How To Fund Your Business Without Raising Money
Here's three ways to make a little extra money to fund your business without raising money.
Here are three creative ways to fund your business without raising money:
Fundraising for a startup can be difficult. There are decisions on how much to raise and what type of money, lots of questions to answer on the idea and traction, and ample time spent with potential investors that often end in a “No.” I see entrepreneurs who feel stuck that they have to raise money to get customers, yet are being told investors won’t provide capital because there are no customers. Here are a few ways to get around that conundrum.
Ideally you want to be full time on a startup to accelerate the learnings and progress. However, the realities of life and a paycheck still leave the door open for a side hustle. While you are working full-time in a current job to pay the bills and generate money for your startup, work nights/weekends on your side hustle to get those first paying customers. Even though the pace will be slower than full time, this allows you to continue learning, crafting the value proposition and go-to-market strategy, and getting your first paying customers.
Let’s say you recognize a need in the market and want to go full time, but don’t have a product/customers yet. Another path I have seen is to start as a consulting/services business. Sign-up customers that bring in revenue and do the work manually/behind the scenes through projects. You can also start creating communities to build your expertise and create a following. Not only does this bring in some paying customers, you are learning more about the customer needs and required product so that when you do go build the software, you already have a base of paying customers that will support you. Over time you can blend the mix of software/services to better scale the company.
I have written before about the power of finding authentic demand and building your product with development partners. If the pain is truly there, customers will pay up front (even if at a discount) to build the product with you. The best part in asking for payment is you separate the ideal customers from the “nice-to-have” customers. Another huge benefit is customer funding can be non-dilutive.
There are ways to show traction pre-revenue to help with fundraising. However, be careful falling into the “build it and they will come” trap and convincing yourself you must raise external money to go build your product as the only path. Instead, consider some of these alternative options to get some early paying customers before raising external money.