It was also published on Startup Professionals Musings.

Money to build the business is the number one challenge for most startups. Don’t believe the urban myth that you can sketch your idea on a napkin, and people will throw money at you. In reality, there are multiple more productive approaches you should explore in getting your startup moving forward.

Of course, there are pros and cons to each of these. For example, with any outside investment, you give up some ownership and control, and with bootstrapping your growth curve will likely be longer and more organic.

Yet, I find that startup founders often fixate on one or two sources, often to the detriment of their business. Following is my prioritized larger list of sources, with some “rules of thumb” which may save you a lot of time and energy:

1. Bootstrapping. Self-funding from your savings is the preferred source of cash for your startup – if you have it. The advantage is no time and effort searching and preparing for the other alternatives, and you don’t have to encumber yourself or give up control of your company. Just don’t quit your day job before your new company is producing revenue.
2. Friends and family. After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. As a rule of thumb, it is a required first step, as outside investors will not normally consider providing any funding until they see “skin in the game” from one of these first two sources.
3. Small business grants. This source often gets overlooked, but it should be a major focus these days due to the Obama administration initiatives on alternative energy and technology. It’s not a quick solution, but the government and other funding agencies do not want ownership or interest payments from your company. Related sources include local business development agencies. You have to be relentless in this pursuit to win.
4. Loans or line-of-credit. If your company needs only a temporary or small infusion of cash, you should try for an SBA loan, or a bank line of credit. Many people are afraid to tap into debt sources because they don’t want to be burdened with the debt if the startup fails. However, if you don’t believe in the company enough to place your own credit behind it, why should anyone else?
5. Startup incubators. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. These resources would likely include office space, consulting, and even a cash investment.
6. Angel investors. If you are looking for $25,000 to $250,000, the next step is to tap into a local angel network. If you don’t know any “high net worth” individuals, use your advisors to find them. Networking is key here, and you need to find an angel who understands your industry and shares your passion.
7. Venture capital. As a rule of thumb, don’t try this one in the earlier stages, and don’t try it unless you need more than $1 million. An investment from a venture capital firm is usually expensive, in equity and control. If you go for venture capital, don’t expect a quick fix, so prepare to spend at least six months searching for and closing the deal.
8. Bartering services for equity. Bartering technically means exchanging goods or services as a substitute for money. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging equity for services is worth negotiating with legal counsel, accountants, engineers, and even sales people.
9. Partner with beneficiary company. A more established company may see the value of your product as complementary to theirs, and be willing to advance funding, which can be repaid when you develop your revenue stream. Consider licensing and “white labeling.”
10. Commit to a major customer. Find a customer who would benefit greatly from getting your product first, and be willing to advance you the cost of development. The advantage to the customer is that he will have enough control to make sure it meets his requirements, and will get dedicated support.

Just remember that you don’t get ’something for nothing’ in any of these cases. All funding decisions represent complex tradeoffs between near-term and long-term costs, ownership, control, and time and effort. Your funding strategy is a key part of every business plan, so don’t forget to check out all the alternatives.

P.S. This is an updated version of an article published a few weeks ago on Forbes.com.

I wanted to reach out to you again after our outage on July 14 that disrupted your online products and services. It is an understatement to say that this outage is not acceptable. It happened after a San Diego power failure blacked out an area that included our data center.  We experienced problems after switching over to backup power, which caused a number of online services to be unavailable for several hours.

I’ve heard your concerns, and I understand your frustration and disappointment.  You depend on us to help you run your businesses and manage your finances. We know we’re not where you expect us to be, nor where we need to be.

Our Online Transition

Intuit built its reputation by inventing and delivering software products that revolutionized the way people and businesses manage their money. Over the past few years, more and more customers desire online connectivity, giving them access to our products and services anywhere, at any time. We have been transforming the way we deliver our services to meet these needs in an online world: the way we build our products, the way we offer them, and the way we host and support our customers.

While we still offer easy-to-use, shrink-wrapped software, it’s increasingly available in online versions. In fact, we currently generate 60 percent of our revenue from our online, software-as-a-service offerings.

Our goal is to be a world-class provider of highly available online services. But as events of the past month have shown, we still have work to do. We are on a continuous journey to re-architect our products, modernize our technology to host them, and build or lease state-of-the-art data centers to house our online services. 

What We’re Doing

That effort is already underway:

• Many of our new online products are architected and designed with 24/7, high-availability and disaster recovery in mind.
• We’ve already invested more than $300 million in new facilities, including two state-of-the-art data centers in Quincy, Wash. and Las Vegas.
• We are aggressively migrating our existing applications to these data centers.
• While in this migration, we are strengthening our infrastructure and constantly evaluating all our internal practices to ensure that we get it right whenever we perform critical maintenance or repair procedures.

Succeeding in an Online World

Our future depends on meeting your needs in an online world. We’ve seen where we’re not meeting the standard that you – nor we – expect, and have already made many corrections. But we’re not stopping. Our mindset is we’ll never be done. Because of that, we’ll get better. That’s how we’ll earn your trust and support. And I hope you’ll continue to let us know how we’re doing.

Sincerely,

Brad Smith
CEO, Intuit Inc.

Size matters. We limit (OE.QBW) file size  to 140 mb. Have more data? Check out the Lists only option for import.  It’s easy. To determine the size of your file open your company file and hold down the F2 key.

And for your reading pleasure, we have all the beefy details behind each of these tips above spelled out in a knowledgebase article.  Enjoy.

A commercial power failure has disrupted some of our online services. We expect to restore full service to the Intuit websites and online services affected by this morning’s commercial utility power failure between 1:30 and 2:30 p.m. Pacific time.

We apologize for the inconvenience and are committed to completing this as soon as possible.

We’ll provide real-time updates here as new information becomes available.

Join us live on July 15th at 10:00 a.m. PT to learn more about the Inventory tracking feature during a free, hour-long Small Business webinar hosted by one of our QBO ProAdvisors. Stacy Kildal, CEO of Kildal Services is our expert for this exciting event. This session will cover: How to set up an inventory, purchase an inventory and adjust on hand quantities.

Not sure if you use Inventory or should be using Inventory to track your products? Come and ask  Stacy.

QuickBooks Online uses standard inventory cost accounting rules. This means your inventory purchases are not treated as expenses, but are instead accurately reflected as Cost of Goods Sold (COGS).  To determine the cost of items, QuickBooks Online uses the first in first out (FIFO) method, which is compliant with generally accepted accounting principles (GAAP) and accepted by the IRS. Sounds complicated? No worries. Come and ask Stacy.

See you on the 15th!

http://community.intuit.com/events/inventory-tracking-with-quickbooks-online-edition

We understand we didn’t communicate as frequently as you or we would have wanted. This issue was complicated and involved a number of Intuit applications. We did not want to share any information until we had complete confidence in it. We realize now that in times of uncertainty it is better to share updates on our progress as they occur versus waiting for complete answers, not sharing enough and leaving you feeling in the dark.

We still have unanswered questions, but we do know more and I want to share it with you.

We had an accidental power failure that brought both our primary and secondary power units down. The process of restoring power caused a hardware system failure. We still don’t know the root cause of that. To ensure full integrity across all our impacted applications, we immediately initiated a restoration process using our back up data. We also had to ensure proper sequencing in a way where both individual applications and our own enterprise applications that they rely on are restored in the most reliable and secure way before bringing them back on line. This took more time than anyone would like, but it was the safest most reliable course of action.

We will continue to look into both the root cause of the failure as well as our response so that we learn from this and get better. We appreciate your patience in what has been, understandably, a very frustrating experience.

Ginny Lee
Chief Information Officer
Intuit Inc.

We’ve restored service to almost all the Intuit customer websites affected by this week’s outage.  The disruption occurred during a routine maintenance procedure Tuesday evening.  An accidental but severe power failure during that procedure affected our primary and backup systems, taking a number of Intuit’s websites and services offline.

We continue to look into the root of the problem to prevent a recurrence.

Why did it take so long?

We understand your frustration and are deeply sorry it took so long . We worked to restore our sites and services as quickly as possible while bringing services back in the safest, most reliable way for our customers.  We understand the important role our services play in your Business And we take that responsibility very seriously.

We know you expect more from us, and we continue to look into the cause of the problem so that we can learn from this outage and prevent it from happening again.

Why didn’t you have backup?

We did. Unfortunately it too was impacted by the severe nature of the power outage. We’re still looking into this so we can prevent this in the future. As we learn more about what happened we will share it.

Was my data affected?

We have no evidence of a security breach or attack on our servers. And it this time, we do not believe there was any damage or loss to customer data.

What are you doing to compensate customers for business losses?

This outage has impacted your business and for that we genuinely apologize. In order for us to process any refunds…you’ll want to contact our trained support team.  The only way we can help process these is through this support channel. Just log into the product and  choose the way you want to contact support (call, schedule a call back, etc).

Again, the team at QuickBooks Online and the Intuit team apologize for the impact this has had on your business.

I deeply apologize for the pain we have caused those of you affected by this week’s outage. We hold ourselves to the highest standards in dependability and customer service, and over the past two days, we have failed to live up to those expectations.

My leaders and I have spoken to a number of you and there is simply no excuse for having such a negative impact on you.

It is our priority to work with those of you who are affected and, where we can, make things right. We have all-hands on deck to help you resolve the issues caused by this outage.

I want to share with you what we know at this time about what happened. The disruption occurred during a routine maintenance procedure.  An accidental but severe power failure during that procedure affected our primary and backup systems, taking a number of Intuit’s websites and services offline.

We worked to restore our sites and services as quickly as possible while bringing services back in the safest, most reliable way. We understand your frustration and are sorry it took so long. We understand the important role our services play in your business and life. And we take that responsibility very seriously.

I also want to share that we have no evidence of a security breach or attack on our servers. And at this time, we do not believe there was any damage or loss to customer data.

At this stage, we have teams monitoring the performance of applications and further investigating the cause of the problem so that we can learn from this outage and prevent it from happening again.

I want to thank you for your business and your patience. We will work our hardest to earn back your trust.

Thank you,

Brad

President & CEO

Intuit, Inc.