Funding is one of the first challenges that an entrepreneur encounters.
You’ve come up with a great idea, you’ve sold some initial units in the neighborhood, and you’re certain it’s going to work. Where do you find the money to make the dream a reality?
The options are many, but it takes careful consideration to determine which methods work for the stage and type of your business.
Are you a hometown hero, well-known in the community but lacking some initial cash to scale?
Sounds like crowdfunding. While you don’t need to ask investors for money, crowdfunding is far from easy. It works best for companies that need capital for a specific item or project (like a new machine or production run). It doesn’t work if you need millions of dollars for a hard-to-explain vision. Our Q&A with Kickstarter food lead Carol Benovic-Bradley is a good place to start.
Have a flawless business plan, and looking for a longtime partner and steering committee?
One or more investors can bring both funding and guidance to your burgeoning business. Remember to choose carefully, as this is only the start of the journey and you want to make sure your long term visions are aligned. And investors come in many forms, like angels, venture capitalists, hedge funds, and more! A helpful list of the types of investors can be found here. How to find them in the first place? Use your network, attend small business events, pitch competitions, and make cold calls. You may have more investors in your neighborhood than you think. Just make sure you’re coming to them with your paperwork, such as your business plan, in place.
Maybe you want to keep the leadership to yourself and just need capital for expenses.
Sounds like the small business loan is the way to go! While you probably know about your regional bank’s offerings for small businesses, did you know that the SBA has loan programs? In these cases, the SBA will either lend your business the money directly, or partner with another bank to minimize your requirements.
Also, don’t forget about your local economic development agencies. For instance in Portland, Maine alone, both the City of Portland and the Greater Portland Council of Governments set aside cash to provide easier access to capital for small businesses. Always remember that towns, cities, states and the federal government benefit if you are operating a businesses in their jurisdiction – don’t hesitate to ask them for help.
Have an hour? This video, from food business financing genius Elizabeth Ü, is worth watching. A bit old, but full of good information!