3 Tips for Funding Your Small Business Idea

I have been working a lot with aspiring entrepreneurs lately and the topic of small business funding comes up a lot. A huge obstacle to any great idea is the capital required to get something real off the ground. Sadly, for many great would-be entrepreneurs, the lack of funding killed great companies before it could even sell one widget. I am here to tell you though that you can get funding for your business idea if you know who to ask. I assume of course that you have a business plan. You don’t need a fancy one. Did you know that the highly successful business plan for Sun Microsystems was famously written on the back of a napkin (or was it a shoddy piece of binder paper?) back in the late 90s? Here are three funding sources you must consider if you need alternative funding.

 

Getting Funding for Your Small Business (Photo: iStockphoto)

Friends and family
You definitely need to be careful about mixing business (i.e. money) with family and friends, but if you apply common sense safeguards and written contracts, you should be able to approach the people closest to you for funding. Sharing your potential for success with friends and family with cash sitting on the sideline is a great way to extend ownership of your idea to a willing participant. If they believe in a company and your idea as much as you do, what do you have to lose? Again, as long as risks are fully disclosed and your family member or friend can stand to take a loss under the worst scenario, you should be OK to broach this idea.

Crowdsourcing works!
By now we’ve all heard of Kickstarter success stories – the Jeremy Lin story immediately comes to mind (I know, New Yorkers don’t want to hear about Linsanity, which is so over, but the producers got the movie funded heavily through crowdsourcing and now it’s set for a national release next month). Putting your idea in front of a crowdsourcing forum is a great way to see if you have a viable product. You really have nothing to lose, just your time in getting your idea up there.

Small business lending/entrepreneur forums
Similar to crowdsourcing, you can search for local entrepreneur forums near your area to find out where people with alternative funding needs can go to present ideas to high net worth people with “play” money just itching to get in on the next great startup. This really does happen. With interest rates so low, people with spare cash are always looking to generate returns. If your company isn’t going to be the next big thing but is expected to kick out solid free cash flow, you may garner interest. You would probably have to sacrifice a chunk of your company to that high net worth person you find to fund your company, but with other options that may be dry, this could be a great resource.

Debra Wheatman is a certified writer and career coach who has guided the professional development of thousands of clients globally. She is reachable at debra@careersdonewrite.com.

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