“A leader is one who knows the way, goes the way, and shows the way.”
~ John C. Maxwell
Every year since 1999, when I started helping entrepreneurs and business owners raise money, I have heard the same thing, regardless of whether the economy is doing well or poorly.
And what I hear is them saying that it’s so hard to raise money.
Importantly, whether times are good or bad, the process of raising money is pretty much the same. And whether times are good or bad, the challenge of raising money is still the same. That’s because when times are good, there are more entrepreneurs seeking funding. When times are bad, funding sources are a little tighter with their money, but fewer entrepreneurs are contacting them. So, it all evens out.
So, how should you go about raising money in 2021?
There are six rules to follow. Today I’ll give you the first three of them and tomorrow the final ones:
- Bootstrap as much as you can. Bootstrapping is the process of running your business with no outside financing. While you clearly can’t accomplish as much as if you had outside funds, bootstrapping forces you to get creative and to figure out how to do more with less funds. Importantly, when you bootstrap, you can 1) start to prove that your business will be viable, and 2) prove that you can execute on your venture. Both of these will help you significantly later when you do seek outside funding.
- Start by raising smaller amounts of funding. No one is going to write you a $5 million or $10 million check for your business until you’ve proven your concept. Bootstrapping will help progress your business; but also figure out the smallest amount of funding you could use to progress your business further and raise that amount. Once you raise the smaller amounts of money, and start growing your venture, the larger amounts of money will become much easier to raise.
- Determine the right sources of funding for now. This is the area that trips up most entrepreneurs. For example, if you’re not a technology company and you haven’t already proven your concept, venture capital is probably not right for you. But that’s ok, since there are tons of other forms of funding that can be a great fit (e.g., angel funding, crowdfunding, vendor financing, etc.). So you must understand all the funding sources that are available to you, and go after the ones that are most applicable. (My Truth About Funding program teaches how to access the 41 sources of funding available to entrepreneurs.)
Funding to Start & Grow Your Company
Do you need funding to start or grow your company?
If so, don’t go at it blindly.
Rather, you should use my proven funding strategy:
Yes, you can raise the money you need to start or grow your company.
But you need to raise it in a certain way.
Today’s Question: What was the name of the first major deodorant company in the United States?
Previous Question: What famous American, in a bid to show the commercial potential of the soybean, appeared at a convention in 1939 outfitted in clothes made entirely from that very versatile vegetable?
Answer: Henry Ford.
His shoes were the only part of his wardrobe not made from soybeans. Talk about demonstrating a product’s potential!
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