Budding entrepreneurs are often faced with the ultimate barrier – having money to make money. While most mentors encourage entrepreneurs to use family, friends, savings accounts, and credit cards for startup capital, there are other alternatives to raising funds.
Here are a few options you have as alternatives to maxing out your credit cards or bumming funds from family and friends:
Do not pull out from your employer
If you are one of those budding entrepreneurs who finds opportunity inspired by a lack in your day job, you may have heard that it’s important to pull out from your employer in order to focus on your business plan. However, if you’re struggling to find capital to start up your business, your most prudent option is probably to keep your day job. You may have to work long nights as it usually takes just as much focus and work to finalize your business plan as it would to work 9-5 day job.
Just make sure your new venture isn’t getting in the way of your day job because scattering your efforts can lead you to mediocre performance in all areas rather than excellent performance in one main focus.
Pay your employees first
If you have already pulled out from your employer and have a fledgling company already up and going, it might be your best option to use the income from your acquired clients to finance your business expansion, rather than to seek external financing. Bootstrapping is an effective way to use your cash flow, at least temporarily. In order to put your company profits back into the business rather than your bank account, you’ll need to cut your expenses and really focus on acquiring leads.
There are many ways to cut expenses, like working from home rather than an office or even exercising deferred compensation with your suppliers.
As you are starting your own business, raising capital can be your number one priority as a business owner. Make sure you’re doing everything possible to cut expenses. You can easily cut your marketing budget by using social media marketing as your main channel for lead generation and brand awareness.