Growing a business takes cash.  That cash either comes from operations, loans, or investors.  I’ve used all three vehicles to grow companies and I can tell you that the path is always clear- but never clear-cut.  There are all sorts of obstacles- ones you may recognize and negotiate, one you may miss completely, and some that just seem insurmountable.  The trick is always to find the best way to reach the goal.

One company was started on a wish and a prayer.  Not really- but it did start with a maximum pot of $ 10K.  From the first $ 1K, we managed to grow from three medical center clients to almost 1000 in the US- all the while growing the business worldwide.  We ran a lean shop- turning over inventory way too quickly.  ( I still can’t believe we turned over inventory more than 28 times a year.  With a 7 day quarantine for each batch, to boot.)

One company got started with a small nest egg, augmented with two rounds of loans. Oh, the backers tried to claim it was an investment, but when their preferred stock demanded a 10% interest rate, we refused to call it anything but a loan.  And, we made sure we bought out these “investors” in under two years.  (Yes, it cost us a 100% premium, but we still managed to eke out a 2000% return, when we were done with the venture.)

Going public or crowd-funding your firm requires you to run your venture, while you are maintaining a full-time press for funds.  So, you really have two full time positions for each executive to perform.

Too many of our clients think crowd-funding means you post your (great) idea and folks flock to give you money.  But, the first thing you need to know before you attempt crowd-funding is that you have to properly set the stage.

No, I don’t mean you need to create the business entity, but that is also self-evident. Actually, it means you need to have some investors/backers ready to go.  Because if you wait to obtain your first nibble AFTER you list your venture, you don’t have momentum- you have inertia.

Folks crowd-fund as they see others participating.  If they look and see no activity, they lose interest and jump onto to another bandwagon.  But, if you post your venture concept and have backers appear every few hours or so providing funding, then others see the momentum and want to join in the effort.   Because it’s just like a website or a blog-site- folks like to see what everyone else finds interesting.

But, it doesn’t stop there.  You need to involve the folks who are providing the funds- or considering their options.  That way they feel part of the community and that the activity is really humming.  (Of course, if they are dissatisfied, their comments can stop your progress like a boulder falling on a narrow road- all progress is blocked.)

That’s also why we recommend keeping a few backers in reserve.  If your crowd-funding campaign extends over 60 or 90 days, make sure you have a backer or two joining every 7 days or so- to keep the momentum strong. Testimonials from satisfied users every week or so also work to the advantage of the campaign.

And, make sure you deliver on your promises.  Because too many crowd-funding campaigns fail to fulfill their orders as promised.  (I recall one effort that promised to deliver software to convert my Palm Tablet to Android- so I demanded my funds back- and then built the conversion myself- in spite of my trepidation and concerns that I would be left with a brick and not a tablet.)

If you manage the campaign properly, it could even set the stage for you to seek venture funding on a much larger scale.  Because your created buzz, you delivered on your promises, and you have a viable product/process.

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