When an entrepreneur is looking into building a new business, funding that enterprise is always an essential consideration. Many companies decide that, at least for their initial push, funding the company requires taking on debt. 

In the past, the only way to support a new business venture was to get a loan from a financial institution. More recent times have seen a change in the economic landscape, and companies no longer need to saddle themselves with debt right out the gate. 

For those entrepreneurs who are looking for more creative ways of funding their startups, 13 contributors to Forbes Coaches Council delve into several funding methods that will help a business start off right, without the millstone of debt around its neck.

1. Always Begin With The End In Mind

Always begin with the end in mind. Would the business be able to turn over profits and cash flow if it takes on the debt and, in the worst case, when the business turns sour will you have sufficient cash flow to sustain it? If you need a high percentage of debt to fund a brand new business, would it be worth the risk to take on such debt or would starting smaller give you space to grow? – Jedidiah Alex Koh, Coaching Changes Lives

2. Get An Accurate Picture Of Your Finances

Before you borrow money to start your new venture, investigate your underlying beliefs and fears about money and rewrite them to serve you. Once you start to shift fear and denial and shame around money, you are ready to take a look and get an accurate picture of your current financial situation. You would be shocked at how many new ventures don’t do this critical step. – Gia Storms, STORMS COACHING & CONSULTING

3. Find Creative Ways To Make More Money

I always advise my clients to make debt their last resort. Instead of borrowing money, figure out ways to make the money you need to build your business. After all, if you can’t make the money to start your business, how will you make the money to grow it? Be creative, start with small steps, earn your way to success. I funded my first business by doing garage sales every weekend — I was only 16. – Roger Doumanian, The Roger Doumanian Corporation

4. Save Money Before Getting Started

Make an honest assessment in terms of who you rely on for your finances — if the answer is you and you alone, taking on significant debt for any purpose can put you at a major disadvantage. The old adage of setting aside six to nine months of living expenses still holds true, so give yourself some runway before you jump headlong into business for yourself. – Jenna Valovic, Jenna Leah Coaching

5. Budget Carefully And Track Your Efforts

Taking on debt to finance your business is never a good thing from a revenue-generating perspective. Have a budget, understand financial principles and track your efforts. If you’re going to incur debt, do it from an investment perspective that plans a return on your investment as opposed to just borrowing to pay the bills. – Jorge Gutierrez, BMOC Group

6. Start With Planning And Foundations

Money is a tool and a resource that is always available to you. There is a sweet spot between having a strategic plan in place while testing the market for viability and also working on your wealth frequency and how you think of money. Debt is not a “bad thing” but it may not be necessary depending on your vision to fund your business as you start it up. Always start with planning and foundations! – Jenna Faye Madden, Soul Meets Strategy®

7. Invest In Yourself

If you believe in yourself and your business, then invest in yourself. I never see these types of investments as debts, but more like working capital. There are various options for loans, including receiving them from family, friends, or banks — with different types of repayment options. There is no better investment than the investment in yourself. If you believe, invest! – Jon Dwoskin, The Jon Dwoskin Experience

8. Partner With A Trusted Financial Advisor

Any business, especially startups, needs to have a good strategic business plan linked to good financial models and plans. This is how you gain investors to help you fund the startup and minimize debt. Startups should also avail themselves of government grants before seeking debt funding. Remember that in some tax jurisdictions, interest on debt is a tax deduction. Always seek financial advice from a trusted advisor. – Kevin Kan, Break Out Consulting Asia

9. Execute Services Yourself

I started my marketing agency by executing services myself. Rather than taking on debt, I worked my way up slowly, building the right client base and the right team. My business is still debt-free, and that allows me to grow at a maintainable pace. Try something that you can execute yourself without taking on debt; later you can bring on additional resources as you have the money to do so. – Anna-Vija McClain, Piccolo Marketing

10. Provide Equity

The leverage effect only works for profitable and high-margin business models. Equity is the first choice. When you start a business from scratch, you start with the idea of how you want to help people. The value proposition, your vision together with a good purpose is required here. This requires equity. Scaling and leveraging only come into play when you have found an MVP and a viable business model and you want to protect your niche from competitors. Again, equity is better, especially for blitz-scaling. – Michael Thiemann, Strategy-Lab™

11. Find A Trusted Angel Investor

In starting a business, not only is it critical to do the proper financial planning — but who one partners with is equally critical. Thus, while debt may sometimes work, a trusted personal/angel investor is often a better choice. One should, where possible, think long-term at the same time as short-term. Who do you want your future partners to be? – Ash Varma, Varma & Associates

12. Tap Into Your Network With Crowdfunding

A great way to avoid debt when starting a business is to tap into your online network via crowdfunding campaigns. Many startup companies have used the power of social media to promote crowdfunding campaigns that raised millions of dollars. Raising funds through crowdfunding is beneficial because you get a built-in base of potential customers that believe in your brand from day one, as well as zero debt. – Lori A. Manns, Quality Media Consultant Group LLC

13. Leverage Credit Card Debt

No matter what, stay in control. No banks. No investors. I’ve built and sold two companies to publicly-traded companies, the other two were sold to private buyers. Debt is easier than banks and many times better than investors — they’re like bad partners or customers you can’t fire. Credit card debt stinks, but it’s easy to get and the high-interest rates give you an incentive to pay it off fast. – Mike Koenigs, MikeKoenigs.com

Read Original Article on Forbes.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment