One of the big questions every entrepreneur faces is whether to try to self-fund their own business or to pursue capital from investors.  The decision has deep, long-lasting implications for the business and its owner.  Below you’ll find perspectives from some really bright entrepreneurs we had the opportunity to connect with recently.

Meet DelRae Cicinelli: Maker + Herbalist

Loil Life has been a self-funded business from day one, and at times, we have been knee deep in the struggle. When I started I took all my ideas and tried to launch them at once. Material costs were high, I didn’t account for the trial and error associated with each product, and the branding was non-existent. Looking back now I wouldn’t have done it differently. Sure, it was extremely stressful and costly, but all of the education I have about every facet of my business is irreplaceable. The product quality is high, the branding has come together, and the vision I had over four years ago is sitting on the handmade shelves of my shop. Read More >>

Chris Coady: Shipping Business Owner

Self Funded: ELI was funded in part by three sources – none of them traditional loans with a bank. Once source was via consulting income which allowed us to buy our first vehicle. The second was “0% credit card” deals with multiple cards. The third was personal savings/family loans. It was very difficult and stressful to fund the business this way. The original $5k we made via consulting helped to give me the confidence to move forward and use my credit and savings to grow the business. The credit card deals worked out great, we never missed a payment and utilized the deals to help get through the hardest of times. It was sad to see my savings decrease month after month, then selling the stocks hard. Eventually I had to come to terms with the fact that I was not going to keep my retirement fund that I built up in my 20’s. By the time my credit was fully utilized, stocks sold, and savings nearly depleted we had just entered our fifth year of business and finally started to become cash flow positive. It took years but we did it. I’m not certain if an investor would have continued to believe in the idea, banks would not like our negative cash flow and lack of assets but family did help us. There were times where we had to take small loans from our parents which have all been paid back. Those loans at those times really helped give us the confidence to keep moving forward. I had leveraged everything I had and now we had to ask for help. When starting a small business it is very hard to ask for help. You are trying to prove you can do it but sometimes you need money to make payroll, taxes, or the lease. As our business grew so did the expenses and responsibilities. If I was to do it differently I would have saved more of the funds I had to start with for later on, I lost hope a few times and used money to go after new ventures that were risky and expensive. If I would have just kept focus on the original business model(shipping) we would have saved a lot of time and money but who knows if we would be where we are today. All I know is we did it differently and after five years we have no loans or investors. Read More >>

Jack Eberenz: Franchise Expert and Consultant

I have a different perspective on the question of using investors or being self funded because for over 50 years I have done both. I started in business at a company that was a self funded family business that when I left was the equivalent of about $60 million in gross revenues by today’s dollar. I purchased a franchise when we moved to Phoenix so I self funded again but quickly became involved in the management of the franchise system. Franchising exists because other people buy and finance their franchise so it becomes a system where the franchisee uses the proprietary information of the franchisor to open a business and manage that business. So for over 40 years I have done both simultaneously. The franchisor self finances until it raises capital by other means but also grows its capital base through franchise fees. The franchisee self finances normally but some franchisees are now public companies. It’s all mixed together into a system that can expand companies exponentially. I love franchising, making many business owners successful using the systems I have helped design is very gratifying. I won’t do it differently. Read More >>

Peter Adams: Owner, Software Developer

Ping! Development has been entirely self-funded. I am only recently able to answer this as I didn’t realize how resilient the business is during events with significant economic impact (such as we’re seeing now). Having never taken out a loan and being deliberate about what kinds of projects we take on has allowed me to keep going without having to make any staffing changes. Looking back, I’m happier than ever at having gone through the trials that come with running a lean business. Read More >>

Dustin Dluhy: Managing Mastermind

Since our start in 2012 we’ve been completely self funded, growing the company organically and avoiding debt as much as possible. Building a business this way certainly can add a few more years to the growth road map as relationships get built and business ramps up, but I would not do it any other way. In my experience the self funded route forces one take serious stock in every business decision and where every dollar gets spent, after all it is you money your playing with. When you succeed, so does the company, when you stumble or get lazy, that has it’s effect as well. It’s great accountability really. Read More >>