them even before the more conventional methods. For example, did you know that you can:

* Use Your IRA to Fund Your Business - With a so-called "self-directed" IRA, you can invest in closely held stock, real estate, oil and gas royalty interests and a variety of other investments.
* Find Grants to Help Fund Your Business - The government may not be handing money out quite as freely as those late-night TV ads want you to believe, but billions of dollars are given out every year to help start and grow a wide variety of businesses.
* Using Private Lenders as Alternative Funding - Where do you go when the bank says "no"? Private lenders can often become valuable advisors to the companies they work with, much like angel or VC investors.

There are so many ways that you can get funding for your business. Explore all your options, and don't give up just because one or two approaches don't work. Of course, any time you get turned down, make sure you take whatever feedback you can get and refine your business plan and pitch before you go to the next one. But don't give up -- if your idea is really worthwhile, you'll find the funding eventually.

When potential students call me I always advise them to have 6 months of living expenses in the bank before they get started. So as you dig through the sofa cushions, work a second job and sell all your stuff to get the funds for our school or any business venture remember to find enough money to live on for a half a year so you have time to make some solid sales before you’re money runs out.

Moving forward,

Jeff Roach

No comments: