Funding footpaths: what financing method is right for your new business?

• Author: Madison, Rachel
• Position: Focus

There's one thing all companies need to start, grow and thrive: money. However, the way in which they locate that funding can vary greatly. The avenues to funding a business seem endless--and there's no one way that's right. Here we take a look at four Utah companies that have taken very different funding routes to success.

Bootstrapping

Amelia Wilcox, CEO of Salt Lake City-based Incorporate Massage, has bootstrapped her business since the beginning. One of the reasons she chose to bootstrap was because she used to own an online business that sold outdoor gear and camping equipment, but when the Great Recession hit in 2008, she ended up with mounds of debt and an inventory she couldn't sell.

"That's when we decided the next business we went into, we'd do it in a way that we were not exposed to as much risk," she says. "We wanted to grow organically and not go into debt and not have to seek funding. We started up five years ago, and we still bootstrap everything."

Wilcox admits bootstrapping hasn't been easy, mainly because "you have to make money before you can spend it," she says. "That's a novel idea in this day and age. But we wanted to do it so we didn't have debt, and so if the market crashed we wouldn't have to lay people off."

Avoiding risk is just one benefit Wilcox sees from bootstrapping. She is also excited every time the company makes money, because it belongs 100 percent to the business. "When we make money, it's really ours," she says. "We can say, 'Where do we want to invest this money? Where do we want to grow? What do we want to do with it?' instead of, 'We have all this money, but now we have to pay it back.'"

Bootstrapping has also given Wilcox the ability to grow at a sustainable rate. She says if the company had been given a large infusion of capital, it might have grown faster than she could handle, which would have ultimately led to destruction.

"Organic growth allows you to grow at a reasonable speed," she says. "We started bringing in business about six months after we started, and I didn't take a salary for the first two years. We just reinvested everything back into the company, and we were profitable right from the get go."

Wilcox says in order to bootstrap successfully, a clear plan is needed. "With organic growth you're a lot more careful with how you spend money and a lot more intentional with your decisions," she says. "You have to do a lot of budgeting and forecasting to make sure you have cash on hand. We...