This article is written by Udemy instructor Emilie Schrevens-Wester and is part of The Entrepreneur Masterclass.
It happens to a lot of people. They have a genius idea, completely viable, but not enough money to turn it into a reality. In this article, we’ll discuss all the ways to get money for your business idea and some tips.
1) Asking for donations
A lot of entrepreneurs choose crowdfunding platforms online to collect money, and it’s not a bad idea. If you’re planning to go for this route, here are some tips:
Make sure you introduce your (to be) company, your ethics, your goals, and make a powerful statement.
Include detailed information on how the money will be used
Create rewards for people backing up your project. It can be a physical product, a digital one, a free ticket to a business meeting, investor shares, etc…
Study who your donors could be. Is your product aimed at a younger audience? Is it aimed at stay-at-home moms or dads? Study who your audience could be, and you will have an idea of who could benefit from your product and be interested in it.
Just like when you’re trying to sell a product, give all the information the potential donor needs, and let them make a decision. You don’t want to force donations.
Involve the donor by wording your presentation with more “you”. “You could make a difference” “you can be part of this adventure” “you can benefit from x x x”
Study potential tax advantages of the donation/investment and make sure to inform the donors about it.
Always set a goal so people can see how far/close we are to the objective.
If you’re sharing your crowdfunding campaign through social media, treat it as an ad campaign. Who is your potential donor, what is their age range, which countries are they from?
Prepare everything. Nice pictures showing milestones that you can share to everyone, graphs of where the money is going, etc. You need to have a whole media kit to go with your campaign. When people donate, thank them publicly, answer questions people might have, be fully open and transparent.
A lot of people want to be successful or part of something successful. If you present your crowdfunding campaign this way, then people will feel like this $100 they will give is like them going into business and being business people.
2) Work on the prototype
It’s great if you’re able to explain your potential product to everyone and that your presentation is looking nice, but you cannot neglect your prototype, your blueprints, or your progress so far.
You need to keep in mind that there has to be something solid behind your presentation. You need to keep people updated about the progress of the development by updating the page of the crowdfunding platform or by sending a newsletter or updating your social media page.
If you are working on a physical product, you can tell donors that they will receive a prototype if they invest a certain amount.
For example, I remember a local business that asked for donations to renovate their concert hall. The sum they needed was around $40.000. If you donated $50 or more, they would let you have a signed picture from one of the artists, if you donated $500, you would have a photoshoot session with an artist, etc.
3) Get a loan
Instead of waiting for your savings to pile up in order to invest in your business, you can take out a loan and put your personal items as collateral. If your friends and family are willing, they can also put their possessions as collateral.
4) Get angel investors
Angel investors give money to business owners and expect a share or a part of ownership in the company. You may not find an angel investor that will give you the full amount, so you will have to focus on getting multiple investors involved.
5) Ask the government
In some countries, the government encourages people to start their own businesses. They could provide you with a low interest loan or give you lower taxes when you make money. Check with your local government office and see if they could help in any way.
6) The internet is your oyster
Nowadays, many people get donations online, whether it’s during their stream on Twitch or YouTube, or after getting people to sign up on Patreon to support their content creation. If you have a skill you can share, organize a webinar or a live stream and invite people to donate while you are out there answering questions or sharing your knowledge. Make sure it’s clear that this is a money collecting campaign. You never know!
7) Reach out to fellow entrepreneurs
Veteran entrepreneurs like investing in younger companies. Reach out to them, pitch your idea, show your prototype and your progress so far. They might invest in your company and maybe become your mentor!
Partner up with another uprising company, they may have skills you need, and they could be interested in profit money in the long run.
8) Organize events and sell tickets to it
If you have 50-100 interested people, organize an event to collect money. Offer them a nice place to be at, maybe a small concert from a local band needing exposure, get a friend to take pictures and let everyone have fun. Afterwards, share pictures of the event on social media (if people consented to it) and spread the word!
9) Keep in mind your emergency fund
Just like savings as a normal person, you need to put money aside in case something goes wrong with the business. Once you start seeing stable income, start putting money on the side. Save money during the good times to be able to stay afloat during bad times. Not every month will be as good as the previous one so you need to be prepared.
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