One of the biggest challenges for entrepreneurs of all ages is getting ahold of startup capital. But for young and first-time entrepreneurs in particular that task can be even more formidable. Banks and investors typically like to see that you’ve started successful businesses in the past or that you’ve worked in your chosen industry.
Fortunately for this group, you can rely on yourself — you are, after all, your best source for capital. Here are 10 ways to use your own best asset: You.
- Income. If you have a job, keep it, or consider just reducing your hours. It will be tough to startup while you’re still working, but that constant, stable source of cash could help sustain you and your startup until it starts generating enough money on its own.
- Savings. Before you startup, save as much as possible. This personal nest egg is your best source for start-up capital, as it can help further your business plans without asking others for money.
- Downsize. If your personal expenses such as rent and car payments are too high, you may not have enough left to start your business. To keep your costs down, continue living in student mode — where cereal and ramen noodles are daily staples — even if your income has moved up. You may need to consider more drastic measures: Moving back in with mom and dad, for instance, is a common strategy among startup entrepreneurs.
- Grants. A number of organizations have grant opportunities to serve as seed money for startups. Federal, state and sometimes city grants are also available to those looking to start up.
- Related: A Definitive Guide to Government Grants
- Credit. While you should avoid crazy spending sprees, your credit cards may be a valuable resource while you’re getting started. Look for cards with no annual fee and a low interest rate on balances.
- Start selling. Your product or service may not be ready for primetime, but what about a local sales event? Maybe you can participate in an area flea market or even sell items in advance of an official launch. Call it a beta launch and tap users for feedback too.
- Crowdfunding. Raising money from individual investors through crowdfunding networks like Kickstarter and Indiegogo will likely get overhauled soon, after the JOBS Act goes into effect. But it’s still a worthy option for cash-strapped startups.
- Related: On Crowdfunding Sites, Age Doesn't Matter
- Liquidation sale. Gather up anything of value that you can live without. Ask family and friends to contribute unneeded stuff too, and hold a garage sale or sell those items on eBay. If you have some furniture and larger items to sell, you may be surprised at how much you can earn.
- Rent party. During the depression, people would throw parties for neighbors and friends with food, drinks and music. Everyone would pay an admission fee and the money would be used to pay the rent. How about throwing your own “rent party” but for start-up cash instead?
- Street performances. OK, so maybe you're not up for this one, but I've given you nine other decent ideas. Now it's your turn to come up with something that will work for you.
What other capital generating tips would you add to this list? Leave a comment and let us know.