This is arguably the worst small business financing strategy:
Even some of the most successful small and medium sized businesses out there today had some questionable moments making a go of it in the beginning - which can sometimes last for several years.
If you have some of your own cash included in your business financing strategy, it will immediately increase your likelihood of getting other kinds of startup funding.
The more "skin" you have in the game, the more interested a lender will be in approving your loan request. Plus, most angel investors will be more impressed and eager to fund knowing you have some of your personal savings invested.
There is also something to be said about the psychological incentive of losing your own money and the motivation it creates for you to work harder to keep it.
Create Contingencies in Your Cash Flow
Whatever you estimate your working capital requirement to be, double it. Things can and will go wrong. So make sure you don't run out of funding when they do.
Use Credit Cards Wisely
Used properly, credit cards can be the cheapest form of working capital you have at your disposal. They can cover gaps in cash flow, or they can be used to fund endeavors that should result in a fast payback. But carry a large balance for a long time and the interest and payments will be way too much.
Some business credit cards provide 30-90 days of interest-free financing. If you pay off the entire balance every month, you have an extremely low cost of working capital financing.
But if you start carrying large balances without paying them down monthly, you will go from the cheapest source of working capital to one of the most expensive, and you will likely also hurt your credit rating in the process (lenders like to see your balance being less than half of your available limit).
Watch Spending Closely At Startup
One of the things you can control early on is how much you spend and what you spend it on.
This will change in time, but if you can spend wisely in the beginning you may be able to avoid a cost cutting exercise further down the line. For example, if you spend too much for an office lease early on, you may have to make the painful and expensive decision to downsize your space later.
While it's normally true that you have to spend money to make money, you can still be smart about the spending process. Be most cautious about your purchases in the beginning when funds are the scarcest. Always negotiate a better deal with vendors and delay anything expensive until you can justify it later on.
With these financing tips in mind, get out there and make those sales. Build a track record of success that you can show an investor while maintaining a positive cash flow throughout.