Your Startup Didn’t Get Any Funding. Now What?
So you’ve applied for that loan or undertook a valiant effort at courting investors, but you were not able to secure the investment you needed to launch your startup.
Rather than feeling defeated and waving your white flag, I encourage you to take a step back and open your awareness to the many backroads you have left to explore.
When you’re set on one vision of how your startup path should look like, it’s difficult to see the additional backroads you can take to your final destination.
No matter what your startup sells or creates, there is another path that doesn’t require immense startup capital to launch it. Big hairy goals are hairy for a reason, and if you stop at your startup’s first sight of an obstacle, then you weren’t cut out for the big leagues anyway. Here’s a step-by-step playbook on how you can explore the backroads to launching your business without funding.
1) Break It Apart, Launch Something
If your company’s initial startup costs require a lot of large upfront equipment or product investments, it may seem that making those initial investments is the only road available to launch your company. For example, if you’re a project management software company, building that initial software may seem like the only way you can launch. Or if you’re a green juicery, getting a storefront may seem to be the vital force behind your business model.
The truth is that what you sell and where you sell it is only one of the many challenges of building your business, and it’s not a make-or-break requirement in order to get your running shoes on.
You have other challenges such as building a brand customers care about, creating a sizable audience of customers, and operationally running the company soundly. Therefore, a great backroad to launching your company without the software or the storefront is to focus on the other challenges you have on hand.
Break apart your company’s current product offerings and find a smaller product or another low-cost way to sell the product — is there a sliver of the software offerings you can sell that’s low-cost such as consulting services? Can you sell your juices at weekend farmer’s markets or deliver your juices to customers to avoid storefront leasing costs?
The key here is that you’re trying to get a product under your brand out there so that you can work on these other challenges of building a likable brand and a customer base.
Even if you build revolutionary software or find the perfect location in downtown LA to house your juicery, your business can still fail because of ineffective branding or no customers. By focusing on these additional arms outside of your product, you can still work on an important facet of your business without waiting on capital.
A response I hear a lot when I propose this backroad to entrepreneurs is that they want their business to make the right first impression by releasing their product in its totality. While I totally respect this perspective, it is difficult to conjure sizable financial capital without a promising plan. If there are no financial leads in sight, you have to make a move.
Consumers have very short memories when it comes to the activities of startup brands, and products need time to play in real hands before they’re turned into diamonds — people only remember you by your failures if that’s all you put out there, and no one gets it perfect the first shot. Have the courage to put things out there so that you have the opportunity to truly create something fantastic.
2) Build Your Brand, Find Your Audience
Netflix is a great example of a company that has excelled at this — the company spent 15 years building a sizable number of subscribers by just selling an existing movie and TV show database before launching its first original content series in 2013. They had a 1.0 version of their business and evolved into their 2.0 version many years after launch. You can do the same for your startup — build your 1.0 and set up your 2.0 for success.
Building an audience is such a crucial challenge for a brand, and arguably a better place to start building a company’s capacity rather than focusing on a capital intensive task such as opening a storefront or building proprietary software. With no customers, all that time and money you spent on securing that storefront or building that software will mean nothing anyway.
So even if you can only sell consulting services to your target market right now for your future software startup, or you sell your juices under a vendor tent where you can’t curate the lighting or temperature, do it so that you can build an audience that’s excited to buy when you’re ready to launch the full vision of your future business.
3) Grow 1.0 And Plant The Seed For 2.0
Once you start selling under your 1.0 version consistently, go back to your original vision of the company and start planning on how to get to 2.0. Start getting aggressive about saving your profits to launch 2.0, plan a Kickstarter campaign, or look for investors who are interested in investing in a company with demonstrated success.
Unlike the first time around of raising capital for your business, this time you have the experience, demonstrated success, and several options to launch 2.0 your way.
If you’ve been rejected from receiving funding for your startup, don’t let it stop you or allow it to label your business as unviable. Less than 39% of startups receive external funding outside of its founders — if a lack of external funding stopped entrepreneurs from building their businesses, the majority of businesses you know and love, including mine would not exist. Take the reins and invest in your startup’s success, no matter how many backroads you have to take.