Lack of money is, by far, the most common argument for not starting a business. Obviously, business ideas vary in the amount of capital required to successfully launch, but most can be modified and bootstrapped into manageable startup costs. Most first-time entrepreneurs develop an “order of magnitude” estimate of how much they need to start their business, based on nothing more than general ideas of what the big things should cost. Without detailed research and planning of your business idea, there is no way to gauge whether the cost of startup is too much. In addition, it is far easier to raise the capital you do need once you have thoroughly planned all aspects of your idea. A well-thought out idea and accurate financial projections will convince potential family and friend investors, and perhaps the SBA, that you are serious about succeeding.

Even if you work through your idea and find that you are unable to finance the full startup, you will find it much easier to modify and bootstrap your idea into smaller, less costly niches that you can ultimately grow into the company you imagine. You can start out part-time, barter with other small business owners for needed goods and services, or pick up side consulting gigs to increase income during the early stages. The internet provides significant opportunities for free marketing – it takes a little more time and effort than paid advertising, but can be extremely effective over the long run in building your brand and customer base. Once you know where you need to spend money to get your business off the ground, it is far easier to find the places to bootstrap.

Of the companies included in the 2008 Inc. 5000, 87% were funded, at least in part, by the owners themselves. The median amount of capital spent to launch these companies was $25,000 – that means half of those 5000 successful companies were started with less than 25K. A bootstrapped startup of $5,000 or less is very common, and most people can raise 5K with a little motivation. Cut your spending, sell some stuff on eBay, do some side jobs, whatever it takes, there is always a way to get started without a major outside investment. By starting your business with an eye toward conserving cash, you will develop a culture of financial responsibility that will ensure your business’s long-term growth and success.

Friends and family are the second most popular source of funding for startups (after self-funding). In order to protect and separate the business and personal relationship, it is important to follow basic business principles in making deals with those close to you. Negotiate all the terms, set a clear repayment schedule, and memorialize your agreement in writing. There are companies available who will service your family and friends loans, for a fee, which can be a great option if you and your lender would prefer an intermediary to handle any potential problems or disputes regarding the investment.

Another new avenue to raising capital for your startup is through social lending websites. These sites allow you to post your request for loans along with a description of the purpose and the interest rate you are willing to pay. Interested users pledge their own funds toward your loan in increments from $50 to your full requested amount. You repay these lenders through the website. This can be a great option if you have limited access to your own capital. Peer-to-peer lending is gaining in popularity, which also means there are some kinks to work out. Be sure to check into any lending site you consider before you commit.

Bank loans are very difficult to secure for startups. Generally, the only way to use the bank’s cash for startup is to personally guarantee the loan, usually with collateral. The SBA offers a number of excellent startup financing programs which require a full formal business plan and good personal credit. Of course, these loans take a significant amount of time and effort to secure, so if your startup expenses are relatively low, you may be better off scraping together your own cash and looking to friends and family for the rest.

Angel investors and venture capitalists are often touted as the ideal route to funding a startup. The reality is that very few companies are funded at startup through either Angels or VCs, the competition is very stiff, and you must be willing to give up significant control and ownership, in most cases. Generally, both Angels and VCs are looking for quick and enormous returns on their investments and are far more inclined to be second round investors – on board after the R&D and grunt work is complete, and all that is needed is cash to send the company to the stars. The process for most VCs is long and tedious, and very few of those seeking capital actually get funded. If you are selected, you will give up most of your ownership stake in your business and be expected to heed the advice of the professionals that come with the money. However, if your idea is one that fits the VC profile, destined for overwhelming success, you will likely be willing to make those trade-offs for the cash your company needs to succeed.

Whatever your startup plans, there is a way to get started, with or without outside financing. It is critically important that you work through your business idea in detail, including all planning and financial projections, before you reject your idea because of lack of money. The more you plan, the better able you are to see ways to bootstrap by starting smaller, cutting expenses, and exploiting opportunities that will allow your business to get off the ground.

Start Here. Go Far. LaunchX.com