The 5 Roads to Funding Your Startup

You’ve had that brilliant idea for a business for years now. Whether it’s the clever app that’s going to revolutionize how we get a date, the vegan taco/pizza/pancake truck, or the self-walking dog leash that scoops the poop for you, you know your idea can not only change the world…but change your life (and your bank account) forever.

Screen Shot 2016-03-15 at 9.27.17 PMBut, then enters the age-old question…”how am I going to pay for it?” Real businesses take real money to get them up and running. Whether it’s hiring an attorney to do patent research, a marketing team to get the word out, or even a design team to help you prototype, an idea will remain an idea until you have the proper funding to turn it into something real.

So, how do you do that? Well, only a few years ago, you basically had two options.

  1. Slog down enough egg nog at the Christmas party to get the guts up to corner your rich, lawyer uncle and “hail mary” your business plan under his nose.
  2. Slap on a suit and march down to the bank in hopes of proving your idea is loan-worthy, even if your car, house, and cats have to serve as collateral.

Fortunately for us, those days are long gone. Welcome to the future of small business funding.

Over the last few years, several options have evolved into legitimate models for acquiring the money you need to get your business off the ground. What follows is a primer on 5 distinct categories of business funding that you can explore, and in some cases, take advantage of no matter your business, your timing constraints, or your personal credit.

Each type of funding has its own advantages and disadvantages, so explore each careful to determine which makes the most sense for your individual situation.

Angel Investors & Venture Capital

Although these two models have their differences, each revolves around the fact that you are offering an investor an amount of equity (a.k.a. a percentage of profits for a certain length of time, even forever) in your business in exchange for an infusion of capital. This describes the kinds of deals you see on Shark Tank. For example, a private investor might offer you $50,000 in exchange for 20% ownership in your company and/or its profits.

The difference between angel investors and venture capitalists is fairly simple. Angel investors tend to be individuals who have a high net worth and invest in companies for fun, profit, and personal interest. This could be the rich dentist who’s bored with golf and sports cars, but wants to help two young inventors from his home state with their new robotic toothbrush. They would create an arrangement where he fronts them a certain amount of money, and in exchange, he receives a return on his investment via the profits they make after expenses.  If they don’t succeed, he loses his money, but the inventors don’t owe him anything (unless otherwise specified in their agreement).

Free Guide: 154 Sources of Funding for Small Businesses

A venture capitalist, however, is less of a hobbyist. She is a shrewd and seasoned investor who chooses investments more on the likelihood of turning a very specific return on her investment. The VC is more focused on making a return over helping out someone for whom she has a soft spot. However, she typically has developed strong business acumen and can serve as a mentor for the young entrepreneur. However, it’s still a situation where, typically, investment is traded for equity and the entrepreneur doesn’t have to pay anything back.

Crowdfunding

This type of funding has come into greater popularity over the last few years with the advent of platforms like IndieGoGo and Kickstarter. Crowdfunding focuses around generating cash via a social campaign. In return, the entrepreneur offers boosters both advance access to the product or service, as well as specific rewards.

Business owners have used crowdfunding to help cover everything from design and building costs to even travel expenses to get their product or service created. At the time of publication of this post, the highest-grossing crowdfunding campaign was the video game Star Citizen, which raised $109,010,029. Yes — that’s nearly $110 MILLION.*

However, it’s not as simple as slapping up a Kickstarter page and expecting generous, anonymous donors to fall into your lap. Successful campaigns often become full-time jobs, with the entrepreneur often employing major marketing agencies to help them plan, create and execute their campaigns. That said, crowdfunding can result in some very serious wins…even into the millions.

Government Loans

Let’s begin by clarifying that although we’re including all Government-related loans under one heading, they’re not all the same.

The major player in government loans is the Small Business Administration or SBA. The irony? The SBA doesn’t even issue loans. Instead, it provides loan guarantees to entrepreneurs and small businesses, issuing a guarantee to the borrower’s bank to pay back a certain percentage of the loan if she/he is unable to do so.

The federal government isn’t just being nice…it has a vested interest in helping small businesses grow and flourish. As a result, the requirements of certain SBA loans are less stringent in terms of the owner’s equity and collateral than commercial loanss. Therefore, this makes the SBA an excellent source of financing source for startup businesses. And in many cases, the SBA will guarantee loans for smaller sums than most banks are willing to lend on their own.

Peer-to-Peer (P2P) Lending

Peer-to-peer lending, often abbreviated (P2P), is a relatively new phenomenon. Instead of going through an institution, a borrower is matched with an individual lender through an online service. These are typically unsecured loans (no collateral required).

This model of lending provides benefits to all parties involved; lenders often earn higher returns than other investment vehicles, borrowers have access to lower interest rates than banks, and the P2P lending company profits through marginal fees on each match they provide.

Frequently, the P2P platform is responsible for checking the credit of the borrower and matching them with the appropriate lending source. Fear not, however, if your credit isn’t in the best shape. There’s a match for everyone; the terms will just vary.

So, Where Do I Start?

Take a good look at your individual circumstances and your ideal situation. Are you willing to give up a small piece of your company in order to avoid the stress of being strapped with business debt for a few years while until you become solvent? Do you have the time and resources to craft a successful crowdfunding campaign?

You have more resources than any other time in history to get the money you need to get your startup up and running. I suggest you take some time to explore different platforms and funding sources to determine which is the best fit for you.

My team has compiled a comprehensive guide called 154 Sources of Business Funding. We’ve compiled as many funding sources as we could find across all styles discussed above, and it’s available to you at no cost. Click here to learn more.

Get Free Access to 154 Sources of Fast Funding for Your Small Business...

Get Free Access to 154 Sources of Fast Funding for Your Small Business...

Keep your business afloat! Get the funding you desperately need...

We’ve compiled an exhaustive list from a variety of reliable sources that can get you a massive investment, loan, equity partner, grant, etc. in record time. Unlock dozens and dozens or resources that are waiting to give you the money you need to GET or STAY in business. Just enter your name and email here, and we'll send you the guide immediately.

Success! Congratulations...you're seconds away from receiving hundreds of sources of funding for your small business.

*https://en.wikipedia.org/wiki/List_of_highest_funded_crowdfunding_projects

 

5 Routes to Funding Your Small Business

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The Biz Funding You Need is in This Guide. Get it Now. Fast...Free.

The Biz Funding You Need is in This Guide. Get it Now. Fast...Free.

Keep your business alive! Get the funding you need...

We’ve compiled an exhaustive list from a variety of reliable sources that can get you a massive investment, loan, equity partner, grant, etc. in record time. Unlock dozens and dozens or resources that are waiting to give you the money you need to GET or STAY in business. Just enter your name and email here, and we'll send you the guide immediately.

Success! Congratulations...you're seconds away from receiving hundreds of sources of funding for your small business.

Perfecting Pinterest: Interview with Beth Hayden

Perfecting Pinterest: Interview with Beth Hayden

Beth Hayden is a nationally-known speaker and social media expert.  She provides master training for NY Times Bestselling Authors, Political commentators, personal development coaches, and more.

Aside from also being a senior staff writer to Copyblogger.com, as well as her site, BethHayden.com she was approached by Wiley Publishing to literally write the book on Pinterest, a new and wildly-popular social bookmarking site.

The book, Pinfluence, is a complete guide to Pinterest marketing that teaches readers how to effectively raise awareness for a brand, product, or service, drive traffic from Pinterest to your website, and connect with current and potential customers.

Interview

Podcast: Play in new window | Download (Duration: 44:31 min — 64.2 MB)


Resources and Follow-Up

56 Ways to Market Your Business on Pinterest
http://www.copyblogger.com/pinterest-marketing/

Beth’s Book on Amazon:
Pinfluence: The Complete Guide to Marketing Your Business with Pinterest

Beth’s Website:
http://bethhayden.com

Beth’s Pinterest Profile:
http://pinterest.com/bethhayden

“Pin It” Button for WordPress:
Pin It button for WordPress

 

My Morning of Skanatra and Goal Yelling

My Morning of Skanatra and Goal Yelling

“Dey got a million tons-a coffee…in BRAZIL!”

Huh?

It’s 8:17 am, and I’ve started my morning routine.  I’m tackling my to-do list on ToDoist, and on that list are two goals I have set to recur every day.

One of them is what I called “Megaffirmations” (a sorta clever way of saying mega affirmations.)  It’s a technique I learned through Tony Robbins — one of the kings of positive motivation and getting on track.

Tony says that feeling motivated isn’t just about telling yourself that you’re going to have a good day and do great things…rather, it’s about getting yourself in such a state of manic excitement and feeling good, that then your brain automatically links “pleasure” to whatever it is you’re trying to achieve.

In other words, you feel so good, you can’t help but want to do the thing you want yourself to do.

It’s an NLP technique — positive conditioning and association.  People use it to lose weight and talk to girls and stuff.

The way I get “in state” is to listen to really great, high-intensity music.  And I just rediscovered a really fun band from my youth — Skanatra.

Check it:
(post continued below awesome video song)

Fun, eh?

So, I’m listening and bouncing along in my chair, which led me to part number 2…Goal Yelling.

I have a list of goals that I want to accomplish over the next year.  Stuff like getting out of debt, going shark cage diving, adopting a dog, building a $10 million business, etc.  To make those goals real, I read them out loud EVERY day.  And on mornings like this one, I start YELLING them.

Why?  Because then I’m paying attention.  It’s a hell of a lot easier to be fully present and paying attention when you’re screaming.  And the only people listening are my girlfriend’s two cats, Rex and Bodhi.  And they’re not people at all, even though they’re giving me some awfully weird looks.

Research shows that the more you repeat your goals, the more your brain tends to remember and integrate it into your life.

And listening to a band that covers Sinatra tunes in a Jamaican accent while yelling next to some cats…I’ll probably remember this.

What goals can you yell this morning?

Customer Persona: Are You Wasting Your Time?

Customer Persona: Are You Wasting Your Time?

There’s an excellent exercise for getting into the mind of your customer.  It’s called creating your Customer Persona.

Customer Personas

Here’s the gist…your target customer or client has all sorts of characteristics that describe them.  If you know and understand that information, then you can use it to create a fundamental strategy on how you communicate with them, better serve their needs, and keep them (and your market segment) loyal to you and your services and widgets.

This is (at least) a two-part process, so stick with me.

Start by gathering information.  And ideally, this is REAL information based on your ACTUAL prospects and customers/clients…not just speculation by what you think defines them.

You can gather demographic information, like:

  • Age
  • Sex
  • Education level
  • Income
  • Location
  • Marital/family status
  • Sexual preference
  • Religious beliefs
  • Etc.

You can (and should) also gather psychographic information on your market segment, which includes info that’s less quantifiable.  It’s more about preferences and habits.  Stuff like:

  • Needs
  • Concerns
  • Wants
  • Fears
  • Frustrations
  • Pressures
  • Drivers (cost vs. benefit)
  • Etc.

You can gather this information to build your Customer Persona in several ways.

The most accurate method is to ask directly — talk to several of your customers and get a sense of the similarities and ties among them.

You can also look into social media.  Using social media channels like Facebook, Twitter, LinkedIn, etc., you can get a sense of who they are and what they need.

And if you’re not a fan of social media, another option is to put a survey on your website or out to your email list.  A great free resource to create surveys and polls SurveyMonkey.

Once you have that information, you can then create a “customer persona,” or general archetype of your customer and market segment.  One of the best ways to do this is to actually create a (semi) fictitious profile of that person.

Write it like you were writing a biography — talk about what their day is like when they wake up, go to work, go shopping, come home, etc.  What are their frustrations?  What makes them happy?  Talk about their lifestyle and habits.  And finally, find a (real looking) picture that looks how you think they would, and place it along with the bio.

Use that customer persona bio whenever you’re getting ready to create marketing materials or tailor your new product line to the market segment you’re after.  Reference it every day so that you’re REALLY getting into your customer’s head.

You can even stop and ask, “Would ‘Steve’ be into this?”  “How would ‘Michelle’ feel about this new direction?  Would it speak to her and answer her needs?”

The more energy you can devote towards truly answering wants, needs, and desires of your market segment by understanding them, the more success you likely find.  Researching and writing a customer persona is well worth the time if it’s going to mean a bigger bottom line for you.  social media

* Special thanks to Jenny Magic and Clay Delk for their contributions about creating a Customer Persona.  Damn smart folks.

Emotional Freedom Technique: Get Unstuck

Emotional Freedom Technique: Get Unstuck

Emotional Freedom Technique.

There are times when we all feel like something is holding us back and keeping us from feeling good or productive.

Days when we can’t seem to push past some type of negative energy that, maybe we don’t even understand why we’re feeling it.

On those days, I like to employ something called “tapping.”

Tapping, also known as Emotional Freedom Technique (EFT), is a series of movements that help you to release “stuck energy” throughout your body.  Sure — it sounds hokey, and honestly, it is hokey.  But for millions of people, it works.

Although it looks funny, its motives are based in physiological science.  Essentially, you are tapping on nerve centers and connecting those with positive messages to yourself through a set affirmation:

“Even though I am feeling [whatever you are feeling — scared, worried, angry, sad], I still fully and completely accept myself.”

The idea behind it is to create psychological congruency within your body and mind.  You are making everything work together.  Our minds work hard to get us feeling the way we desire, but if our bodies are tense because of something we experienced or felt either recently or a long time ago, we aren’t in full congruency with ourselves.  That means we aren’t productive and will likely have a really hard time getting there.

Once you release that trapped energy through tapping/EFT, your body and mind are aligned, and you can start to move forward.

There’s a great intro video on how to do this on Tapping.com.  I think he also has a free ebook you get for signing up for the mailing list.

Check it out, and get back to work!