Money makes the world go round, at least when it comes to the world of business. As Tom Wolfe pointed out in The Right Stuff, “no bucks, no Buck Rogers.”

Here at Commerce, we get tons of emails from business owners who are looking for financial resources to save their current business or start a new one.

Unfortunately, the state’s hands are largely tied. The state constitution prohibits taxpayer funds from being given or loaned to private enterprises. We have managed to put together some $20 million in small business grants using unclaimed lottery money and federal funds, which don’t have the same constitutional limitations.

But the long-term question remains: How do you start a business to make money when you don’t have any money?

Before the pandemic, we created a guide for entrepreneurs and small business owners called Startup Wisdom, 27 Strategies for Raising Business Capital. In it, we explore the advantages and disadvantages of each strategy. Many of these pathways will be covered in greater depth in our upcoming Entrepreneur Academy, set to debut in October. But for now, let’s take a quick look at some of the more common methods of funding a new enterprise.

Pick your own pockets

More than two-thirds of all businesses start this way, using personal savings or investments to cover startup costs. I did this when I started my own business on the heels of the Dot Com bust. I used my severance package from Egghead Software to buy a new computer, printer, desk and chair and ran up my credit card a bit, which is another self-funding strategy used by 34% of new business owners. Self-funding your business puts you in a negative cash flow position from the start, but it is a very common way to bootstrap your business.

Pick someone else’s pocket

More than one-fifth of owners surveyed said they asked family and friends to invest in their idea. This has a different level of risk, given that you may be putting personal relationships on the line if your new idea falls flat. Even so, it’s a fairly popular way to build a business. Just know that you may be “Unfriended” or “Unfamilied” if things go south.

A loan again

Lenders want you to have skin in the game. To get a loan, you’ll need to kick in about a third of the total amount, which may include offering up some collateral in the form of assets. Whatever you do, don’t put your home on the line, no matter how certain you are that your business will succeed. You need to have a pretty stellar credit rating and demonstrate that your business will make money. Credit unions can be an option when seeking a business loan since you are not only a loan recipient but a shareholder as well. As such, you may get more favorable terms, especially if it’s a relatively small loan for an existing business.

Join the crowd

You’ve probably heard of Kickstarter, Indiegogo and These crowdfunding sites have had some legendary successes (Exploding Kittens) and catastrophic failures (the Coolest Cooler). That said, crowdfunding is a proven way to fund a product or business. Just one caveat: you need to be an excellent promoter. Listing an idea on one of these sites doesn’t mean it will gain traction or be funded. You have to do all the outreach and marketing yourself to convince people to finance your new endeavor. Once you start a crowdfunding campaign, the clock starts ticking. If you don’t reach your intended goal, the money goes back to the would-be investors.

Seek investment

This is a more difficult path for funding, in part because there are so many hoops to jump through. The federal government tightly regulates investing. Angel investors have been known to invest in startups, and some even toss in mentorship as a bonus. In return, they will want a return on their time and money in the form of a promissory note, deferred repayments with interest, or converting the debt into equity in your company. They may also want a decision-making role, meaning you need to give up some control in return for the investment. Before you consider this strategy, do your homework. You usually only get one shot at an angel. You want to be sure the venture is a good fit for both of you.

Some lesser-known options…

Historically disadvantaged businesses and small business owners in underserved parts of the state face additional challenges, such as higher interest rates, lower total loan amounts or additional lending requirements.

One potential avenue is the Community Development Institutions Fund, which is a network of banks and credits unions that serve those who have been traditionally left out of the financial mainstream. They cannot only help fund your small business or microenterprise, but many lenders help you gain financial literacy, improve your credit score or develop a savings strategy.

Microloans are another option. Microloans are well suited for businesses in the startup phase. These loans are in the $500 to $35,000 range and are funded through private institutions and the Small Business Administration. Like regular business loans, you will need to present a formal business plan.

Given that our book has 27 different strategies, we’ve barely scratched the surface here. For more proven ways to fund your new business, product or service, from the very traditional to the highly creative, check out Startup Wisdom, 27 Strategies for Raising Business Capital.

In the greater Seattle area, dreaming of new business adventures, just for the fund of it,

  • Robb