Get the Right Funding for Your Entrepreneurship Type!

There are three types of entrepreneurs. Which type are you?

When getting funding, aligning your Entrepreneur DNA to the type of funding is critical to the success of your business, and more importantly, to your mental health! 

Think of your Entrepruer DNA as pre-coded rules or belief systems. You want funding and partners that align with those beliefs.

If you’re an introvert, doing things that require you to socialize and make small talk will always be a struggle. It doesn’t mean you can’t overcome it, but you’ll probably always feel uncomfortable. Funding is the same way. With the wrong funding type, you will hate your life, with the correctly aligned funding type, things will be sugarplums and roses (well, that’s an overstatement for sure).

What is Your Entrepreneur DNA

There are three types of entrepreneurs*:

Craftspeople - Craftspeople are driven by their art. They love doing the thing they do and want to do it better than anyone else. Being the best at what they do optimizes feelings of self-worth. Whether their art is project management, programming, graphic design, or fine art, the craftsperson takes pride in their work and does not want to outsource it to a team. They do what they do well and the world should know and trust their great work. 

Freedom Fighters - Freedom Fighters are motivated by independence. They value not having to answer to a boss and making their own way in the world. They are usually the sole owner of a business or have only one partner. Because Freedom Fighters value time freedom, they often build businesses with employees to help do much of the work. The most successful freedom fighters build a business big enough that they can step away for weeks at a time and the business continues to prosper. Freedom Fighters often see their businesses as an extension of themselves and refer to employees as family. 

Mountain Climbers - Mountain Climbers seek multiple big businesses and are driven by the game of building and moving among multiple businesses. The best Mountain Climbers are great at building partnerships, and managing multiple complex relationships, and are inspirational enough to bring people into their vision. A Mountain Climber has no problem giving away 70% or more of the equity of their company because they see the value of growing something big.

The Right Funding for Your DNA

While there are entire books written on funding options, here is a very quick guide to the types of funding that work best for each entrepreneur type.

Craftspeople - Since the most important thing to this type is mastering craft, answering to a boss (an investor can seem like a boss) is the equivalent of having a tooth pulled. If you can, self-fund by doing great work. If you need money upfront, pre-sell your work based on your portfolio. If you’re a chef (food artist) and have a great product you want to sell like your lasagna, do your art as a service until you have enough money to rent an industrial kitchen. If you sell graphic art, pre-sell by offering the original, then a limited number of copies. I know an entrepreneur that ran her entire business by pre-selling on Kiva. Every quarter she would decide how much money she needed for the next three months, then go to Kiva and offer her art. Once the specified number of people bought, she closed the “fundraising” and went and built the product. She was prepaid for everything. Consistently raise your prices as you become more and more in demand by delivering great work. Crowdfunded grants are your next best option. Less desirable are loans. Since your pay is limited by the amount of time you have to produce work, this will set you on a path where you will always be behind. And by all means, do not try to get any venture-type investment in your business. Investment in a specific project with a clear beginning and end (like a book or play) is different, a clear entry and exit can be successful because when the particular project is over, your financial relationship ends.

Freedom Fighters - For Freedom Fighters, there is nothing worse than a boss. Venture investors are essentially your bosses, and they will eventually force you to make decisions you don’t want to make. Their top priority is getting their money back through the sale of your company or a public offering. You, in many cases, will not want to sell your business. If it is earning you a good living and you like the people and product, you won't want to sell the business. Freedom Fighters should stay away from equity venture capital at all costs! If at all possible, bootstrap the business to get traction. Then, as you grow, you can use debt financing to increase production capacity as long as you can be sure the sales will justify the debt. There are many types of debt financing (far too many to discuss here) that will work based on your business model. A straight SBA or commercial loan may not be right for you. Perhaps revenue-based financing (you pay the loan as a few percentage points of sales) is a better option? Speak with a professional (like me) about the many different types of financing you can get to grow your business that won’t put you out of business.

Mountain Climbers - For Mountain Climbers, venture capital is the holy grail. Not only can VC’s bring money, but if chosen correctly they will also bring a network of customers and partners. With the right business, the problem for Mountain Climbers isn’t getting the venture capital, it is getting to the point where the business has enough traction to attract investors. Most investors want to see a product and sales process that can scale. To do these things, the Mountain Climber usually needs helpers with the skills that the founder lacks. A good salesperson usually needs someone that can build and deliver. A great product engineer needs a marketing and sales guru. Both of these entrepreneurs need a top-notch finance person to manage the money. This is why the Mountain Climber needs to be great at convincing others of their vision. It’s not just to get funders, it is to get early employees and/or cofounders to join in their vision at lower pay and more hours than most other jobs they can get. Once a company gets traction, with the help of a solid fractional CFO, it should be able to get angel and VC funders if they are lucky enough to be in the right funding environment. 

What to do Now?

No matter your entrepreneurial DNA, the easiest time to get money is when you don’t need it. We are entering an investment climate where funders (lenders and investors) don’t want to just see sales growth, they also want to see a profit.

First, if you can, build a business that is profitable. Then seek funding only for growth when you have proven traction and a profitable delivery system.

*Drilling for Gold - How Corporations Can Successfully Market to Small Business Owners" John Warrilow copyright 2002

GGE Ep 9: Masterclass: Creating Sustainable Revenue in a Social Enterprise

Click the link to go to the now famous blog post: "23 Questions to Ask Yourself if You're Not Generating Enough Money with Your Social Enterprise."

Today's guest Solene Pignet wrote a great blog post, "23 Questions to Ask Yourself if You're Not Generating Enough Money with Your Social Enterprise."

I'll be the first to admit the title doesn't roll off the tongue very easily, but it is impactful.

It was so interesting we decided to do an entire show on the concept. Don't worry, we'll also get into Solene's story on how she jumped ship from the corporate grind to start and run her own social enterprise.

A Map to Your Funeral

What would you want to be said at your funeral? Can you close your eyes and imagine your funeral? Who is speaking? What is being said? Most of us, in a rush to start a business and become successful, forget to actually define success. We shoot for more money, bigger houses and maybe even big impact.

Rarely do we stop long enough to map out a course to our own success.

But what if, just for a few minutes, we took the time and energy to determine what's important? What makes us happy and serves those around us?

Who are the people with whom you spend time - maybe not the specific names, but the quality and kind of people.

The words at the funeral are the endpoints on our own map of life.

On the way, there will be detours, prototypes, and iterations. The road will be winding with thousands of small decisions. Our definition of success is our true north as we are faced with those dilemmas.

Without a true north, we bounce around like a pinball. A definition of success helps us enjoy the journey.

GGE Ep. 8: This Lesson Will Change Your Life

What if there was one skill, that if you had it could change your life and your organization. Well there is, and that skill is persuasion.

In this special episode of Greater Good Entrepreneur, we're going to give you something special. It is a brief lesson, only 15 minutes, that literally can change your life.

In this lesson, you will learn the art of persuasion. Whether you are seeking investors, trying to get an email address, or trying to get someone to come over to your point of view, this lesson will teach you a persuasion architecture you can use for the rest of your life.

You can use it in a conversation, when writing web content, as a guide for writing an article, or any other communication medium you choose.

If you need to persuade someone of something (and we all need to do that several times per day) then this brief special episode is for you.

Want to See the Future of Work? Look at TV and Film

Television shows and films have very short lifespans. A movie may take 1-2 years to make and play for only a couple of months. A television series will run for a couple of years if it ever even gets an audience. Only outliers last more than five years.

Product lifecycles and companies themselves are becoming more and more like TV and film. Products last a few years at best. Companies change so much and so fast that workers can't rely on staying at the same place for an entire career.

For better or worse, the gig economy is the future.

According to the Forbes article "The Rise of the Freelancer Economy," as of January 2016, there are 53 million freelancers in America. By 2020 it is expected that 50% of the US workforce will be self-employed.

Want to know how to plan your career when the economy consists of products and businesses with short lifecycles? Look to your friends in the film business. They've been doing this for years.

Milk Money

GGE Ep 7: - Milk Money with Janice Shade and Louisa Shibley

Vermonters already know the benefits of Eating Local and Buying Local. Now Vermont is leading the way to Invest Local as a way to build a strong local economy.

Communities thrive when people invest in each other. Entrepreneurs and small businesses gain access to “neighborly” capital to grow their company, while investors work toward their financial goals by investing in companies they believe in. The whole community benefits as local jobs are created and wealth is recirculated through the local economy.

Louisa and Janice have started Milk Money as the platform to enable Vermonters to invest locally. You will hear how they got started and how you can invest, or find investors, for a local business.

To learn more about Milk Money go to www.milkmoneyvt.com

Getting There Before the Tank Reaches Empty

When starting a new venture,  the only thing that is certain is it will not look like the thing you imagined at the seed of the idea. We start out putting something out there, we learn lessons, adjust, and try again. We keep running this sequence until we get something that works.

The really really really big question is, how long can you keep learning and adjusting (pivoting) before running out of money. The cheaper and faster your tests, the longer you can keep trying until the puzzle pieces fit together.

A former mentor used to tell me "cash is like gas." When the tank hits empty, everything stops.

Do This One Thing to Have a Better Life

Our lives are made up of conversations. The quality of the people with whom we speak every day will significantly impact the quality of our lives. Jim Rohn said, "we are the average of the five people we spend the most time with."

If we spend our time with negative or disruptive people, we lose our mojo. If we spend our time with people that are moving forward on the kinds of projects and relationships that we love, we move forward.

There is nothing more critical than taking control of the people with whom you surround yourself. We become them.

To the extent that you can control who you speak to on a daily basis, be intentional and vigilant surrounding yourself with the right people.

The Man in the Arena

No one says it better than Teddy Roosevelt did back in 1910.

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

Putting yourself out there means potential financial and social risk. To strive forward doing work that matters involves getting hurt and being vulnerable; because honestly pushing boundaries means sometimes falling.

There is nothing wrong with opting to for invisibility. But being invisible has its price, paid by the soul.

What is Your Important Work?

Our most important work is passive. It won't show up if we don't intentionally carve out time to get it done. Whether it's career, relationships or physical health, it takes specific intent to get the most important (and almost never the most pressing) work done.

• Showing up at the gym
• Eating well
• Going on a special outing with your partner
• Writing a letter or email to a colleague relationship that needs nurturing

All of these require intentionally stopping the noise of email and facebook and twitter and the constant stream of work stuff that feels important at the moment but can almost always wait.

Getting the most important work done is a practice of living with intention; knowing what is important today and intentionally making time to do it.