You’ve probably heard the common axiom, ‘It takes money to make money.’ Indeed, every entrepreneurial endeavor needs funds to innovate and grow.
Still, and, fortunately, you don’t have to max out all your credit cards or sign away a limb or firstborn child to venture capitalists, not when you can use the alternative funding and growth options and strategies we shall discuss as you read on.
Growth Hacking: Doing More with Less
Let’s assume you’ve created a cool new app, but due to limited funds, no one really knows about your amazing innovation because you haven’t done that much marketing.
With traditional funding and growth strategies, you would seek investor funding from angel investors, venture capitalists, etc., and then use the seed capital to grow your enterprise. This approach is often tedious and long, especially when compared to growth hacking.
Growth hacking differs from traditional funding and growth strategies because it primarily focuses on using minimal resources and unconventional strategies to spearhead massive, tangible business growth and development. You can consider it MacGyvered funding and business growth.
As an alternative funding and growth method, growth hacking may involve different things, like using content marketing to highlight a business’s value proposition, going all in on using digital marketing strategies to create a community-supported brand, or using cost-effective crowdfunding and peer-to-peer funding options.
Fundamentally, growth hacking involves finding cost-effective, clever, and creative funding and growth avenues to test out rapidly to see which ones stick and lead to the anticipated funding and growth results.
Crowdfunding: Customer-Driven Funding and Growth
As you know, traditional funding sources include banks, angel investors, venture capitalists, etc., with the funds usually being in the form of equity or loans.
In contrast, crowdfunding involves pooling funds from supporters and customers and is usually in the form of donations, contributions, and, in some cases, straight-out funding for a cause.
Crowdfunding using the best crowdfunding platforms like KickStarter, Indiegogo, and even Patreon, a platform that many entrepreneurs consider great for content-based crowdfunding, is a fantastic way to get your customers and supporters to pool funds and support the cause behind your entrepreneurial endeavor.
You can use various crowdfunding approaches, such as rewards or equity-based crowdfunding, stretch goals, and other ideas that could lead to your funding goals and spearhead anticipated growth.
Crowdfunding is a lot like throwing a successful virtual fundraiser. However, instead of selling overpriced raffle items, drinks, and chocolate bars, the prices are unique rewards and early access to features and products. You can also use crowdfunding campaigns and platforms to build communities and launch marketing campaigns that lead to viral business growth.
Crowdfunding also has other advantages, such as:
- Lower risk: Compared to traditional funding approaches like venture capital and bank loans, crowdfunding has a lower risk because, since you are pooling funds from supporters, you won’t need to give away some equity or put up collateral to guarantee the loan.
- Community building: As already mentioned, a successful crowdfunding campaign can be a great way to generate a buzz, build a vibrant community, and even test out new products and services. Think about it this way. When people show interest in investing in your business idea, it can signal demand for your core products or services within the larger market. Knowing there’s demand for your products and services can give you confidence in your entrepreneurial endeavor.
- Faster funding: Traditional funding options like bank loans often take longer to process because the bank must do various things, like checking your loan documentation and processing the loan request through various departments. Compared to that, crowdfunding is relatively faster, and depending on how successful your campaign is, you can get the capital you need to grow your business within a week or month.
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SBA Loans: The Heroes of SME Financing
Most successful entrepreneurial endeavors usually start as small and medium-sized enterprises. And, if you didn’t know, SBA loans are one of the best forms of business funding for entrepreneurs.
First, Small Business Administration (SBA) loans are loans given by financial institutions with a partial guarantee by the U.S. Small Business Administration (SBA).
Secondly, SBA loans are a fantastic funding option that can help spearhead massive growth in your entrepreneurial journey because the loans usually have competitive loan terms, flexible requirements, and, in some cases, lower down payments.
Additionally, because the Small Business Administration can guarantee up to 85% of the loan, compared to seeking a business loan using the conventional approach, it can be easier to get an SBA loan since lenders may be more willing to take a chance on qualified businesses because of the SBA guarantee.
Moreover, besides having lower collateral requirements than traditional funding sources like banks, which makes them more accessible, SBA loans also tend to have longer repayment periods, making them especially ideal for many SMEs.
As if that were not enough, since the SBA has one mission: to help small businesses grow into successful enterprises, using it as a funding source has fringe advantages like educational resources, mentorship opportunities, and the chance to network with other entrepreneurs and small business owners.
Peer-to-Peer Funding
As an alternative growth and funding source, peer-to-peer lending, also called social lending, involves raising business capital using platforms that directly connect borrowers to investors.
Although P2P funding has numerous advantages, one of its main ones is that there are no intermediaries, which, since you’ll be dealing directly with a lender through a P2P platform, translates into lower fees and means you can get unsecured funding.
Other key points that make peer-to-peer lending a great alternative funding approach for startups, entrepreneurs, and small businesses include:
- Widely accessible: Thanks to popular peer-to-peer lending platforms like Funding Circle, Lending Club, Prosper, Upstart, and others, startups and small businesses can easily access the capital they need to innovate and grow.
- Friendlier interest rates: Although interest rates vary depending on factors like market conditions and borrower risk, peer-to-peer lending platforms generally have friendlier interest terms than traditional banks, thus making them an ideal way to fund a small business or startup.
- Flexibility: Compared to traditional funding options that stipulate how you should use the borrowed funds, P2P loans are much more flexible, and you can use them for things like debt consolidation, acquiring business assets, expansion, etc.
As you can see, P2P lending is a great way to fund your business, especially if you have an up-and-running, successful business that’s seeking capital to expand and grow.
Bootstrapping: The Slow and Steady Wins the Race Approach
The traditional funding model usually requires you to seek external funding from bank loans, VCs, etc.
Bootstrapping is a different ball game altogether. It involves using whatever available funds, perhaps from your active income or savings, to launch and grow your enterprise.
While bootstrapping may be the slower funding and growth approach, it has key advantages, like giving you complete control of your enterprise and allowing you to grow at your own pace. It’s like being the tortoise in the race against the hare; it might take you longer to cross the finish line, but you’ll get there without burning out or losing your shell!
Some great bootstrapping ideas you can implement to improve business performance and growth include penny-pinching by renegotiating contracts, relying on free resources where possible, using growth hacking strategies, having a side hustle that supports your business growth, and pre-selling products and services to generate sales and revenue.
Unleash your potential with alternative fundraising and growth techniques to propel your business forward!
Incubators and Accelerators
There are many mistakes to avoid when planning your business. Business accelerators and incubator hubs are like the fairy godmothers of the startup world in that, at the wave of a wand, aka their well-funded wallets, they can give startups the capital they need to innovate and grow.
Incubators and accelerators are especially ideal alternative funding sources for early-stage businesses and startups because, like the SBA, besides providing funding, they can also provide other benefits, such as access to mentors and other resources.
Unfortunately, because there are not that many, getting into well-funded business incubators and accelerators can be very competitive, with many startups applying to get a share of the funding.
Strategic Partnerships: When Two Heads Beat One
Strategic partnerships are another alternative funding and growth strategy for entrepreneurs. Fundamentally, the goal is to form strategic partnerships with other entrepreneurs and, in so doing, leverage each other’s resources, customer bases, and expertise to fuel mutual growth.
Influencer marketing, for example, is a great way to form strategic partnerships, especially if your product or service has a baked-in virality factor. By partnering with influencers who send leads to your funnel in exchange for affiliate commissions for each successful sale, you can easily grow your brand while generating the sales needed to fund different aspects of your business’s growth.
Final Words About Alternative Funding and Growth Strategies for Entrepreneurs
As you can see from our discussion, you really don’t have to go the traditional funding route if you don’t want to, not when we have alternative and innovative funding options like SBA loans, growth hacking, bootstrapping, and forming strategic partnerships. The ball is now in your court. Which of these five innovative funding alternatives will you try based on your business goals?
GrowthHackers is one of the leading growth hacking agencies helping businesses from all over the world grow. There is no fluff with Growth Hackers. We help entrepreneurs and business owners embrace innovation with alternative growth strategies, increase their productivity, generate qualified leads, optimize their conversion rate, gather and analyze data analytics, acquire and retain users and increase sales. We go further than brand awareness and exposure. We make sure that the strategies we implement move the needle so your business grow, strive and succeed. If you too want your business to reach new heights, contact GrowthHackers today so we can discuss about your brand and create a custom growth plan for you. You’re just one click away to skyrocket your business.
