Research from Ernst & Young, published in their “Nature or nurture? Decoding the DNA of the entrepreneur” report has revealed that access to funding is the biggest challenge startup founders face.
In fact, getting funding isn’t just a big problem, it is so significant that 33% of small business entrepreneurs surveyed revealed it to be their biggest problem; the closest problem after funding was only cited as #1 problem by 19% of founders.
Now, pretty much 99.9% of entrepreneurs who tried getting a loan from banks will tell you it isn’t an option; according to the Ernst & Young study, banks rarely lend small businesses money because it is “expensive” to them to do so.
Entrepreneurs are too risky for them, and their business model relies on playing it safe.
3 Ways Small Business Entrepreneurs Can Gain Funds
As an entrepreneur who went from being a 16 year old nobody to owning a successful consulting business, and building a commercial fish farm that employs a few people (currently 5), I know a few things about generating funds to grow a business.
Here are 3 ways for small business entrepreneurs to start generating funds.
1. Start Freelancing on a Part-Time Basis
Spend part of your day freelancing to get funds for your business.
Majority of the founders of some of the world’s biggest companies today had to freelance at some point.
Whether it is as a developer, as a designer or as a writer, nothing serves as a good and reliable source of fast cash as freelancing does.
Freelancing is very simple, and the key to success is pretty straightforward and often accomplished in the following steps:
- Identify a service you can offer to potential clients.
- Look for a unique advantage you have that can be used to convince clients that you are the person they really need.
- Identify where your clients really hang out; it could be on freelance jobs board, writing websites, social networks, top blogs in your field or someplace else. It is essential to find this out.
- Reach out to these clients and let them know how you can help.
It’s also important to know that you won’t have a magical success rate; rejections will be high, very high, and you need to prepare for this.
Expect a response from anything from 2 – 10 percent of clients you pitch; the amazing thing is, if your offering is right and you don’t undercharge yourself, the few clients that respond will make it worth your while.
2. Build Your Network
Things haven’t always been rosy for my fish farming business and, due to a lot of mistakes I made early on – not starting small, and failing to minimize my expenses at the initial stage – I’ve had to deal with financial struggles at the early stages of my business.
During this period, the network I’ve built has been most invaluable; in terms of access to direct cash, resources, and advice to help me reduce costs and maximize funds.
I still benefit from my network today, and there are a lot of advantages you can have from being in the right network beyond cash that is more important than cash.
Being in the right network can also lead to great things such as:
- Resources to grow your business you’d have otherwise spent money on.
- Ideas that can help you save costs or double your revenue that you wouldn’t have gotten otherwise.
- Opportunities people in your network, who are well placed than you are, are aware of that you wouldn’t have heard of.
Find people in your field that you look up to, and think about ways to genuinely connect with them; gradually grow your network and increase your value in your network by contributing value to others in your network.
I’ll also let you in on a secret, about the best way to quickly build a solid network within a fraction of the time it takes: FIND A MENTOR.
Make sure your mentor is someone who really knows what he is talking about in your field, and who also has his own level of influence. Genuinely learn from him, and be available whenever he needs you; over time, you’d surprise to find out, your mentor’s network becomes your network.
What he’s built for years or decades, you have access to in a year or two.
My teacher and mentor in the fish farming business is influential in the field, and to be his student I had to partially suspend a lot of my other activities and move and learn with him for two months; I’ve also constantly kept in touch for over a year now.
The result today is that people know me with him, I’ve built my own strong network in the process, and he’d be more than happy to help me whenever I need is help.
3. Work as a Consultant
Just like freelancing, consulting is another way to get funding for your business; the difference is that, with freelancing you’re actually doing the work while with consulting you’re mostly providing the ideas/knowledge required for others to execute.
Identify individuals and businesses that need your knowledge and expertise, and strike a consulting deal with them; it might be difficult convincing them of your value initially, and you might want to start with a basic package, or charge slightly lower, to get them to see that you know your stuff.
Funding doesn’t have to be a challenge for small business entrepreneurs, and hopefully it isn’t anymore due to the tips above.
I’ve built the foundation of my business, offline and online, using the ideas outlined in this article. Implement them, and have your immediate funding problems solved.
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