Raising startup funding is one of the biggest challenges for any new business. Banks are often reluctant to make loans to start-ups, while public and private grants are usually restricted to nonprofit organizations. Fortunately, it doesn't always take a lot of money to start a new business. "Inc." magazine reports that some small businesses have become million-dollar companies after raising just $1,000 in startup capital. Even a thousand dollars in donations could be enough to help a company generate some sales and attract the attention of other investors.

Create a business plan. Prepare a written document that shows the potential of your company. A good business plan reflecting a sound and detailed strategy could impress a number of potential donors.

Present your plan to friends and family. Ask for donations and emphasize that no donation is too small. One family member might cover the cost of your business cards. Another may offer to pay your Internet connection for a year. Another may underwrite the cost of a three-month marketing campaign. It all adds up.

Expand your network to find other donors. Sign up at online sites matching entrepreneurs and philanthropists looking to back a cause. For example, the Kickstarter website (see Resources), attracts donors looking to give money to small businesses in certain creative businesses, such as technology, design, music and art. Donors give money because they believe in the project, and the money is purely a donation – not a loan or an equity investment.