4 Ways to Fund Your New Business Without Borrowing a Dime

By Carrie Smith on 28 April 2015 0 comments

Becoming a small business owner or freelancer is a great way to regain control of your schedule while having limitless potential for income and locational flexibility. The only problem is that starting a new business venture usually comes with a big price tag.

It may be difficult to fund a new business without using loans or credit cards, but it's not impossible. Here are some tried-and-true ways to avoid taking on debt when becoming your own boss. (See also: 6 Simple Ways to Market Your Side Business)

Bootstrap Your Business

Bootstrapping is essentially the DIY version for business owners. It's the process of streamlining your expenses while spending as little as possible in order to grow your business in the long term. It's not just about being cheap, but more importantly about spending money on the right areas of business while being conscious of your bottom line.

A few bootstrapping techniques include outsourcing small projects to contractors using paid gig sites, such as Fiverr or Upwork versus hiring regular employees, or paying for a course to learn a bit of copywriting, versus hiring a professional copywriter.

But don't stop there. Are there existing sources of funding you can use for your new venture? Can you use the cash value of your life insurance policy, sell a little-used second vehicle, or downsize your home? Bootstrapping takes many forms, and if you're serious about avoiding debt, you should also be serious about locating funding.

Seek Out an Investor

This is not a new idea by any means, but it's one that should nonetheless be considered. If you need capital for inventory or equipment, seek out an investor who believes in your idea and is willing to become part owner. This will give you the added cash flow your business needs without going to the bank.

You can choose to be as informal as you want, by asking friends and family to invest in your idea, or be more formal by seeking out someone like an angel investor, either through local professional networks, or on websites such as Gust.

You have to be willing to take on a partner of course, but working with someone who has deeper pockets than you do could be a real advantage.

Leverage a Day Job

Consider leveraging your current day job while starting your business on the side as a means of generating revenue for your new venture. This is a very smart way to vet out your idea before having the added pressure of making it produce revenue to support itself. Many entrepreneurs choose this route before starting an online business, and essentially use their day job to fund their dream job.

This method may take a bit longer to build up, and you'll have to juggle multiple priorities at the same time, but you will be the sole owner of your business and able to build a solid foundation from the beginning.

Try Crowdfunding

If your business venture is an idea for something that people will buy, such as a physical product or a smartphone app, consider crowdfunding as a way to infuse your new idea with the cash it needs to get off the ground. Sites like Kickstarter and IndieGoGo are perfect platforms for bringing your new idea to the masses.

There have been quite a few ideas brought into the market this way, including everything from video games to watches and beer, that have grossed more than $1 million dollars from crowdfunded pledges.

Give your new business the fighting chance it deserves by avoiding taking on debt in the beginning stages. You will learn to streamline your work process and focus on the true priorities while the business grows. Then you can later expand and build upon the foundation you've created.

Have you launched a business or side business? How'd you pay for it?

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