Allow me to disagree

In a recent blog on Small Business Blog, blogger Janet Attard rightly said that acquiring funding to start a business can be challenging. Then she suggested that, if you don’t have enough funding or credit to get started in business, one way to get funding is to enter contests. (Read Janet’s Startup Cash Blog here.)

Now, with all due respect to Ms. Attard, I need to disagree. Entering contests is not a smart way to get funding. First of all (and Attard does mention this), it’s a long shot. The odds do get better, she says, in local contests instead of national ones.

Contests are not the way to run a business. This is only slightly better than the idea that you can retire if you only buy enough lottery tickets and possibly win one big jackpot. People win lotteries but the odds are astronomical and shouldn’t be what you place your money on when you’re looking for your golden ticket out of the work world.

The problem with winning a contest in order to run a business is that your business is designed around the contest; your plans are designed around the contest parameters; your goal is not for long term success but for a short term cash fix. Contests are rarely 100% philanthropic; there will likely be a caveat in the contest that you’ll need to accommodate in your business.

I would also suggest that the expense that needs to go into creating something that complies with the contest parameters might be saved and spent elsewhere. Attard mentions one particular contest in which the contestants must attend a “free orientation session and four free training sessions”. Uhh… Hello! When you combine sessions and commute times, you might be looking at a bunch of hours of your time! (Say, 30 minutes to commute there and home, and an hour-long session each time sounds like a realistic estimate… that equals 10 hours!). Why not spend those hours marketing your business instead?

Okay, so if funding your business with a contest isn’t the wisest idea (in terms of promoting a long-lasting enterprise), and if you can’t get (or don’t want to get) a loan, what options do you have?

• Bootstrap it! You should consider investing something in your business but if you can’t, then just push through anyway. There are solutions that can meet your needs… and those solutions are available for little or no money thanks to today’s free trials and beta release services. Not always perfect but workable.

• Find investors. Your family and friends believe in you. Sure, you don’t want to beg them for money but if they think your business is sound and can return their investment, they might consider investing. A cautionary note is necessary here, though: This can ruin relationships, too!

• Trade. Figure out what you need and barter your services in exchange. This is tricky to do but frankly I think it’s easier than entering a contest.

• Start smaller. It’s tempting to start big to get bulk discounts. Starting smaller might mean a higher per-unit cost but an initial lower (and therefore more realistic) cost that you can later increase if necessary.

• Partner. There are plenty of people who already have successful businesses but need your skills or contacts. Sure, you’re not building YOUR business, but you are still building something and you might build it to a point where you can later spin it off into your own thing.

Good Luck!

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