In 2016, options like creating an app, crowdfunding, and promoting your fledgling idea for a new business online are all hip things to do — but there are some time-tested, old-fashioned ways to raise money and stay safe while you do so.
Don’t Quit Your Day Job
Oftentimes, people in executive positions have saved up a healthy nest egg. Once the idea to go out on their own hits (and perhaps even become a competitor to their current employer), many are too quick to quit their jobs. Even if you have a solid business plan in mind, have started the recruitment process, and already have a location lined up, your day job is a huge part of what is allowing you to grow your capital. Sure, it may seem to be taking away time you could be spending on your new venture, but you are also learning new things at your current job everyday — things that could be total game changers you’ll need to know about before you jump off the ledge.
Decide on a percentage of your day job paycheck you can reasonably set aside to fund your new enterprise — and stay employed until you won’t have to depend on anyone (or any institution) when you experience financial setbacks you didn’t see coming. Your day job is the lifeblood that feeds your pet project until it’s no longer just in your head, and you’ll need that money you set aside from those paychecks in the event things don’t work out, or don’t come to fruition as quickly as you had expected.
Crowdfund, but with Reasonable Expectations
Crowdfunding is an excellent way to raise money for your new venture, but you need to take precautions. If your current employer finds out you’re raising money to go out on your own, you probably won’t be employed much longer. So how do you get around this? Find the most connected person you know to set up the crowdfund account in their name, or in the name of the soon-to-be enterprise. You’ll have to be able to trust this person, and the same company you currently work for can’t employ him or her, either. Think of your trusted friends and family — maybe an attorney, other businessperson, or trusted accountant can start the crowdfund for Company X. Even better, if you have a college-aged child, s/he probably knows how to crowdfund better than anyone you know.
But even with all the proper precautions in place and utilizing a third-party to create the crowdfund, keep your expectations reasonable. In all likelihood, your crowdfund is not going to raise enough money for you to leave your job. Think of it as a slush fund for the small things you’ll need to get started: computers, desks, or the first month’s rent on a commercial space. You may be lucky enough to have a crowdfund that really speaks to people and makes them want to help you — but just in case the only people who donate are the people who know and love you, it’s best to stay humbly hopeful.
Use Your Real-Life and Online Network to Reach Out Cautiously
It’s always a good idea to get helpful hints, advice, and even create partnerships for your new venture through networks like LinkedIn or even a pool party. But make sure the people you’re talking to can keep things to themselves until you launch, and make sure they have your best interest at heart. Be sure you have your privacy settings on point across all your social platforms until you’re ready to unveil your new venture.
For those who want to invest in your venture, create a plan to pay them back or give them a stake in the venture from the jump. To do this, you’ll have to have something worth giving them — and conversely, you’ll want to ensure you’re not giving up too much for the money you need from them to get off the ground. Creating your own legacy by owning your own business is inspiring and something to be proud of: but to get it right, you have to know which moves to make when, who you can truly trust, and be cautious about whose money you take.