Having a great business idea is a great first step to becoming an entrepreneur. How can you take the next step to fund it?
Social media is riddled with incredible stories of young entrepreneurs who have defied the odds, made millions, and are pursuing their wildest business dreams while working remotely and traveling the world.
This can be extremely motivating for enterprising young people, but for those who have crushing student loan debt, the thought of even funding a start-up business seems farfetched. The New York Times recently highlighted several examples of young entrepreneurs who, weighed down by their student loans, encountered cash flow issues or couldn’t secure funding for their businesses.
Luckily, there are many different ways to fund your entrepreneurial dreams, and you shouldn’t let debt hold you back. All it takes is some research, creativity, and a lot of grit. Below are some examples:
No one says you have to secure a $50,000 business loan to start the company you want. Instead, starting your business when you’re young is the best time to bootstrap. You don’t necessarily need a storefront; a website will do. You also don’t need a full staff; freelancers and contractors love the freedom of their jobs, too.
Sure, you might not be able to take on each and every big project you want or fulfill every order you get. However, this is all a part of business growing pains. If you start small in the beginning without incurring significant debt, you can grow slowly and steadily until you can earn the capital you need to accomplish your bigger business goals.
Take on an Investor
Many young entrepreneurs might find it intimidating to take on an investor, but it doesn’t have to be complicated. The best way to start is to take an inventory of your current contacts. Which of your friends (or your friends’ parents) have a strong business background? Who do you know with a passionate interest in entrepreneurship? What is the biggest business in your small town? If a friend of a friend knows the owner of that business, perhaps they might be interested in funding your endeavor in exchange for a small equity stake in your business.
The truth is, you won’t know until you try, and it’s far less intimidating to approach an investor you know or know through a friend than it is to walk into a bank and ask for a business loan.
Make it a Side Hustle
When I began my digital media company, it was just a small blog that I started one day for $10. That was almost seven years ago. It took me four years of working on my blog and freelance writing business at night after work to generate the revenue necessary to become fully self-employed.
Trust me, it would have been nice to start my business with a pile of cash and all the time in the world to make it work. Unfortunately, that wasn’t the reality for me, and that’s not the reality for most young entrepreneurs. Sometimes, you have to slowly but surely grow your business on the side before you make enough revenue to fully quit your day job.
Also, keep in mind that your business can grow and change over time. You don’t have to do everything you want at once. Start with one product or one service and scale slowly.
Join an Incubator
Start-up incubators are becoming increasingly popular. Incubators offer start-up funding to businesses in exchange for a small equity stake in their company. The real benefit, though, is receiving advice, counseling, and help to prepare to pitch other investors. One of the most well-known incubators, Ycombinator, helped brands like Airbnb and Reddit get their start.
There’s a growing number of start-up accelerators and incubators in cities across the country. All you need to do is find one near you and apply. If you get accepted, you’ll not only get advice and mentorship, but also the funding to move your idea forward.
Create a Crowdfunding Campaign
With an online campaign such as GoFundMe, Indiegogo, or Kickstarter, you can use crowdfunding to tell the world about your business idea. Decide the amount of money you want to raise and what you want to give your customers in exchange for different tiers of giving. Then, be sure to promote your campaign on social media and to your family and friends.
You never know when your idea will take off, and a crowdfunded campaign can really transform your business and make it known to the rest of the world. For example, the travel jacket company BAUBAX joined Kickstarter seeking $20,000 in funding, but instead raised more than $9 million! They now have a full-fledged business that sells many different types of jackets to frequent travelers.
As you can see, you should never let start-up funding (or a lack thereof) hold you back from pursuing your business dreams. With a little bit of ingenuity, you can find the funds to make your entrepreneurial dreams a reality.
Catherine Alford is the go-to personal finance expert for educated,
aspirational moms who want to recapture their life passions and take on
a more active financial role in their families. Named the Best Contributor/Freelancer
for Personal Finance in 2014, she is also the founder
of BudgetBlonde.com, an award-winning personal finance blog.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. All investing has risk, including the possible loss of assets. If you need recommendations geared to your personal financial situation, schedule time with a financial planner.