Could you pick a worse time to search for start-up funding? You wouldn't think so, judging by developments in the economy, financial markets, housing, imports, retail sales, venture capital and by other high-profile influences. There's no doubt it's difficult for new businesses to attract financing today.
Difficult, yes. Impossible, no.
If you need money to launch your business, recognize that the funding honeymoon of the last decade is over. We're beyond the IPO frenzy of the '90s; no one expects the stock market to double this year (maybe not even this decade); and "dotcom millionaire" has become an oxymoron. In other words, things are returning to normal.
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However, that doesn't mean things are going back to the good ol' days of 10 years ago. "The market downturn that began last year hit investors and institutions hard, and many are still skittish about taking a risk on new businesses," says consultant Charles Cocotas, the former president and CEO of TCBY who, as president and COO of Boston Chicken, helped transform a single-unit restaurant into a national franchise chain.
So where does that leave you?
First, have you looked for funding in every nook and cranny? If so, that was your first mistake. (When was the last time you stashed any money in a nook, let alone a cranny?) Avoid timeworn clichés, conventional wisdom and traditional routines. Difficult times call for new clichés, unconventional thinking and innovation.
"In this environment, many think there's no money [for] start-ups," says Rich Tambor, senior vice president and general manager of American Express Small Business Services Lending in New York City. "That's not true. There is capital out there. It's harder to get, particularly for dotcoms seeking venture capital, but if you have a good business plan and a clear sense of how your business will make money, you can get financing." Tambor claims lending terms are no less favorable. "You [just] have to search longer and harder. It helps if you're creative."
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