This article is part of our “Business Startup Guide” – a curated list of our articles that will get you up and running in no time!
So, you have a great idea for a new business? The thing is, getting started isn’t as straightforward as some people make it sound. What if you need a little help getting it off the ground? In addition to creating a solid business plan, marketing your business, and a host of other details you’ll be considering, a lot of your time will probably be spent thinking about how to fund your new venture.
You may be thinking that you’ll have to rely on loans, but I’m here to show you otherwise. In this article, I will take you beyond the traditional funding sources, and show you that it is possible to fund your startup idea by operating a successful side business.
Bootstrapping your business
If you aren’t familiar with the term, bootstrapping, also known as “self-funding,” refers to the various methods entrepreneurs can use to fund their startups beyond funding sources like small business loans. The phrase, based around the popular idea of individuals “pulling themselves up by their bootstraps,” refers to doing something without outside help—in this instance, funding your business.
There isn’t one way to bootstrap your business—and this can be both a positive and a negative. Bootstrapping can offer entrepreneurs an opportunity to be flexible, creative, and fund their business on their own terms. It often results in cobbling together a variety of revenue streams in order to establish a solid financial platform to get a business going. However, this can also be a risky, unstable endeavor, which is a potential downside to consider.
When funding a business, there are the standard options: bank loans, borrowing money from friends and family, crowdfunding, and depending on your industry, venture capital or angel investment.
You shouldn’t completely overlook traditional business funding paths such as loans—be sure to check out our small business loan finder—and it will never hurt to see what’s out there in terms of angel investors, if applicable to your business.
However, if you do not qualify for the standard funding routes, or are interested in exploring alternative sources, bootstrapping your business is a good thing to consider.
Using a side business to bootstrap your startup
How have other entrepreneurs bootstrapped their way to success?
It’s easy to see why the idea of bootstrapping is appealing; while it can be challenging to secure enough funding from a single outside source, bootstrapping your startup enables you to piece together your funding on your own terms, in whatever creative way you find appealing.
So, if you are looking to bootstrap your business, what are your options? I opened the discussion up to several entrepreneurs, who started side businesses as a means of raising funds for their startup.
My criteria for side businesses was simple: they had to be flexible, take up minimal time, and have low overhead. After all—a side business shouldn’t take up all of your attention! These 10 side businesses work alone or in combination, can be tweaked to fit your schedule, and often rely on existing skills.
Read on to see which is the best fit for you, or try more than one—the beauty of bootstrapping lies in its flexibility.
10 side businesses to help fund your startup:
Etsy has become known as the ideal marketplace for the creatively inclined, and for good reason; setting up an Etsy shop is incredibly simple, and as the platform is geared heavily toward handcrafted products, if you have a craft, you’ll be in good company.
Do you enjoy making jewelry on the side? Maybe you are an artist, and your hobby will help bring in revenue? This option is excellent if you aren’t interested in turning your hobby into your main business, but still want to put your creative skills to good use.
Etsy is a great choice for a side business because it is so flexible; you can work from home and during off hours at your convenience, and supply costs vary depending on your craft.
To help make your Etsy business a successful source of income, you’ll want to get creative. There are plenty of great Etsy shops out there, so even though it may be a side project, make sure you can still stand out from the crowd.
Sara Bliss, who recently opened her shop The Boss Stitch on Etsy, is a great example of a unique Etsy product. She sells custom cross stitch pieces, which are humorous, clever, and definitely memorable.
EBay is, in some ways, Etsy’s older, more experienced cousin, and as such offers a wider platform for product selling. Do you have a collection of—well, virtually anything? There is likely a market for it on eBay.
Just like Etsy, eBay is incredibly flexible, which makes it a great side business. Best of all, an eBay business can be anything you want it to be—for example, Lori Cheek, founder of Cheek’d and bootstrap marketing expert, used eBay to resell her designer clothing, which helped fund her startup.
If you plan on launching an eCommerce startup, eBay is also a great way to test the waters with your business idea. Before launching his vintage T-shirt business Defunkd, James Applegath sold his vintage tees on eBay, as a way to determine if there was a market for the business. “EBay and other marketplace platforms are an excellent way to test how your business will perform prior to launching a startup,” he says, and adds that the funds you generate through this avenue will also help you in starting your business.
Freelancing can be an excellent way to take your existing skills and channel them in a direction that can generate income. Are you a writer? Consider using freelance writing to fund your startup. Flexible hours, ability to work from anywhere, and virtually no materials needed beyond your computer and internet access—freelancing is a dream side business.
Networking within your industry can often prove a great way to find freelancing work, as well as sites that help connect freelancers with jobs. Odesk and Elance are popular, but don’t underestimate Craigslist—it’s more than just a place to find a gently-used sofa.
Says Abbey Finch, who used freelance writing to help fund her startup Scribe Space, “I also surprisingly got a lot of luck using Craigslist and Odesk to find new work. I did everything from writing for a local, free newspaper covering town council meetings to writing how-to guides for eBay. I’ve written for lawyers, doctors, home improvement specialists, a wedding band, and so much more.”
Freelancing is not just limited to writing, however. Joseph Howard, founder of startups Dream Start Soccer and Wordpress Buffs, generated freelance income using his existing knowledge of SEO and as a webmaster.
Think about your skills; can you refocus any of them into a freelance opportunity? With the flexibility freelancing provides, it can be a perfect way to generate supplemental income to help you launch your startup.
4. Consulting services
In the same vein as freelancing, consider establishing yourself as an independent consultant. This is an excellent side business to help fund your startup; says Brett Stapper of Falcon Global Capital, “When starting a consulting business, there is no overhead and in today’s modern age, there are basically no startup costs.”
Consulting is another area in which you can make use of your existing skills. Diana Melencio spent eight years working on Wall Street, and later used her financial background to her advantage, working as an independent financial consultant. This side business enabled her to follow her passion and to start OkMyOutfit, an online styling and shopping platform.
To market yourself as a consultant, you will, of course, have to be an expert in something. But, as Brett rightly says, “most people starting a business are.” What are you good at? What skills from your career can translate over into a viable consulting business? Think about your previous duties and areas in which you have excelled, and go from there.
5. Selling services
On a more casual level, there are a variety of service businesses that make great side businesses. Sites like Craigslist can be a great way to put your skills to use and piece together revenue. Do you know what interviewers look for? Consider offering resume building help. Know multiple languages? Put your skills to good use and offer tutoring or language conversation lessons. Do you love animals? Advertise yourself as a dog walker for your neighborhood.
While at face value these might not seem like stable sources from which to generate a large amount of money, with enough time to establish yourself and a solid client base, they can all be viable side businesses. This can be a downside, but if you believe you can provide a coveted service, it’s a good idea to consider.
6. Your day job
There’s a reason plenty of entrepreneurs don’t quit their day jobs—innumerable startups have come into existence as a result of the daily nine to five grind. Joseph Howard maintains his full time job, in addition to freelance work and channeling his energy into his two startup ventures. The combination of freelance work and his full time employment gives Joseph the financial freedom to work on multiple projects at once.
Does your job offer you the flexibility and adequate revenue to help you fund your startup? If so, you might be set. While you can certainly supplement your income by combining your day job with one of these side businesses, consider thinking of your full time employment as a means to an end, and focusing any extra income after living expenses into your startup.
Anyone can start a blog, but monetizing it is a different story. However, if you are experienced and passionate about a certain subject, or have an existing blog that you can turn into a money-making endeavor, consider focusing your energy there. Blogging can be a great way to turn your passion into a side business, and blogging is—you guessed it—incredibly flexible. With no time constraints, the ability to work for as long or as little as you wish, and the freedom to work from virtually anywhere, blogging is an excellent side business option.
Cyrus Roepers, a full-time entrepreneur with a SaaS startup, used his food blog as a way to generate income for his software startup. “Interestingly (and somewhat paradoxically), a food blog that started out as a passion project has actually become a source of income that helps me fund other projects and my main software startup,” he says.
Though blogging can be a difficult area to monetize quickly, if you have an existing blog that you can focus your attention on, you may have a ready-made side business. Consider blogging if you have a popular passion, an interesting story, or a fresh take on a subject.
Perhaps a little unusual (though certainly not the oddest suggestion on our list—see number 11), entering into a competition can be a unique way to raise funds for your startup, provided you are a skilled competitor.
To found their floral startup BloomNation, co-founders Farbod Shoraka, David Daneshgar, and Gregg Weisstein used a rather unorthodox funding source—the poker business. The three pooled their money to enter David, a former World Series of Poker champion, into a local poker tournament. He won, ultimately raising $30,000, which the trio used to help start BloomNation.
While this suggestion could not be further from the standard small business loan, it cannot be denied that the strategy paid off. The company has now earned around $1.65 million in seed funding from Andreessen Horowitz, CrunchFund, Spark Capital and Chicago Ventures, and has been named one of the Top 5 Silicon Beach Startups to Watch by Entrepreneur.
If you’re feeling very, very lucky, consider entering local competitions in areas where you have a history of excelling. Is it a riskier option for generating income? Definitely. While we aren’t advising that you take your savings to Vegas and hit the card tables, if you are skilled in a competitive area, it’s worth considering.
9. Driving for Uber
Do you have a car and a smartphone? Consider becoming an Uber driver. This controversial, app-based transportation service lets drivers use their own vehicles and set their own schedules, making it a dream side job for the aspiring entrepreneur.
Louis Ashner, founder of NoPass, drove for Uber as a way to help fund his startup while finishing his degree at Louisiana State University. “There was a great demand for Uber drivers during LSU football games,” he says. “All last season I drove during surge times after the games and pocketed a great deal of money.”
Before you get too excited, make sure that Uber is legal in your city first—in my home city of Portland, Oregon, for example, Uber has faced serious opposition from both the city and local taxi companies—but if Uber is legal in your city, becoming an Uber driver might be a great way to put your existing assets (namely, a car) to good use.
Of all the suggestions on our list, driving for Uber has unique perks: no time spent on your feet, and not all that intellectually challenging. There is a lot to be said for a side business that still enables you to focus your mental and physical energy into your dream startup, so if you are concerned that a side business like freelancing may stretch you to capacity, driving for Uber might be a good fit.
Not only that, being an Uber driver can prove an unexpected networking opportunity; entrepreneur Gavin Escolar has used his position as an Uber driver to promote his jewelry business, by establishing connections and networking with his riders.
Do you live in a well-traveled area, preferably with room to spare? Consider offering up your accommodations through Airbnb, the web and app based service that connects travelers with hosts, who then open their house as an impromptu hotel. Airbnb makes a great side business for the social butterfly who enjoys making connections and meeting new people.
In addition to consulting, Diana Melencio funded OkMyOutfit by renting out her guest room to travelers. “I rent out my guest bedroom for supplemental income,” she says. “Along the way, I’ve had some incredible guests that I remain in touch with.”
If you have extra space in a coveted part of the country (if you live in smalltown, USA, this might be a less viable option), you would be wise to consider Airbnb. Not only will it provide a relatively low-effort supplemental income source, but you might come across some interesting networking opportunities along the way.
11. Worms (yes, worms)
Now for the completely strange and unexpected: Jon Colgan, founder and CEO of fintech startup CellBreaker, used his background in sustainability to help finance his business. “I also studied sustainability in school and became enamored of using worms to compost. As a third revenue source, I sell worms,” he says. “I discovered that happy worm populations double every 90 days. My worms are always happy. So, I started selling worms and vermicompost on Craigslist and by word-of-mouth.”
Intrigued? So was I. Jon, who also performs music for bars, restaurants, weddings, and other events as a source of income, admits that his bootstrapping efforts are unorthodox. However, they have ultimately proven a successful combination.
While I’ll be the first to say that this is a relatively niche side business to emulate, it does drive home the point that if you are looking for side businesses to help fund your startup, consider a wide variety of options, and above all, think creatively.
What are your skills, what is your knowledge base, and how can you channel your areas of expertise into revenue-generating side businesses? A great side business is one that allows you enough flexibility to pursue your dream startup, while still bringing in a sufficient revenue stream. Maybe, like Lori Cheek, you can sell unwanted items on eBay while also renting out a room via Airbnb, or follow Joseph Howard’s example and keep your corporate job while offering freelance services.
When bootstrapping your business, you’ll need to think creatively—here are some great ways to get started.
Which of these methods have you used? Do you have any creative ideas for side businesses that I missed? Let me know in the comments, or via Twitter!