4 Tricks for Self-Funding Your Business
4 Tricks for Self-Funding Your Business
How to go it alone without going broke.
When you launch a business, one of the most important questions to answer is how you’ll fund it. Today, there are myriad options to explore, ranging from high-risk/high-reward venture capital funds to more conservative small business loans from banks.
That said, according to Fundable, only 0.05 percent of startups are venture-backed, and less than 1.5 percent receive funding from small business bank loans. In reality, the majority of all new businesses are funded in part by the founder’s personal savings and credit. While self-funding may seem like uncharted waters in today’s glitzy startup scene, Fundable notes it’s actually how nearly 6 out of every 10 entrepreneurs gets started.
I chose to self-fund my wellness business, Golde, when we launched in 2017. I didn’t feel ready to take on the pressure of outside investors, and as a brand new company with no income history, we weren’t eligible for traditional small business loans. Since then, we’ve doubled our revenues every year, and have inked partnership deals with some of the biggest retailers in the beauty and wellness space, like Sephora and Goop.
Three years later, we’re just starting to open our business to investor conversations, and I’m so grateful that we took a more sustainable path to getting started. While the journey has been extremely rewarding, it wasn’t without its hardships. Here are a few tips for self-funding your startup:
1. Evaluate if self-funding is right for you.
While going it alone is certainly noble, it’s not always prudent. Take a careful look at your business plan, and see if self-funding really makes sense. If you have massive startup costs in order to launch your product, you might be better off talking to investors or launching a crowdfunding campaign. You might also want to skip self-funding if you’re in a personal cash pinch, or have other significant financial responsibilities, like student loans or a mortgage.
