3 Creative (and Legal) Ways to Fund Your Service Business
October 5, 2007 - Posted by Shama Kabani
The fastest way to raise funding is to rob a bank. But aside from being highly unethical…it is also illegal. So, let’s examine three legal and ethical ways of raising start-up capital and cutting costs.
1) Barter- Our ancestors used this system efficiently for centuries before money was created and you can too! Give away your services to others in exchange for theirs. For example, if you own a web design firm offer web design services to your accountant, your housekeeper, your lawyer, the milkman, etc. Not only will it build up your portfolio, you won’t have to pay in cash. Two pieces of advice-1) make sure both parties understand the expectations, 2) get it in writing.
2) Share Resources- This is a fun strategy that some of the biggest businesses use as well. If you and a colleague have similar needs, consider sharing resources. For example, if you could really use a new copy machine but find the price tag a bit high, find a friend to share the machine with. You could offer equal partnership of the machine or charge a fee for each use of the machine. This concept also applies to administrative assistants, expensive technologies, offices, artwork, and so on. It pretty much applies to everything and everyone, with the exception of spouses and children.
3) Give Away Shares/Profits-This is another tactic to save initial costs, but be sure to use extra caution with this. Giving away huge parts (or shares) of your company may seem fine in the beginning, but once the business takes off you may regret it. Can you imagine if Google had given away huge shares of their company when they started? The actual founders would have nothing left by now. On the flip side, if you use caution and play your cards well, you can leverage this technique to raise a lot of capital. Be sure to brush up on your presentation skills!
Bonus-Smart Marketing! Please please (pretty please with sugar on top?), leverage the internet to market yourself. I don’t care how small of a company you are-you can use this technique. If you optimize your internet marketing, there is no need to invest in other marketing channels and this is a huge cost cutting mechanism!