Funding can be a major hurdle for business owners. While many owners traditionally turn to banks, loans are increasingly harder to obtain thanks to increased regulations. From credit cards and grants to self-funding and venture capital, entrepreneurs are finding creative ways to make their business dreams a reality.
We asked three small-business owners—Nick Gentry, CEO of Iconic Solutions in Raleigh, North Carolina; Wesley Mathews, co-founder of High Level Marketing in Detroit; and Hesam Meshkat, CEO of Guzu in Los Angeles—to share their experiences with funding and their advice for securing enough financing for their businesses.
How did you initially get funding for your company?
Nick Gentry: At first, we pursued every funding option available, including applying for credit lines; giving up equity for convertible notes and seed investments; and even government-sponsored grants.
We chose to bootstrap our operations and fund everything ourselves. After discussing our business model with key advisers, we realized that a large cash infusion significantly limits how you're able to pivot the business as time goes on. We knew that we would have to evolve our offering as the market changed, and with outside investors this would be more difficult.
[pullquote showtweet="false" username="Wesley Mathews" alignment="center"]Make sure you have a plan for the dollars. Have a clear vision of what the money is for and how you are going to use it, track it and repay it.
—Wesley Mathews, co-founder, High Level Marketing[/pullquote]
Ultimately it comes down to deciding if you’d rather own your own business or partner in a larger, potentially more successful one. We knew that an external investment would provide operating cash, business expertise and connections, but it also meant loss of control and ownership of our business.
Wesley Mathews: High Level Marketing was self-funded via credit card. I bootstrapped about 40K to get things going and float expenses for the first six to nine months. This was the only option I considered.
Hesam Meshkat: Initially when we launching Guzu, my partner and I decided to self-fund so that we would maintain ownership. The pro is that we had more control, but the con is that we were personally liable for the business.
Looking back, what’s one key lesson you learned about accepting and using funding?
Meshkat: Since we launched, we did receive a small funding round. The most critical lesson is to allocate those funds to marketing campaigns and expenses that directly connect to revenue coming in.
Mathews: Make sure you have a plan for the dollars. Have a clear vision of what the money is for and how you are going to use it, track it and repay it. Stick to a playbook.
Gentry: After launching multiple products, I’ve learned that it always takes more money and more time than initially anticipated to bring something to market. Make sure there is a clear understanding of cost and timelines, as external investors want their return as quick as possible and will be less likely to fund a subsequent round if they begin to doubt the delivery.
What tools or resources can entrepreneurs take advantage of if they lack experience securing funding?
Mathews: Funding isn’t always as easy as it sounds. Seek advice from other entrepreneurs, connect online [or in person] with local groups and your Chamber of Commerce. Ask questions, and remember that when it comes to funding, there is no one size fits all.
Gentry: First, make sure you are engaged with an attorney who has experience with multiple funding cycles and is familiar with local investors. Second, seek out other business owners who have secured funding in a similar way. Most business owners I’ve met are more than willing to spend time educating others on the path they took, whether it was good or bad.
Meshkat: Crowdfunding is a great opportunity for those not familiar with raising funds. It is relatively easy for the first timer and can provide fruitful results if the product and pitch are put together well.
Read more articles on financing.
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