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Fuel-Up Funds

By Garrett Bryce and Misty Elliott    

Being an entrepreneur may seem glamorous, but anyone who has ever taken the plunge into self-employment knows it begins in the trenches. Often, the biggest barriers standing between an entrepreneur and outstanding success are finding the cash to start the business and having the patience to see it through the not-so-glamorous times.

Meet Daniel Dawson and Jared MacDonald — they’re entrepreneurs, bootstrappers, and survivors. Each is using ingenuity and resourcefulness to overcome big financial challenges, and they’re on their way to making each of their business start-ups a reality.

Turning into Himself

When it comes to finding the funds to start up his own radio talk show, 18-year-old Daniel Dawson of Center Point, OR is looking to the first place an entrepreneur should look — his own pockets. His dream to become a talk show host started two years ago when Daniel got a job as a production assistant with Talkradionetwork.com (TRN). Now he produces seven syndicated talk shows, including shows for well-know hosts such as Barry Farber and David Ruben.

“My goal is to move from producing into hosting,” Daniel says. He and some friends have been getting together on Sunday mornings, when the studios are not being used, and producing segments of A Different Frequency, Daniel’s talk show on teen-related topics.

Although Daniel and his co-host Jacob Ghena, 18, save on operating expenses by doing all of the production themselves, they still need tapes, music, courier services, and money for travel expenses. Daniel estimates the cost of putting on one show at about $100. For five months Daniel has been footing the bill with help from Jacob. He’s tapping into the money from his job at TRN and from savings.

The next step for Daniel is to get his show on the national airwaves, which is an expensive endeavor, but can also be very profitable. He is creating a demo tape that he’ll use to convince radio stations to become affiliates. Once the show airs and demand increases, Daniel plans to syndicate — or sell the rights to air his show.

Until that happens, he is devising an attractive offer for sponsors who will buy advertising time and help cover his costs. Meantime, Daniel will continue to act as the president, sales manager, marketing director, producer, and show host. “I am definitely in the trenches!” he says with enthusiasm.

Loans for Success

Nineteen-year-old Jared Macdonald is taking a decidedly different approach to finding start-up capital. This snowboarder from Canada was tired of the hassle of ordering boards from Websites in the U.S. that charged him higher shipping rates for delivery to his home in Calgary. Last year, Jared decided to start ShredOnline, his own online snowboard shop that would cater to Canadian customers.

He spent a month writing a business plan, researching the competition, and talking to suppliers about selling their gear online. He also outlined the costs of hosting the Website, advertising and marketing, and the biggest cost of all — inventory. “I got an idea of what I thought it would cost me to do this, and doubled that amount,” explains Jared, “because I knew there would be unforeseen expenses.”

For the amount of start-up money ShredOnline required, Jared knew he needed to get outside sources of capital. He contacted banks about loans, and even some government organizations, but he had no luck. “For the kind of money I needed, there was only one way to get it — family and friends,” Jared says. The snowboarding enthusiast made 20 copies of his business plan, and sent them to everyone he thought would be interested. He set a schedule of pay back dates for the loans he was seeking, and the start-up funds began pouring in.

To keep his start-up costs low, Jared uses his bedroom as an office, shares his Internet connection with his parents, and personally handles the packaging, shipping, Web design, and many other jobs for ShredOnline. “[During this start-up period] I’m not interested in putting any money into something I can do myself,” says Jared.

He already has plans for expanding the business as customer demand increases. Right now, he stores inventory at his house, but next year he plans rent warehouse space. Having overcome one of the major barriers to starting a business — securing start-up funds — Jared feels well positioned to take his company to the next level.

Looking for Capital?

Of all the places to look for start-up money, one of the easiest is yourself — if you have funds saved up or a credit card account you can tap. If your start-up costs are too high, however, you may need financial assistance from other sources. In this case, your business plan will need to convince lenders or investors that you have an excellent chance of being successful. There are two types of financing that you may seek from investors:

Debt financing— borrowing money that must be paid back to the lender in a specific amount of time. You must pay interest on the loan and make payments on schedule even if there are no profits. The lender usually does not become a part owner of the business.

Equity financing — selling part ownership of your company to an investor in exchange for some of the start-up funds you need.

Most entrepreneurs get money from a combination of sources. Fill in the blanks below to create a plan for financing your business start-up:

A. Start-up money required:_________________

B. Personal funds on hand:_________________

C. Investments or loans from family/friends:_________________

D. Other debt financing:_________________

E. Other equity financing:_________________

F. Total start-up financing available:_________________

If your total start-up financing available (F) is less than the start-up money you required (A), you will have to work on reducing your start-up costs or on finding creative ways to increase the total start-up financing you and others are willing to provide your business.