Equity Financing Ideas:

Equity financing is when you invest your own money to start the business. This money is used to give yourself a “runway”, covering both your expenses and salary for a period of time, usually 6-12 months or more. 

This gives you the ability to go “all in” from day 1 and focus hard on turning a profit quickly before you run out of runway.

Before considering this option (or any option, for that matter), you need to know:

• Your estimated business expenses
• Your necessary salary

This will help you figure out which of these options is best for you. 

Most people know their necessary salary (this is the monthly amount you need to stay afloat personally, but don’t forget to account for taxes if you’re paying yourself from the business versus just living out of your savings). 

To figure out your estimated expenses, you can do a bit of guesswork, or build a solid business and marketing plan, like what I teach in Breakthrough Boss®. Normally, it’s a combo of the two since your estimated expenses tend to miss a few things. 

Once you know your estimated expenses, you can choose equity financing that works for you:

#6 – Pull From Your Savings/Retirement/Home Equity

If you have the cash in a savings or retirement account, or equity in your home, you can loan this to your business. Talk to your tax advisor about the best way to do so to avoid any fees or unnecessary taxes. 

This option can feel a little nerve-wracking for some, but I’d encourage you to ask yourself how confident you are in the business. 

Are you willing to bet on yourself? Because keeping the money in a savings or retirement account is simply betting on someone else – a bank, the stock market (which is essentially other people’s businesses), etc instead. 

It’s a lot easier to bet on yourself when you KNOW you have a solid business plan based on real market research though. This removes all doubt, boosts your confidence (because you’ll hear directly from your ideal market how hungry they are for your offers), and provides you with the “how” to get started. 

The drawbacks:

• You might be stealing from your future self if the business flops. 
• There could be penalties or taxes to pay. 
• If you’re very security-oriented, this can cause a lot of stress. 

#7 – Liquidate Assets i.e. What Can You Sell?

Liquidating assets simply means looking at what you own that’s worth anything, and selling it. Some examples include:

• An unused car
• Furniture
• Heirlooms
• Random garage sale items
• Electronics
• Jewelry
• Unused gift cards

The process is to literally walk around your home, garage, storage unit, attic, etc, and pull together items worth something – anything. 

Then list them on Facebook Marketplace, OfferUp, a pawn shop, or have a yard sale to help you scrap together enough for the small business “runway” you need, or use it for Idea #3.

The drawbacks:

• You no longer have that stuff. Which might not be a drawback?
• It can take time.
• You might not have enough to sell to get the startup funds you need.

#8 – Flipping Items

Have you ever heard the one about trading a paperclip for a car? The person literally took a paperclip and traded it for something of bigger value, then took that item and traded up again and again until they finally got a car. (It’s been done so many times! Google it!)

This is just an extreme version of “flipping” and although the paperclip thing might be time-consuming, the normal way isn’t.

Flipping is simply buying something undervalued and flipping it for more. 

Or if you’ve liquidated assets, you can take some of the revenue you made in those sales to invest in something else that’s underpriced and can be resold for more.

For example, a lot of people go to estate sales or yard sales and scoop up collectibles to sell on eBay or buy furniture that they have the skill to refurbish and sell for more. You can even buy and resell tickets for events, concerts, or sports games if you have the knowledge to do so wisely.

The drawbacks: 

• You need to know what you’re doing and what items are worth it.
• The resale process can be slow.
• You could get stuck with an item you can’t sell.

#9 – “Flipping” Your Time

Again, we will always trade time for money or money for time, so this one is common. 

What skills do you have that are always in demand? Think SIMPLE stuff that doesn’t require education, testimonials, etc for someone to take a chance on you:

• Housecleaning
• Mowing lawns
• Scooping poop
• Organizing closets
• Babysitting
• Cleaning out inboxes or file cabinets
• Dog walking
• Running errands 
• Ikea furniture assembly
• Moving heavy furniture
• Meal prep
• Tutoring
• Anything a person might find on TaskRabbit or similar sites

Or things you’re well-qualified for, even if it’s not what you want to be doing as a business: 

• What’s your education in?
• What kind of job experience do you have?
• Avoid jobs that offer an intangible outcome (“happiness”) since those require more effort and skill to sell and look for commodities and services people are accustomed to paying for and actually need

Then to find your first clients/customers:

1. ask every single person you know if they need those services
2. Then ask if they can share phone numbers of others who might need those services OR know others who do. 
3. Or jump on sites like TaskRabbit but DO NOT put all your eggs in that basket since people are less likely to hire you if you’re new; they’re much more likely to hire you if you came via a referral.

Think of this process like flipping businesses. You’re taking a basic or already learned skill, something that people always need and are willing to pay for, and pounding pavement to find those people. 

And you’re doing this just long enough to save up the cash for what you really want to do. And because you don’t have the emotional attachment to this first “business”, you’re usually not dealing with personal hangups around marketing so it can turn a short-term profit pretty quickly.

The drawbacks:

• It requires time, naturally.
• You need some sort of skill or ability that others are willing to pay for. 
• You might not like it. But think of it as paying your dues. 😉 

#10 – Rent It Out

If you have a room to spare and don’t mind a roommate, that’s one way to come up with funds, but it’s not the only thing you can rent. You can also rent out:

• Garage or parking space
• Storage space
• RVs through sites like RVShare
• Your own items through websites such as RentMy or Fat Llama

The drawbacks:

• It can be slow to get your first rentals.
• It can be even slower to get enough rentals to fund your business.
• You have to deal with insurance, liability, and unreliable people.

#11 – Freelancing or Gigging

The gig economy is still booming, and the options are limitless:

• Drive for Uber or Lyft
• Delivery for DoorDash
• Do random stuff on TaskRabbit
• Offer up services on Upwork, Fiverr, etc
• Hell, start an OnlyFans if you’ve got the feet for it 

The drawbacks:

• It can be hard to gain traction on some of these sites.
• Things like Uber and Lyft come with their own expenses (insurance, vehicle maintenance, etc).
• Again, it can be slow to earn and save up enough funds. 

#12 – Cutting Expenses to Save Cash

Good old fashioned saving money. Go through your monthly and annual expenses and ask yourself:

• What expenses am I willing to cut altogether if it means financial freedom later?
• Where can I find better prices (i.e. auto insurance, cell phones, swapping stores or brands, etc)?
• What services could I barter for instead of paying for them?

The trick here is whatever monthly amount you save in this financial audit, set up an automated “bill” to transfer that exact amount from your checking to a separate savings account every month.

The drawbacks:

• Be careful that you’re not spending more time to save money. It’s easier to replace money with the startup funding ideas in this article; it’s impossible to replace your time. 
• There is only so much you can cut expenses before you need to focus on out-earning them.