Crowdfunding is fast becoming the most popular way to fund new small businesses, and for two good reasons: you don’t go need to go into debt to acquire the financial product, and you don’t have to give away any equity to receive your financing.
Kickstarter, IndieGoGo and others have taken a strong concept and turned it into a profitable, reliable model for incubating new businesses. The idea is astonishingly simple: if you can convince enough people to chip in just a little bit of money, then it quickly adds up to a lot. Crowdfunders raised $3 billion in 2012, and that number is expected to triple by 2015.
Sure, this might not get you all the way across the finish line, but you’ve got to start somewhere. By trading products and services you already have for products and services you need, you free up cash for essential items, like payroll and debt management.
3. Small Business Incubators
Universities and local governments want your business to succeed, and they are often willing to offer you office space, support staff, and mentoring at little or no cost to your company. Once you start looking around for business incubators, you might be astonished to find them popping up everywhere. Currently, there are about 1,200 small-business incubators and small-business accelerators (those that offer term-limited support and mentorship) in the United States.
This perennial favorite funding strategy has been much abused in recent years. The advent of crowdfunding has led to a backlash against DIY financing (why pay for it yourself when you can get the “crowd” to pay?), but let’s face it — if you aren’t willing to put your own money into the pot, then you are going to have a tough time convincing investors or lenders to chip in.
Photo Credit: Ed Yourdon, Flickr.