How Did You Fund Your Business? What Methods Would You Recommend For Others?
How did you find the capital to start your business?
I understand that some fields have very high startup costs, like in real estate, building cars, or starting an airline. But... there are many people out there with business ideas that seem much cheaper to get off the ground, and they get stuck at funding.
I funded all startup costs for my PR Firm out of pocket. Both me and the firm are 100% debt free, and have been in business for 10 years.
Is there anyone else who took this route for their business? And if not, how did you fund your business?
Update 2/2/17: I updated the question to prevent any further confusion. I'm not looking for advice or consultation services on how to fund my business. Just curious to know how other people funded their business, after watching so many Clients and other entrepreneurs balk at the idea of funding out-of-pocket, the way I did. Thanks!
Answers (11-20)
I agree that you need a good business plan. You also need a detailed marketing plan that will work for you one year at a time. Any business, no matter how small or large, can have the best widget or service in the world but if no one knows about it there won't be any sales. You must FALL IN LOVE WITH MARKETING!
Go into it for the long haul. It is an adventure that unfolds one day at a time.
Gary is right, you must have a business plan specifically written for raising capital.
As for Marketing Partners, we are self-funded and debt-free too. If the cash flow can't handle it, it waits until it can, whatever it is.
That is a great method for starting. I self funded my bookkeeping - accounting business with out of pocket. I worked my way up the corporate ladder for 10 years and saved so that I had 3 years of living experiences. Three years is a lot but I wanted be on the safe side because I have family and son support.
Although debt in a company is not necessarily a bad thing. As long as positive ROI (return on investment) is achieved the debt is justified for expansion and growth purposes.
I do agree that a debt free company has a better chance at being self sustaining. Not having debt eliminates the interest expense which is increasing the bottom line or net income of the business. And having the cash flow of the business come from operating activities instead of financing activities is a strong sign for a business. This is actually seen on the statement of cash flows and is what banks look at when issuing a loan.
I have the same goal with my personal finances too. Working on taking out the two biggest household expenses. The house and car loans.
Great post
Rob
I would guess the first thing anyone starting their own business needs to consider is what does it cost to start. Some businesses (service types) can be started out of ones home using equipment (computer and printer) on hand (such as your PR firm and my Process Serving services). While having a pretty office starting out is nice with the latest and greatest with multiple computers and printers is nice, if there's no business income then the office and office equipment is an anchor to sink the business. For a business that is a production non-service type then the idea has to be to get best sized work space (to start) and best priced (not always the cheapest) equipment to start the business with.
Don't despise small beginnings .... my first website was a $500 site I built on Wix (the only site i've ever built on there lol), 4 years later I'm building for some of the biggest companies in town and using wordpress. My local companies rank at the top of page 1 on google. Start with what you've got and just get ready to dig in and grow in every sense of the word! I am ALWAYS learning and evolving.
Hi Alexis, I'm new here where are you?
Start and maintain a debt free business. The less debt that you have, the less risk that you have. You will be able to make wiser decisions, faster, and with less hesitation when you don't have to worry about debt collectors coming after you.
I agree with Theresa. I am funding my business. I, too, am in it for the long haul. I do not plan to seek funding or a partner for many reasons.
Must have business plan
Read everything, but implement something. You can go forever learning and never do anything
Could research government grants and loans