- Build a client base first (by using guerilla marketing techniques and a client-centric culture)
- Save a portion of your profits first and build equity (to take advantage of future business)
- Slowly grow the company using the equity (for continuous marketing and innovation)
Better Than Cold Calls
- A well-honed message followed by your superb listening skills
- Your initiative to go after your prospects like diamonds in the rough
- Polishing them with tender loving care and assuring your TLC is constant
Names, Names, Names!
I remember in the second grade, we were visited by a representative from the Bank of America. He was this big guy with a bowtie and a gentle demeanor. He gave us our first lesson in financial literacy and encouraged us to start saving now either with a saving account or the now-defunct Christmas Account. I couldn’t afford the monthly deposits for the Christmas account (which was a way to save for Christmas gifts slowly over the year while earning interest) but I had $3.50 to put into a savings account making four percent interest per annum. Man, I was so stoked about growing my money that I would stand in line at the bank on the first of each month along with dozens of retirees to collect my interest! It gave me the incentive to make it grow through chores and entrepreneurial ideas even then because I wanted a baseball glove and later a bike.
- Your best bet is you. It’s the money you’ve saved whether it’s in a cash account or any investments that if you were to lose it, wouldn’t do too much harm. To keep it straight, loan the money to yourself as a sole proprietor or use it to purchase shares in your company as an LLC or corporation. Then deposit it into your business bank account; not your personal bank account. Possible areas of money you have right now are your savings accounts, earnings from your job, retirement fund, life insurance policies (whole life which has an accumulated cash value), lines of credit from your home equity loan and inheritance.
- Family and friends are also a decent source but the one thing you must be clear about is the lenders’ relationship to your business. If you do not want their voice or decision-making within your company, create a written agreement for the loan and make it clear that they are making a loan with no powers. You control everything. They either loan you the money on this basis and shut up or no deal. Believe me, there are family members and friends who’ll want a piece of the action when your business starts to fly. Also make sure you detail how you’ll pay back the money either in increments or a one-time payback and whether there is interest built in. Even if it’s your mom and dad or best friend, do the loan papers with the utmost precision as if you’re dealing with a stranger. Money has a way of screwing up even the best of relationships.
- Community lending programs offer micro-loans from $500 to $100,000 based on your equity, your company’s equity, and your ability to pay back the loan. In Oakland, there are several agencies including the Oakland Business Development Corporation, Opportunity Fund and Working Assets. (In the pipeline is a proposal by Goldman Sachs (of all people) to develop a microloan program with $300 million distributed through such organizations as those mentioned above.
- Community-based banks such as OnePacific and Community Bank of the Bay will work with you to secure either SBA-backed or special government backed programs. But you must do your due diligence and if you start the paperwork with them, be persistent until you get an answer.
- Some entrepreneurship training programs have accumulated a reserve or grant to help their graduates launch their businesses. Normally, you must be a graduate of their program in order to qualify.
- Private investors who are looking for high returns in lieu of other types of investments such as stocks, housing, etc. In these cases, you will need to have a strong track record and a well-conceived prospectus.
- Our Urban Luau fundraisers, which is made up of Urban FIRE graduates, coordinate and take part in raising monies for fellow graduates who don’t have the funds to pay for a business license, fictitious business name, and minor startup costs (up to $200 per).
- Other possibilities but unlikely: credit cards (unless you can pay back the principal amount each month to avoid high interest rates), venture capitalists, and going public.