Small businesses are finding it harder than ever to get loans either for startup or expansion. Fortunately, that hasn’t stopped entrepreneurs raising funds from less traditional sources. Products including the Pebble Smart Watch, Ouya Game Console, Safecast Geiger Counter, Luminae Multitouch Keyboard & Touchpad, and SLXtreme Waterproof Solar iPhone Case were all launched by startups in 2012 with funding collected through Kickstarter. The site is one of the funding alternatives available to small business owners unable to secure a traditional loan. Here are 10 ways, including Kickstarter, to expand your business when traditional sources fail.
1. Use the Kickstarter ecosystem. As observed above, Kickstarter has become a major player in small business funding. The site allows entrepreneurs to seek funding by explaining their business, product, or project and collecting contributions from the Website’s community. The process is called “crowdfunding”, and since 2009 Kickstarter has helped raise $450 million for startup projects, $275 million last year alone. Reuters
2. Seek customer validation. An important component of crowdfunding and potentially other efforts to kickstart your business, is to seek customer validation of your product or service first. Gem Misa, CEO of U.K.-based Righteous, a vegan, chemical-free salad dressing, says her company made sure customers had already tasted its product and supported its brand before attempting to crowdfund for expansion. Career Fuel
3. Try bootstrapping. If you can’t find traditional funding to start your business, try bootstrapping instead. Bootrapping means launching or growing your business without outside investment, usually by using your own money or the company’s revenue for reinvestment. Serial entrepreneur Ilya Pozin has some bootstrapping suggestions including finding good partners to reduce costs, bringing in great sales people to generate revenue from day one, and hiring contractors instead of full-time employees. LinkedIn
4. Court friends and family. For years, entrepreneurs have been going to friends and family for money to start and expand businesses. When doing so, Randy Myers suggests you set the same ground rules you would for any other investor. Create a sound business plan, put your deal in writing, set clear repayment terms, explain what happens if you can’t pay back your investment, and keep the lines of communication open. Business On Main
5. Improve your cash flow. Maximizing cash flow is another way to kickstart your business, whether starting a new company or expanding an existing one. Eliminate unnecessary expenses, don’t squander your assets, make sure your method of invoicing and bringing in cash is efficient, and create a cash flow reserve, says blogger Gerwyn Wallto. Print Runner Blog
6. Tap your existing customers. Another way to raise money is to maximize revenue from your existing customer base. These are people who already love you and your business. Gary Shouldis gives some suggestions for boosting the revenue coming from your current customers, by increasing prices, offering upsells, offering a subscription model of your business and more. The Small Business Playbook
7. Serve a smaller market. It may sound counter intuitive, but the key to rapidly growing your business is not always expanding your customer base or your range of offerings. When looking at kickstarting your company’s growth, advisers Karl Stark and Bill Stewart recommend serving fewer customers and focusing on your strengths. Inc.com
8. Look for special funding opportunities. Astia, a non-profit organization working to increase the number of women at the helms of fast growing companies, recently launched a network of angel investors who will focus their resources on businesses led by women. You should always look for unique funding opportunities where you have an edge in receiving the resources you need. Bloomberg Businessweek
9. Look for government grant opportunities. The benefit of funding your business with government grants is that they do not need to be repaid and do not require company founders to give up any equity. Martin Zwilling explains how to take advantage of this lesser known funding source to kickstart your business and some of the difficulties involved. Startup Professionals Musings
10. Look to asset-based lending and other alternatives. Another approach when banks say no is to sell your invoices or receivables to a “factoring company” which will pay you 80 to 90 percent of their value up front and the rest when payments are collected. There is a cost for these and other alternatives, so you must decide whether pursuing this type of funding is worthwhile. The New York Times
For the latest, follow us on Google News.