One of my first jobs after leaving school was for a company called Sertant Capital who would loan money to businesses in order to buy certain types of equipment. Something which never ceased to amaze me in those days, especially for a young and impressionable mind like mine, was hw so many of these businesses got themselves off the ground without any help in terms of business loans or fundraising by selling shares in the company. This is what they call bootstrapping, when an individual is able to pool enough money on their own, which they can use to give their business a lift off. This is a great way of launching a business of course because it means that any debt is minimal and that allows the business to breathe easier in terms of finances.
If you have a great business idea and you do’t wish to take a hefty business loan, here are some tips on DIY fundraising.
Crowdfunding
One of the greatest things that has come about thanks to the internet is crowdfunding, the ability to raise a huge sum of money thanks to very small donations by a very large number of people. This has been used very successfully by many businesses, particularly those within a niche which is relatively new. Simply set up a page, write out your mission and why you need the money, then share the page and see how many people wish to contribute.
Personal Debt
Many people have looked to take on a small amount of personal debt in order to launch their business such as personal loans or credit cards. The terms can often be better for personal debt than business and it also allows for a far smaller amount to be borrowed. It is worth bearing in mind however that it will be the person and not the business responsible for the repayment should everything go wrong.
Selling Up
A man who I met back in the servant Capital days was so convinced by his business idea that he sold almost all of his possessions, downsized his house and his car and invested all of that money into his own business. This is very commendable and despite the risk I guess it comes down to the fact that if you are confident in what your business is going to be able to do, then take the risk and go in with both feet.
Friends and Family
Borrowing money or going into partnership with friends and family is also a very good idea and a smart way to launch a business without having a huge level of risk. The biggest thing to bear in mind here is that money is powerful and it has been known to cause problems amongst friends and family, so ensure that you both respect the terms of the agreement which you make.
Bootstrapping isn’t easy but the benefits financially on the business are incredible, if you can do it, you should try your best to make it work.
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