Ep 15: Detara finds funding for her business

Learn about bootstrapping, loans, and grants.

Detara Finds Funding for Her Business

Featuring: Small Business Owner Detara Williams and Author and Personal Finance Expert Kerry Hannon

On Episode 15 of This is Small Business, Andrea Marquez tries to demystify the fear around all things money by talking about some ways to approach funding your small business. First up, Detara Williams, co-founder of Darlyng & Co., talks about her personal relationship with money and some really helpful tips on bootstrapping, loans, and her personal favorite and current funding method: pitching for grants. Next, Kerry Hannon, senior columnist and on-air expert at Yahoo Finance who’s written more than a dozen books on entrepreneurship, joins Andrea for a chat about the different methods of funding and how to choose one that works best for your small business. Join Andrea as she gathers a bunch of useful tips that she’ll be storing in her small business playbook.

Detara with various Darlyng & Co. products

Episode Transcript

[00:00:04] Detara: Are you profitable? Are you making money? Do you even need to be raising capital? Cause even though we're having this conversation, some businesses are pretty healthy, and their profit line is just remarkable. So look at your numbers. Have those hard conversations with your accountant. Ask them, well, if I can get investment for $10,000 non-equity or $5,000, what impact would that have on my business in the next three to six months? Have those hard conversations. Get the answers. If you're not sure, find a mentor. There are so many people that is deep into the financial world and they literally love talking about money, and they will talk about it with anybody that wants to listen.

[00:00:50] HOST: Hi, This is Small Business -- a weekly podcast -- brought to you by Amazon. I’m your host, Andrea Marquez. This show is all about learning how to start, build and grow your small business - [00:01:00] I know it sounds intimidating - but I'm also learning with you, and will call out key lessons at the end of every episode for you to use on your small business journey.

As always, we appreciate and take into account your comments So thank you August E for leaving us a review on Apple Podcasts. August said that This is Small Business is “Great info from some entrepreneurs in the thick of the small business world.” Thank you!

One very important - and some would say scary - part of any business is money. How can I fund my business? It's actually a popularly Googled question that people look up when they want to start a business. And I totally get why, I mean, it's such an overwhelming and intimidating subject to approach. Money can also be a barrier for early-stage entrepreneurs and can stop people from continuing a business or even starting it in the first place [00:02:00] - even if they are passionate about the idea. So how do you get funding? What are the different options available? And trust me there's a lot but then how do you choose one that’s right for you and your business?

Coming up -- I'll talk to Kerry Hannon -- a strategist on entrepreneurship and finance who has written more than a dozen books on entrepreneurship-- about raising capital for your small business. But first -- I want you to meet business owner Detara Williams, the co-founder of the award-winning baby brand and lifestyle company, Darlyng & Co. When her company started, Detara had to delve deep into the world of funding so she could make sure that her business could continue to grow and meet demand. She found a way or maybe I should say ways, to fund her business and she's here to let us in on all her secrets.

[00:02:57] Andrea: Detara Williams, thank you so much for being on This is Small Business.

[00:03:00] Detara: Thank you for having me.

[00:03:04] HOST: It’s important that I mention, that the information provided in this podcast is not legal advice and should not be construed as such. Instead, the information provided is for general informational purposes only. Moreover, the information in this podcast does not create any attorney-client relationship between you and the podcast contributors or their respective employers. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. You should contact your attorney to obtain advice with respect to any particular legal matter. The hiring of an attorney is an important decision that should not be based solely on anything we speak about today.

[00:03:35] Andrea: So tell me about Darlyng and Co and how it came to be.

[00:03:40] Detara: Sure. So Darlyng & Co started around eight years ago. We're about to hit our eight-year mark. When my daughter Alethia was born, so she was around two months old. And during that phase, you know, we get all the tips as new parents, but no one warned us about the teething stage. So, she started teething at two months old [00:04:00] and she was constantly chewing on her hands. And her dad at the time was home on paternity leave and he came up with the idea of, well, you know what, all the teethers on the market seem just old fashioned. They are plastic. We don't know the material they're made of. We don't know the liquid that's inside of it. So, we wanted something a little bit safer and as parents that we didn't have to one: stand there and self soothe her all day. And parents, you know what I'm talking about. So we came up

with the Yummy Mit, which is our first product. It was our first invention. It is a teething mitten that is worn in a hand by the infant and they're able to self-soothe themselves. And from there we were able to garner other products through just listening to our customers, having more kids and just, parenting and wanting to solve those everyday parenting problems.

[00:04:50] Andrea: I'm very curious what was behind the name? What went behind Darlyng & Co.?

[00:04:55] Detara: So we wanted a name all parents could, you know, [00:05:00] just think about that name and it became a household name. And we thought about names that everyone called their child and it's darling. And so everyone actually thought it was like a play our last name, but it was actually just calling your child darling. And. That loving endearing term, and we thought, well, everyone could relate to this cuz when your baby's born, whether it's the grandparent, the aunt, it's like, oh my God, like the little darling. And so that's where the actual name came from. We wanted to just be broad and anyone can use it.

[00:05:28] HOST: We're not gonna be talking in depth about being able to legally protect your brand name, but we do cover it in Episode 1 of Season One with Jen and Max Ash of Max’is creations. Detara just pointed out a very important thing when it comes to branding name - it is being able to protect it.

[00:05:47] Andrea: Let's move on to money, specifically, funding your small business, because that is a popular topic for small business owners. It comes up all the time in all the conversations I have with many of the small business owners [00:06:00] that are in the early stages. Right. It is daunting. It is overwhelming. Whenever you think about money, in any scenario, it doesn't even have to be starting a business, it can seem like everything is rigged to go against you because it is very complex. So, first, talk to me a little bit about your relation to money, and how you feel about even bringing up the topic of financing your small business.

[00:06:26] Detara: Absolutely, so when we started, we bootstrapped, we used savings, family savings. I remember our parents were like our first investors. And we didn't know the term family and friends’ investment. Then we just knew like, hey, can you fund this PO? Cuz we, you know, we have all these orders and they started to believe in the product and what was going on because it was selling. So it's like, oh, if we invest now we are gonna get payoff anyway, cuz we're the parents, so that was our first kind of relationship with getting any type of funding.

[00:07:00] And I remember we got our first Chase account and that was our first business account. And they gave us a credit card for $5,000. And that was our first line of credit. And I did not use it. We did not touch that because my education around money at the time was just, hey, you don't take a loan if you're not able to pay back. You don't go into debt if you're not able to pay back. I didn't know how people in the business world were using money to fund their business and pay it back. So, I did not touch that credit card. I did not use it. I just kept using our cash flow. Luckily at the time we had cash flow, our products were selling, but it was selling really fast and we were scaling, so I needed money to expand. So, two years later was when I found out about pitching, and that's where the magic started.

[00:08:00] HOST: I think something that resonates with me is how important it is to determine what your relationship is to money first, before you even start to consider funding and how you're going to approach raising capital for your small business. Money is a difficult topic for some people. I was raised by immigrant parents and one thing they taught me was never to owe money to anyone - ever. So when it comes to funding; bootstrapping seems like the obvious safest starting point to me.

[00:08:30] Andrea: So, let's start by talking about the differences between bootstrapping, loans, and grants.

[00:08:34] Detara: Bootstrapping was essentially what we were doing when we started. We were just using our cash flow. So, if we made 10 to $20,000 that month and we knew the next month, our sales would go up. So, we would probably make 30,000 dollars next month based on the sales that we were having. We knew that 20,000 that we made would have to go right back, into ordering more inventory. So if we ordered inventory, say 10,000 pieces [00:09:00] the month prior to it, we would then have to scale to 20 pieces just to keep up with the demand. And so that's essentially what we were doing in the beginning. We were bootstrapping, using whatever money that we were making, putting it right back into the business. We did not pay ourselves; we did not see a profit even though there was profit, we did not see it. And that's something I strongly advise against today. Pay yourself first, like even if it's a hundred dollars a week, just put aside some money because you have no backup plan with this journey we call entrepreneurship, so just put aside some type of money, um, not just, hey, let me pay my rent out of this month, and I'm good. No, put aside some money for yourself. And for me now, when I get a

paycheck on Friday, that motivates me to work harder cuz I'm like, oh, I could pay myself. Like I'm gonna work harder. So that's the first lesson in bootstrapping.

When it comes to loan, you have several different types of loan. [00:10:00] I do wanna warn cuz there's a lot of predatory loans, especially against small businesses, so you wanna make sure you do your research. If you find a loan that you're interested in and they're like, hey, we'll give you this amount of loan. Ask the interest rate. Hey, what other small businesses have you worked with that I can talk to? So, you can ask them their experience. And I think that's something that's lacking in the community. We don't talk amongst each other with what we are doing, what's working for us. Definitely have those hard conversations and ask those questions. Just read the fine prints, ask questions. I know a lawyer is expensive, so there are a lot of pro bono lawyers that may be able to go over those contracts for you. So look into those things, but make sure you read the dotted line, and just do your research on loans. One thing that's helped me when it comes to loans – and I look at credit cards in some aspect as a loan. So if I open, say, a business account, um, and this is something it took me a while to actually do, [00:11:00] but if you open, for example, when I started my hair care company, Peculiar Roots, we opened a business account and our small business banker was, we came in with cash to put into that account and he said, put away your cash. He said, I'm gonna give you a credit card that has $10,000. Use that to start your company. And then pay it back as you go. That means your hard cash, if there's an emergency, you can use that. If you need more inventory, you can use that. So that's one way I started to look at my small banks as a loan provider. Even though it's a card, interest rate is minimal to, well, it depends again on your credit score, but the interest rate was minimal to what I would have to pay somebody else, a third party. And having that personal relationship with them, they would increase our credit card amount. So, if we paid that back fast, oh, your credit card is $20,000, we're gonna up that to $30,000. Um, so those are some ways you can use those small banks, they are willing to work with you as a small business.

[00:12:00] And then pitching is essentially going out there, finding grant opportunities that's willing to invest in your business with no equity taken. Which is amazing. So, you're not having to give any equity to these organizations. Most of the times they just have extra cash that they're looking to give away from their nonprofit, and so they wanna invest in your dreams. And so that's a great way to do it as well. And that's one of the strategies I've been using for the last few years.

[00:12:35] Andrea: Can you talk to me a little bit more about some of the grants you've applied for that have been helpful for the journey of Darlyng and Co.?

[00:12:43] Detara: Yeah, I'll share my first grant experience. There was like a pitch competition. I remember I had to actually fly out for this competition. At the time, I believe it was $5,000. And I didn't have to do much for it, but tell my story, I remember I was a nervous wreck. [00:13:00] I didn't know what a pitch was. And I was just happy that they accepted my application and, I think we had to pay for our own hotel, which was fine, but they flew us out. I hang with a cousin that was in town, and so I didn't have no cost, no overhead. And I remember going to this pitch competition and there was a young man. And he was just like, oh, I do this every month, every week I go around and I pitch, and I never start any of these businesses. And I was like, what? But I have a valid business. I have a business that needs funding right now. And you do this as a hobby. And that's when that world of pitching, like just, I started to do research and I saw like how many competitions there were and there are literally people that take advantage of this, but never start the business.

[00:14:00] Cuz essentially what you're doing is you're pitching your idea. It could be an idea, it could be a business to a panel of people that will invest in you. And even some of them you walk away with absolutely nothing. Some of them, you may come in third, you may come in first, but when he said that, it just made me so much more determined to win because I knew I actually had a business that needed to be funded. And so I started to work on my story, and I didn't overthink it. I was like, my story is unique. I was a regular mom at home. With my daughter going through an issue that any parent is gonna go through. The difference with me at the time was I took action. I decided to execute on that idea, and so I went and I pitched that story and that was my truth, right? That was my truth. I pitched it. We came in second. That was my first competition. I came in second and I was like, whoa, I don't have to pay you back. This is crazy. And then from there, I started to just enter pitch competitions, [00:15:00] and I wanna say this, sometimes we think our pitch story has to be dramatic, it has to be sad, it has to be some type of trauma involved. It could be so simple as I was nursing my baby and she was teething, and I needed a solution. I went out there and do it. I had no idea what I was doing, but I figured it out. And look at where we are today. And because of where we are today, now I want to make that idea and that vision even greater, and I would love your investment. See, I just pitched y'all. I just pitched y'all.

[00:15:35] Andrea: Do you have any advice for anyone who's thinking of pitching for grant money?

[00:15:40] Detara: If you're pitching, be very clear on what you're gonna use the money for. Don't show up to a $10,000 pitch and say, I'm gonna use the money just for inventory. Today, that's not enough. What impact are you gonna make once you get that funding? It can't just be: I'm gonna generate revenue for myself to pay myself like it has to make a greater impact [00:16:00] on the people around you, whether it's your employees, whether it's your first hire you wanna make. So being very, very clear in what you're gonna use the funding for is so, so crucial and a lot of entrepreneurs miss that key part of pitching.

[00:16:18] HOST: So we've talked about bootstrapping, loans, and pitching for grant money. But I'm sure right now you have one - or a couple - questions on your mind: Where do I start? As a small business owner in the early stages, how do I know which to consider first? Detara’s story is a little bit about trial and error and seeing what fits. What’s right for you.

[00:16:39] Detara: It took me eight years to even consider venture capital. And fundraising and all those things. It took me eight years because one, that wasn't my world. I wasn't in that world. I didn't really start paying attention to it until I started to see the reports of black women not being funded. And I was curious like, what does that mean? [00:17:00] Should I be seeking funding? Because then it becomes appealing like all my friends are doing it. But then having those real conversations with them and asking them questions that matter to me. So if you're listening to this, start asking around the questions that matter to you as a small business: is your goal to exit your company. Cause that's one major thing that a small business, we don't talk about exiting our company. We think we're gonna be there forever, when in reality, you may wanna exit your company in three to five years. So in order to do that, you may need to just scale, a little bit faster and venture capital may be the route for you. I've heard entrepreneurs say. I don't want to exit my company, but I wanna scale really fast to go compete with those companies, so in order to do that, I can't keep using my cash flow. I can’t keep running my business like this. And there are business like, well, I could just go get a loan cuz that's like, I have a mom-and-pop shop and I wanna keep running in that way and I wanna go to my local bank [00:18:00] and get a small business loan for $5,000 and that's gonna buy me my supplies and I'm gonna be able to be fine. So it really comes down to what your end goal is.

So, just do your research, look into your own companies, look on your numbers. Before you even start raising grants, look at your numbers. Are you profitable? Are you making money? Do you even need to be raising capital? Cause even though we're having this conversation, some businesses are pretty healthy, and their profit line is just remarkable. So look at your numbers. Have those hard conversations with your accountant. Ask them, well, if I can get investment for $10,000 non-equity or $5,000, what impact would that have on my business in the next three to six months? Have those hard conversations. Get the answers. If you're not sure, find a mentor. There are so many people that is deep into the financial world and they literally love talking about money, and they will talk about it with anybody that wants to listen. [00:19:00] There's also predatory competition out there as well. So look for those. If you're looking for non-equity, make sure you read the fine prints that they're not trying to take any equity. Ask questions. If you win a competition, ask what the payment terms are. Make sure you're prepared to be paid. In order for these entities to pay you, you have to have a legit business bank account, they're not gonna cash app you the money, they're not gonna PayPal you the money, again, it's a tax write off, so you have to have a business account. I've seen a lot of entrepreneurs win competitions and they're not able to get paid cuz their business is not legally set up. So just make sure everything is okay legally on your end as well cuz it goes both ways.

And I'm gonna plug Amazon. So, when we started on Amazon, we made around like $10,000 the first month. Crazy. We were just like, what? And we started to grow so fast that Amazon was like, [00:20:00] they had just started their small business loan. So, they sent us a letter and they're like, we can give you $10,000, And all we're gonna do is the money that you make on Amazon, we're just gonna take a small percentage of that every month. Game changer. Game changer cuz what? We were guaranteed to make money cuz our products was flying off Amazon so fast. And two, we were able to get that, like they literally deposited that money y'all in 24 hours, like right to our bank account. I was able to make that purchase order and I was able to pay that back in like three months. And then they kept sending bigger amounts, so it went from $10,000 to, here's 20, here's $50,000. That was our first, like loan that we got from before, even the banks, that was our first loan. And we still get those offers today. Like, hey girl, you want some cash? You want some cash to like get your inventory? Again, read those terms, make sure you could pay it back [00:21:00] on time and make sure those interests are not going to eat you up or your profits daily where you can't make payroll or you know, just simple things like that.

[00:21:12] Andrea: Detara, thank you so much for being on This is Small Business.

[00:21:16] Detara: Thank you for having me.

[00:21:20] HOST: MIDPOINT: You're listening to This is Small Business, brought to you by Amazon. I’m your host, Andrea Marquez. That was Detara Williams -- co-founder of Darlyng and Co. You can find out more about her company in our show notes on our website: Thisissmallbusinesspodcast.com.

Detara gave us so many approaches to funding your business and of course one of her favorites was pitching for grant money. She was so passionate and confident in her story and that led her to winning grant money that played a significant role in the journey of scaling her small business. So, it’s worth thinking about how you tell your story, because that comes to play not only in how you fund your business, but also in your company culture [00:22:00] and what you transmit to your customers, as we’ve learned throughout This is Small Business.

Did you know that more than half of the products sold in the Amazon store come from small-and-medium sized businesses? Darlyng and Co. is one of the many small businesses selling in the Amazon store who have tapped into some of the tools and resources offered to help them succeed and grow. Learn more about them in our show notes on our website ThisisSmallBusinesspodcast.com.

Also, if you’re curious to learn more about the Amazon lending program that Detara mentioned: Amazon Lending provides business financing for eligible U.S. small and medium-sized businesses, with a simple application and no lengthy paper work. Sellers on Amazon can access capital in a matter of days. That way, you can get your business goals… financed. To learn more, you can also visit our show notes on our website: thisissmallbusinesspodcast.com.

[00:23:00] My next guest is Kerry Hannon, a senior columnist and on-air expert at Yahoo Finance. She's written over a dozen best-selling and award-winning books on career management, entrepreneurship, personal finance, and retirement. I'm excited for you to meet her.

[00:23:18] Kerry: I'm sort of a workplace futurist and I look at entrepreneurship and small business. I write about retirement as well in personal finance. All kinds of money related things. And I've written 14 books, and one of those books is Never Too Old to Get Rich, and it's all about entrepreneurship at midlife. So I really got into that whole idea of entrepreneurship and I, I'm fascinated by it. I also wrote a book called What's Next? Follow Your Passion and Find Your Dream Job. And in that book, I spent three and a half years traveling around the country and meeting people who had done something for maybe 20 or 30 years and shifted to do something completely different. [00:24:00] Most of them were entrepreneurs and I was just incredibly inspiring. And, you know, I realized that it's so much of our souls that we want to be, our own bosses, right? We like to have the autonomy and the opportunity to kind of do work with meaning and purpose, and a lot of that comes from doing our own businesses. And I'll, I'll finally say that I grew up in a small business, so I, you know, we talked about business around the dinner table and the breakfast table and all kinds of things. So, you know, it's really close to my heart.

[00:24:30] HOST: This the part where I started fangirling because Kerry's book What's Next sits right here in my bookshelf. It was gifted to me when I was completely lost and had no idea what I wanted to do next and luckily, it led me to podcasting. Anyway, I'll try my best to contain myself.

[00:24:48] Andrea: Kerry, what are some ways you can fund your business?

[00:24:51] Kerry: So before you start clawing around to find the money, let's start right with you. You've got to do a budget, right? Ah, roll your eyes. Nobody wants to do a budget, [00:25:00] but you have got to figure out what you've got coming in, what you have going out. Where can you get lean and mean? Can you pay down some credit card debt? Get yourself in a place where you can be nimble because money. All of the entrepreneurs I've interviewed, money is the biggest stumbling block. I mean, debt is a dream killer. We all know that. And so if you can get financially fit, that's gonna give you the opportunity to really be nimble.

Okay. The second piece, you have got to think about what are your personal resources, the number one way people fund their business, is personal savings. You know, there's all this romantic idea that you're gonna get angel investing and all these people are gonna come scampering over to give you some money to launch your business. Well, they might say, great, and pat you on the head, but frankly, a lot of it is gonna come from within. So you really need to think about what your resources are and that you're not going to dip too much into your own financial security so that you're not risking it all. But number one is gonna be personal savings.

Number two is, okay, your friends and family, they love you. [00:26:00] They absolutely love you and so if you have a great idea and you're enthusiastic and they have the opportunity, they have the wherewithal, they'll help you out. But you got to

be sure that you structure this, don't make this a loosey goosey kind of arrangement. You want to actually have it down on paper, that you're gonna pay them back with interest in a certain time period. And this way it can be a low, low interest rate. It doesn't have to be a huge amount, but it keeps you accountable and it makes them feel that they are not being taken advantage of in some way.

Obviously, the next simple thing is crowdfunding, right? We all know those platforms are out there and that's one way to do it. You develop your fans that way. Your devotees, people who think you're fantastic and they wanna be part of startup, they wanna help you. And you know, you might have some reciprocal thing that you give them some goods and services in return for them funding in this method. There's another kind of crowdfunding that's called equity crowdfunding [00:27:00] that's a little more nuanced and it's getting more attention. These are people who can invest small amounts in your business. It can be a hundred dollars, but these people, they bring these investors together for you under an umbrella. They do expect to be repaid. But it's a stretched-out period.

Bank loans are your next thing. Right? And today interest rates are kind of bumping up. It's a little crazy out there. I'm not sure it's the best way, but the small business administration is the place to go to. You know, they have all the resources of people that do SBA backed funding. You've gotta have a pretty solid business plan and most people are gonna want, uh, you to have some skin in the game that you've shown that you've invested in your own business. Some people top home equity loans, not a bad idea. If, if you can get a low interest rate in today's world, again, maybe not the best, uh, strategy, but I, if you have equity built up in your home, it is a possibility.

The ones I tell people not to do and not everybody listens to me is, try not to tap your retirement funds. [00:28:00] You're kind of jeopardizing your future in the long run. So I'm not a big fan of that. There are ways to do it, and if you're responsible, you can get in and out and repay it.

[00:28:10] HOST: To recap on what Kerry mentioned. She talked about self-funding, in other words, bootstrapping, or tapping family and friends, and making sure you also put everything down on paper, even if it’s a family and friends loan. Then she talked about crowdfunding as a way of making fans part of your business journey. She also mentioned loans but making sure you pay close attention to interest rates, just like Detara mentioned. She also suggested against taping into retirement funds. So that was a lot, but let’s focus on bootstrapping, loans, and grants for now.

[00:28:46] Andrea: Kerry, what considerations should be made when bootstrapping?

[00:28:50] Kerry: If you're gonna be self-financing this, you need to be very rigorous about how you're going about this. And be sure that you have money set aside. [00:29:00] You know, I like to tell people, if you have this idea that you wanna start something, give yourself some runway. I mean, if you have two or three years. And I know that sounds like a lot, but to really like start, you know, making sure you have savings set aside that you can tap easily, that you don't jeopardize being able to not pay your bills and, so forth. And start in baby steps. You don't have to jump in with $10,000 or something. You can start in small stages, and I think that's the way to really think about, change your mindset that yes, you have this big audacious dream; you're gonna get there. Break it down in pieces. The other beautiful thing about starting the business is in today's marketplace, you don't have to necessarily go it alone running. You can have a virtual workforce, so you don't necessarily have to be hiring people. You can, you know, have someone come in and, you know, helicopter in and help you with bookkeeping once a month.

[00:30:00] But these don't have to be big expenditures, you know, you need to really do your business plan and think it through about where, what's the minimal amount you need to really start launching your business? And a lot of people do launch as side gigs, right? While they're working their main job. And this is a great way to actually do it because you're not pressured to make it grow too quickly and you can just let it grow organically on the side while you're earning a steady income to make sure you can pay those monthly bills.

[00:30:28] Andrea: You mentioned the importance of having a crisp business plan and making sure you have that budgeting plan done. Are there specific things you should look out for when creating that budget or business plan when it comes to funding and money in the long term?

[00:30:44] Kerry: When you're really putting together your financial package, you need to have a really good credit score. And that means that you've shown that you pay your bills on time, that you don't have too much debt already. These are things that you can structure, so now this will help you get a business credit card if you need one. [00:31:00] This will help you get funding or a loan if you do need one. It’s very important to have that sort of clean bill of financial health before you

launch into anything, so you're not distracted by other expenses that are gonna take away from what your business demands. I think probably the most important thing though, is not to try to grow too fast, to go in baby steps and so that you're not spending above your head and that's so hard to do because we get so enthusiastic and excited about our business. But if you can do some pre-selling of things, that really helps you start bringing in cash flow, even before you've officially launched your business. You might wanna even continue to be consulting, so you want your business to be the main, your main focus. But that doesn't mean you can't be earning some money on the side that can help cushion you.

[00:31:48] Andrea: Okay, so let's move on to what I assume is a lot of people’s favorite funding option: grants.

[00:31:55] Kerry: That's a good way to get started, it's a wonderful source. And it's not money you have to repay. Look around, in your community, [00:32:00] your Chamber of Commerce, even your Rotary. But again, the virtual world has exploded. So it doesn't necessarily have to be somebody in your back door that has a grant program for you. But you know, this is the time. If you wanna grant, it's kind of a rigorous process for the most part because these can be very competitive. But if you are willing to put the time in to do that and really write a strong proposal and identify why you, why this product or service and why now? If you don't wanna be the writer of this grant, there are many people who write grants as a source of income. And they know the little wiggles to get you through this process.

[00:32:43] HOST: For some reason hiring someone else to write a grant proposal for a small business never occurred to me. But it does make sense to leave it to the experts, plus it allows you to focus on other important things. But for those of you who do want to take on that grant proposal…

[00:33:00] Kerry: …the whole process actually can be super beneficial to you as a business cuz it forces you to think about some of these questions: how does it impact the world around us? What is your business gonna look like? Who's it gonna help? You know, they wanna be making an impact on the world. So often that's what you need to get that into your secret sauce of that message.

[00:33:20] Andrea: So now that you're ready to take on grants and possibly got over the fear of writing a grant proposal. Let's face another fear inducing way of funding your business: Loans.

[00:33:32] Kerry: Nobody wants that, but it's okay. Sometimes it is the right thing to do. I don't put it as my number one step for getting money. As I said, with interest rates these days it's kind of a tricky environment. So, I personally think you wouldn't wanna go too long range of a loan. The other thing is to talk to other people in your industry that you're launching into and see if there are any financial lenders or financial institutions that really are aligned with your industry, [00:34:00] that they tend to be more receptive to businesses in this certain industry. They understand it.

[00:34:06] HOST: By the way, Small Business Association, also known as SBA, is a great resource that comes up again and again whenever we talk about funding your small business. SBA offers pro bono work for lawyers, finance teams, and they'll help set you up in a way that will help you succeed in the future.

[00:34:23] Andrea: Is there anything else you would like to say?

[00:34:25] Kerry: I think a small business is the actual engine of this country. I mean, it is essential from an economic standpoint. You know, we pay taxes, we contribute to the economy in a way that is amazing. And there is that realization that's out there. And so I think it's don't be daunted by it, but also this is, you have to be sharper than ever about how you use your resources. Don't jump in with some huge audacious goal. Have that out here. But start with the practical and go from there.

[00:34:57] HOST: That was Kerry Hannon, a senior columnist and on-air expert at Yahoo Finance. Thank you for listening today -- [00:35:00] I have so many different funding opportunities listed down in my playbook and the idea of getting funding seems a little less daunting. As always, some of the key takeaways I learned today with Detara and Kerry are:

  • First things first, you should probably start by creating a budget. This will help you determine what’s coming in and what’s going out. And then you can also figure out the minimal amount of money you need to really start launching your business. Because as Kerry mentioned, it’s best to start slow and make sure you set yourself up for success before starting your business. And I know, that's definitely easier said than done - but there are resources out there to help you like the Small Business Administration.
  • Bootstrapping: is a good place to start. Funding it yourself. Once starting, Detara mentioned that they didn’t pay themselves as founders at first, but she thinks that you should try. She mentioned putting aside some money for yourself as a way to continue motivating yourself. [00:36:00] Along the lines of bootstrapping is getting money from friends and family. Kerry says this is also something to consider at the beginning but making sure that any agreement is in paper so that it’s not a loosey goosey arrangement. This is so you can keep yourself accountable.
  • Loans: before considering any, do your research. Ask questions. Read the fine print. Consult with a lawyer. An important question to ask is: what’s the interest rate? Kerry suggested looking into resources offered by the Small Business administration.
  • Grants: Detara’s journey to pitching for grants has so far been successful because she is able to tell her story in a way that transmits her passion and belief in the brand. The great thing about grants is that there are opportunities for investment that don’t require paying anything back. Detara suggests that when pitching for grants, it’s important that you’re clear [00:37:00] on what you will be using the money for AND you need to have a business bank account and all of your legalities in order so that the grant money can be deposited.

I think we learned that you don’t need to grow too fast. And ask yourself questions along your journey to make sure you're doing the best thing for you and your company. Detara’s choice to continue getting funding through pitching because she felt like venture capital wasn't gonna work for her is a great example of making sure you're doing what’s right for you.

I'm curious -- what approach are you going to take to fund YOUR small business? Reach out to us at thisissmallbusiness@amazon.com to tell us what you're up to. Or let me know what you think of the episode by leaving a review on Apple Podcasts – it’s easier if you do it through your phone. And if you liked what you heard -- I hope you'll share us with anyone else who needs to hear this!

That's it for episode 3 of season 2 of This is Small Business, brought to you by Amazon. Remember -- you get to hear me talk about businesses every week now. [00:38:00] Every other week we'll be bringing you short, straight-to-the-point business lessons in the form of This is Small Business Minisodes.

On our next episode we'll continue our conversation about money and dive into taking on investors and raising capital with Allen Lau, Co-Founder and former CEO of Wattpad and Executive Advisor to WEBTOON Wattpad.

Until next time – This is Small Business, I'm your host Andrea Marquez -- Hasta luego -- and thanks for listening!

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:38:48]

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