There are a number of articles and blog posts on how those with entrepreneurial aspirations can start their businesses on a shoestring budget. My question has always been, well whose shoestring are we talking about? A toddler’s shoestring is very different from that of, oh let’s say Shaquille O’Neal’s shoestring. Huge difference!
I’ve worked with startup entrepreneurs on tight budgets and I know their frustration. There’s so much they want to do to grow the business they launched on that proverbial shoestring budget but are limited in doing so.
What they soon found out is that operations, payroll (or 1099 contractors) and marketing…the stuff you do to keep customers coming in and keep current customers happy all require their own “shoestring budget.” Before you know it that shoestring is eight feet long!
That’s when these entrepreneurs begin to look at financing options.
SBA Loans are a tried and true funding source. These loans are guaranteed by the Government and require that you:
- Have reasonable invested equity
- Use alternative financial resources, including personal assets, before seeking financial assistance
- Be able to demonstrate a need for the loan proceeds
- Use the funds for a sound business purpose
- Not be delinquent on any existing debt obligations to the U.S. government
You’ll also need to prepare:
- Personal and business financial statements
- Last three years personal and business tax returns.
- Completed loan application describing the loan request and itemizing the use of loan proceeds
- Signed authorization for credit and background investigation
- Management resumes from owners and primary managers
The whole process can take a month or more. If you’re still in the startup phase, this process can seem overwhelming and then what if you go through the process and not get funded?
The Crowdsourcing Phenomenon
Some entrepreneurs and small business owners have found great success on sites like www.crowdfunding.com and www.indiegogo.com. These are crowd-funding sites that allow you create a profile about your business and raise funds for that business.
There have been several big success stories to come from this type of funding; one of them being The Glif. It’s a tripod for your smartphone. Genius right? Their original funding goal was $10,000 but they ended up raising $137,000.
A word on crowd funding…you can’t create a profile, set a goal and hope to reach your goal without a lot of elbow grease. There’s a lot of work to do on your part. You’ll need to promote your campaign heavily across multiple platforms and channels in order to reach your goal!
OK, if you’ve got really big vision, you could subject yourself to the sharks on ABC’s hit TV show SharkTank. Just know you better know your financial numbers like you know your name!
Companies are coming up with innovative ways to serve the funding needs of entrepreneurs who may not be a good fit for traditional lending solutions. One such company is Kabbage. Money was called “cabbage” back in the day and the Urban Dictionary even notes its slang use for the word money so it’s a real cool name for the business.
Kabbage is interested in getting funding into the hands of entrepreneurs and small business owners. It’s obvious by their lending requirements.
Not like traditional loan requirements, Kabbage can use real-time business data from places you do business online like:
- Intuit Quick Books
- Business Checking
Your credit score is not the only factor and that can be a huge saving grace for some business owners.
You can apply for loans as low as $2,000 up to $100,000. There’s a six-month repayment plan and you only pay for money you actually use. And again, Kabbage uses seller history and reviews to determine loan amount.
So as your shoestring budget grows…and it will…Kabbage makes it easy to fund your growing business.