Many industries use The 3-Legged Stool metaphor to describe the foundation of success. The metaphor is based on the minimum number of points needed to define a 2-dimensional plane in 3-dimensional space. This lead to the development of the actual 3-legged stool, having the minimum number of legs needed for stability. The idea was later adopted as shorthand for everything from the Christian Trinity, the foundation for personal financial success in retirement, to successful political lobbying.
In our case, we’re adopting this shorthand as the foundation for success |
- Audience–via advertising
Finance | Self-funding
Be prepared: this takes hard work and it’s a grind. It’s also a chicken-and-egg issue because you need something to sell to start the whole cycle. But where do you find the money to make the thing or create the service you’re going to sell?
This brings us to your day gig.
For the majority of start-up entrepreneurs, a day gig that often has nothing to do with your new organization is where the initial money comes from to start venture–you’re investing in yourself instead of a car, travel, or your daily latte.
How to do this revolves around two things |
- Committing to being an entrepreneur
- Developing and rigorously adhering to a realistic budget
I continue to teach How To classes on both subjects because through my own experience I’ve found that while reading a book on the subjects is a good starting point, it usually leaves a person bewildered and wondering how to get started.
The good news is that determination, hard work, and thinking out-of-the-cube are the key ingredients to success.
Ask yourself if you can do those three things based on what Joan Jett accomplished. If your answer is “yes” then take the next step and read a couple of books on both subjects. After reading your books, if you need help taking the next steps, you’re welcome to contact me.
Need some reading material on being an entrepreneur?
More good news! If you’re willing to put in the hard work, this is the most beneficial way for you to be an artist because the only person who you answer to is yourself.
Finance | Crowdsourcing
Today, getting started is relatively easy because of the development of web-based platforms such as Kickstarter.
The keys to success |
- Have a first-class video that tells your story in a friendly, engaging manner that’s no longer than 2 minutes. Sixty seconds is ideal.
- Set a realistic fundraising goal by first developing an accurate budget for what it will take to complete your project and comparing it to how much money you’ll likely be able to raise. One way to check if your budget matches your fundraising capabilities is to find out if you can raise at least 25% of your total budget through family and friends. If the answer is “yes” then you have a better chance of being successful. If the answer is “no” then break your project up into smaller pieces and do multiple rounds of fundraising.
- Communicate, communicate, communicate. Nothing is more unnerving than giving money to a crowdsourced program and hearing nothing. Even if it’s bad news, let everyone know what’s happening and what you’re doing to correct the issue. Once a week is a good schedule. Pick a day and time each week and post an update like clockwork.
- Offer “free” stuff to 3 tiers of fundraisers. Build the price of the free stuff into your budget. Silver, Gold, and Platinum. It worked for American Express, it will work for you.
- Have a group of people who agree to fund your crowdsourcing campaign 2 months prior to the campaign going live. Almost nobody wants to be the first or second person in any public display of support. So it’s imperative to have 10 funders lined-up in advance so the minute your campaign goes live, your success will immediately start. Then you can build on your momentum by actively advertising that you’re 25% to your goal.
These people are usually friends and family.
Finance | Grants
Qualifying for grants has its own 3-Legged Stool.
There’s no end to the number of grants available. But finding and applying for them will take a good amount of time doing research on the web.
Expect to spend 2-4 weeks per grant application.
When searching for your day job, we’ve all heard and read that shotgunning generic resumes to 100 companies will likely lead to no results. The same is true for grants.
Every grant has very specific rules based on the founders and board of director’s objectives and viewpoints. Your business plan may be amazing, but if you don’t adhere to their rules, documentation, and format requirements, then you’re wasting your time.
Start with a Google search on a series of topics that apply to your endeavor and follow the rabbit hole to grants that sound like you fit within their philosophy and guidelines. Using Exel or a similar database, build your list of the name of the grant, deadlines, key people, paperwork requirements, rules, restrictions, and the amount of the grant.
The Kaufman Foundation is a good place to get a sense of different grant processes from their curated list of grantees.
Whether it’s an individual or a board, research the key people using Google and LinkedIn and continue building your database with information about the people you’ll be working with. Document their backgrounds and hobbies. Then reach out and communicate with them first via E-mail and then via phone. It’s much easier for you to get a sense of who the person (or team) is and the intricacies of their vision and process when you’ve talked with them. From their perspective, they’ll have a better sense of who you are and can help guide you through the process.
Plus, if you do submit your business plan to them, they’ll know who you are which is a success even if you fail at obtaining the grant. Why? Because you’ll be in a better position to ask for thoughtful feedback from them to better position yourself for their next grant opportunity.
Seems like paperwork is an anachronism in the age of the web. But the key thing to understand is that the review of a grant is designed to best suit the people who are reviewing the documents. So if the person or board requires an actual hardcopy, send them one via UPS or FedEx (with tracking). If they want a PDF file that contains everything, send them your portfolio in that format. If they want all your information electronically, consider trying WeTransfer instead of E-mail or DropBox. WeTransfer makes it easy for them and gives you a record of when the files were sent and when they were downloaded.
And that’s really the key to success. Make it easy for the reviewers by looking at your submission through their eyes: they’re going to be reviewing a lot of information from many entrants. With paperwork, now is not the time to be creative. Stick to their rules so that they can easily get to reviewing your business plan.
Finance | Venture Capital
This used to be the domain of technology businesses and Wall Street investment banking firms that measured their achievements in hundreds of millions of dollars if not billions.
Today, Angel Investors are abundantly available.
The process is similar to finding a grant. But, with one important caveat |
Unlike many grants, an investor becomes your partner and they have a say in how you run your operation. If you go down this route, make sure you select your investor(s) wisely.
Here’s a good article from Andy Rachleff, co-founder of Wealthfront, about what the motivation of an Angel Investor should be vs. what it likely is. Why read this article? It’s helpful to understand the people you could be working with.
More information about the world of Venture Capital in a future story.
Finance | Out-of-the-Cube
These methods of financing range from traditional to somewhat traditional ways of obtaining the financing you need for your endeavor.
Please note that I intentionally left out loans. Frankly, there’s a lot that can go wrong with any type of loan so I’m not an advocate of this method of financing.
The good news: I just scratched the surface of financing. Need proof? Here’s how Steven Soderbergh financed his movie Logan Lucky.
Photography by Micheile Henderson