You have a great idea and you’re going to bring a new product or service to market. It’s an exciting time as you imagine the changes your idea could bring. You’re embarking on changing a corner of the world in some way and impacting people’s lives — how they work, travel, communicate, think, feel or act.
Now the tricky bit — cash. Am I right? However great your idea is, or lean your startup is, you need money. You just can’t get avoid the need for funding. Welcome to the startup’s chicken-and-egg dilemma: your product is awesome* (*let’s assume this is true) and will generate cash, but you can’t develop, market and deliver your product until you have — you guessed it — cash.
There are certainly numerous ways to fund your dream — here are some possibilities to generate cash or support for your startup:
- Bootstrapping (which typically involves giving up anything in your life that costs money: food, rent, fun)
- Friends and family (also known as unaccredited investors)
- Equity investment: Accredited investors such as business angels or venture capitalists – this includes convertible debt options
- Debt investments or loans: Bank loans, private loans, microloans, credit cards
- Government sources: Economic development initiatives, U.S. Chamber of Commerce programs
- Support organizations: Business incubators, business accelerators
- Crowdfunding: These could be rewards-, equity-, donation- or lending-based.
Of course there are advantages and disadvantages to each of these options. For some of these funding sources, the upside includes mentorship, access to resources, introductions, networking and collaboration. Potential downsides include loss of equity and control, accrued debt and interest fees.
One area that many startups seem to avoid in the early-stage build phase is sales. Cold, hard sales — where you tell people about the benefits of your product and ask them for cash — would not only help fund your growth but would also create a customer base of fans that could support you in ways that go beyond the financial.
Even if you are working from an incubator or have access to initial funds, you need to learn — and feel comfortable enough — to sell your product.
If you’re dragging your sales heels, then why not join one of our free two-hour workshops – The Build Phase – Increasing Sales (Fast) as a Tech Startup – which are being hosted in Boston, Cambridge, Austin, San Francisco and New York. Check out our workshops page for all upcoming workshops and to register.