At our Entrepreneur Meetups (www.UmpquaEntrepreneurs.com) the biggest question new entrepreneurs have is…
“Where do I get the money to start my business?”
I asked the same question when I got started. I’ll answer it by telling a story on how I “bootstrapped” several companies with very little money. Before I dive in, I understand that there are other ways to fund a business. Banks, money from family / friends / investors, your bank account, etc. They all work great for certain situations. But not everyone has easy access to those resources.
I’ll show you how I’ve started all of my companies without banks, with sometimes less than $200 of my own money, and without investors or loans.
My first big “money” mindset shift came when I was 21 and in college. I came up with a crazy idea to buy an apartment building. The problem was that I had about $600 in the bank, no experience in real estate, banks wouldn’t lend to me, and I was afraid people wouldn’t take me seriously.
What did I do?
At first I did what most do, I almost gave up. That thought lasted about 12.4 seconds before I smartened up and realized money was out there, I just had to get creative (keyword) and not give up (read my article on the Entrepreneurs Mindset if you haven’t). Within 2 months I found a perfect 4 unit property, a seller who was willing to be flexible, and BOOM!… I was the proud owner of a $174,000 property that made money from day one with only $400 out of my pocket. In this case, the property owner decided to loan me the money to buy his property. Yep. It happens.
That opened up my mind to a whole new world.
I took that creative funding mindset to my first online publishing company. Starting with less than $200, that company grew to over $1million in sales in just 18 months. To fund this business our customers give us the money to start the company. How?
Simple, we did our research and found a need in the marketplace. We already had a small list of prospects in the market, so we emailed them a few emails asking these simple questions. “Do you have this same problem?”, “Will you buy a product from us that will help you solve that problem?”, and “What would you pay for it?”. Simple right?
A few dozen said they had the problem and would pay about $1,000 for it if it really worked.
So we put together an offer, wrote a product description, and pre-sold the product to that customer list for $900.
19 customers bought that week. That’s $17,100 in sales before we ever created the product.
The customers were pre-buying our product. We call it a “customer funded business”, and it’s pretty common. Authors pre-sell books, Apple pre-sells iPhones and iPads, heck… a local linen company that came to a YES Meetup said that their business was funded by their largest customer (that customer bought their equipment for them in exchange for servicing the linens for their business).
A great customer funding resource is the website www.KickStarter.com. You can post a product or project you’re creating, people pre-purchase your product, and if you reach your funding goal you get the money.
Don’t ever let money be the main hurdle for starting your business. The money is out there, just get creative… the money just may be right under your nose.