Starting a business of your own takes a whole long list of important steps. One of the first and most important is creating a business plan.
But after that, which is just a plan on paper, it takes start-up funding to bring those words to bear.
There are various ways to approach finding funding, even if you don’t happen to have a rich uncle or an extra $20,000 or $30,000 in the bank.
Finding funding starts with a good product or commodity. If no one believes your idea will sell, you will not sell anyone on your idea.
From there, two traditional avenues open up funding: going to investors and going to banks. Newer and non-traditional funding sources, like kickstarter, work well supplementally.
Mill Creek Brewing Company, the recently-opened brewery in Nolensville, started with two guys brewing out of their homes. From the beginning they worked simultaneously with investors, banks and Kickstarter to secure cash.
“I kind of already knew that I had some family that would be interested in helping,” said Chris Going, Mill Creek founder. “We first found some equity investors, mainly friends and family.”
That gets the ball rolling, but from there you need to get out there with your product, and keep pushing it uphill. Literally, in some instances.
“I really used beer, our product, to draw people in,” he said. “I would brew two kegs at a time and bring them with me to stuff around my neighborhood or do public tastings, anywhere that would let me do it for free. So driving community interest to find potential funders was an early step for us. Just get the name out there, market it, and I also met people through the process who would say when are you opening, I want to be part of it.”
Grass-roots self-marketing gives you an opportunity to broaden your network, reaching beyond those first investors.
“I kind of built up a network of people I could tap, so that when we were raising equity I could send them a business plan and then sit down and talk about this,” Going said.
At the same time, Going looked for a bank loan.
“Were able to raise enough money to go to the bank and say here is how much we have and this is how much we need,” he said. “The bank wanted to try to product and see if it was something they believed in. We were meeting with them along the way, under the guise of, ‘Once you raise equity, then we can talk.’ The bank will want you to have some skin in the game, either your own money or investors’ money, before jumping in.”
‘I would stress finding a local bank that you trust and feel comfortable with,” he added. “Ultimately, they are going to be- they have to be- your biggest fan for it to work.”
Going also started a Kickstarter campaign. Kickstarter provides crowd-funding. An idea sets a goal and people pledge to invest a certain amount. Mill Creek set its goal at $100,000. The catch with Kickstarter, however, is it’s all-or-nothing. You reach your goal or get nothing.
“In hindsight, I would not have set our sights so high,” said Going.
But, he said, it still indirectly helped raise money, since some of the potential investors from Kickstarter ended up coming in the old fashioned way.