Stuck on funding for your business? You are not alone.
Media reports make it seem as though every startup receives millions of dollars from venture capital firms. In reality, however, countless entrepreneurs build businesses without any initial funding support. That very experience often makes them smarter and sharper.
‘Taking initiative can help you make sales even before you have finished building your business,’ said Patrick FitzGerald, entrepreneur and speaker at the Wharton School, adding that he had seen more and more of his students develop a deep appreciation for self-reliance. ‘I am the same way. My parents were teachers, so I never had the luxury of... not relying on myself,’ he emphasized.
Here are 6 business lessons from successful entrepreneurs who creatively found effective approaches—including some considered “crazy”—to help their businesses grow.
1. Invite People to Play to Make Sales
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Jason Bockman – co-founder of Strange Donuts |
Jason Bockman wanted to open a donut shop (selling fried or baked sweets eaten as dessert or snacks) in St. Louis, Missouri, US, but one unlike other donut shops. “We wanted something fun that would bring people together around an activity, like wrestling, painting, anything,” Bockman said. But lenders were not attracted to the idea of such an unusual donut shop. 13 lenders told them “No.”
But this was precisely when Bockman’s creativity was ‘switched on.’ “We organized a game popular in the 90s.” They collected many trendy items from that era, promoted the event and attracted 200 local residents to compete and try donuts for a small fee. “We were just testing the market, but unexpectedly it was extremely successful,” Bockman said.
They then organized 6 more events, including a wrestling night, a beer tasting, and a party. These distinctive features of Strange Donuts gradually attracted attention and raised USD 20,000. A subsequent Kickstarter crowdfunding campaign brought another USD 12,000. Finally, they secured a small business loan from a bank whose executives later attended Strange Donuts’ parties.
Strange Donuts opened in 10/2013. It currently has 2 stores in the United States and one franchise in Mexico City (Mexico). Lenders continue offering them loans. “The way everything has unfolded seems kind of crazy,” Bockman remarked humorously.
2. Enlist neighbors as employees
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Anthony Byrne – Co-founder and CEO of Product2Market |
Anthony Byrne launched sales solutions consultancy Product2Market in 2010, not long after the 2008 financial crisis. This period was considered “the worst time in world history to start a company,” Byrne admitted. But despite a shortage of capital, his entire team pressed ahead. They bought liquidated company furniture and office equipment. “We held meetings with companies we did not even want to work with, purely so we could get… stationery,” Byrne recalled.
These difficult beginnings prepared them for a breakthrough moment. Microsoft wanted to hire Product2Market for a project, but first the giant wanted to visit Product2Market's office to ensure its partner had enough staff to carry it out. In reality, they did not. But that did not stop them. ‘We brought friends, family and even neighbors into the office to try to show them we were twice our actual size,’ Byrne said. And it worked.
“Microsoft was the first blue-chip technology company—‘blue chip’ refers to high-quality shares issued by major corporations—to award us a contract,” Byrne said.
Product2Market currently has 125 employees and works with major brands such as Twitter and Zendesk. “Our approach in the past was not very ‘glamorous,’ but it helped us move to the next stage of growth,” Anthony Byrne remarked.
3. Play… pretend
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Jane Lu – founder and CEO of Showpo |
At 24, Jane Lu quit her job, traveled and pursued personal goals. When it was all over, what remained was… USD 60,000 in debt. Lu did not want to tell her parents, Chinese immigrants to Australia who wanted a better life for their only daughter. Rather than disappoint them, she claimed to be working at Ernst & Young while actually starting a small retail brand called Showpo.
Lu built the website, bought inventory and paid the shop rent with credit cards. ‘I had to wake up early, put on a suit, eat breakfast with my parents, carry my laptop bag and take the bus into the city with my mother,’ Lu recalled. She did this for 18 months before telling her parents the truth about Showpo, which by then was successful and growing rapidly.
“I told them, ‘I will pay off all my parents' debts, and I will buy them a car.’ They could not believe it,” Showpo recalled.
Showpo currently sells to 80 countries and expects to earn USD 100 million by 2020.
4. Make money by… entering competitions
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Arion Long – Founder and CEO of Femly |
When starting Femly, a company supplying organic feminine hygiene products, Arion Long approached many investors but received no response. She thought she knew why: less than 1% of venture capital goes to women founders of color.
At that point, Arion Long found another way to raise funds: entering a local business-pitch competition, which she won.
There were many similar competitions everywhere, so she thought, ‘If I am really good, I will get funding!’ But she failed in the next 5 competitions. To improve, Femly's founder studied the speaking styles of Steve Jobs and Gary Vaynerchuk. The real turning point came only when she suddenly thought about her audience: ‘It is not easy to help them understand deeply when talking about menstruation. They have to understand why it matters.’
Arian Long changed her approach by opening her presentation with a personal story about a cervical tumor. She then asked, “Does anyone know what a condom is made of?” Everyone knew. Next came, “Does anyone know what a tampon is made of?” Nobody knew. She then discussed the chemicals found in most tampons before presenting her organic solution.
Since 2016, Arion Long has entered 30 competitions and won half of them, earning USD 200,000 in prizes, gaining media coverage and being introduced to more investors.
5. Say what others want to hear
CEO Erik Huberman runs marketing company Hawke Media in Los Angeles, California, USA. The company provides outsourced CMO (Chief Marketing Officer) services, helping shape brand messages, and has worked with giants such as Verizon Wireless and eHarmony.
Back in 2011, while starting a very different company, Huberman learned a valuable lesson about pitching. At the time, he launched a men's T-shirt subscription service called “Swag of the Month,” but struggled with publicity. After a friend told him how companies raised funding through technology blogs, the Hawke Media CEO had an idea: write a TechCrunch article claiming he had raised 100,000 USD (in fact, the money came from… Huberman's father).
“I received a call within 30 minutes of publishing the post. It remained effective for many hours and helped ‘Swag of the Month’ gain another 600 new sign-ups. Huberman would never use such a misleading trick again, but he learned an invaluable lesson. “Give readers the headline they want. I learned how to tell stories. It helped me understand how the entire the communications apparatus”, Erik Huberman said.
6. Market the “manual” way
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Christina Stembel – Founder and CEO of Farmgirl Flowers |
When launching Farmgirl Flowers in San Francisco, California, US, Christina Stembel's daily routine was to go to the flower market at 3 in the morning, buy flowers, drive home, unload the pickup and put them in buckets of water in the bathtub. “I finished the bouquets before the delivery people began arriving at 9 in the morning,” Stembel recalled.
Those were only the basics; the next steps truly brought Farmgirl Flowers success. Besides customer orders, Stembel made additional bouquets and delivered them free to city coffee shops with 50 Farmgirl Flowers business cards. ‘Each week I returned and counted the remaining cards. If most were gone, I had found a suitable shop for attracting my customers, and it deserved more free flowers. Otherwise, I would find another shop to replace it,’ Stembel shared.
Stembel used this approach for a year, and it was well worth the effort. ‘All the initial inquiries about Farmgirl Flowers came from these coffee shops. It was the cheapest thing I could do,’ Stembel said.
Collected.
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