Being an entrepreneur, starting a successful business is the end goal for many people nowadays. And unsurprisingly so. Starting your own company can be one of the most rewarding and interesting opportunities you will ever have. But like all other good things, entrepreneurship doesn’t come easy.
A lot of stress and anxiety comes with being an entrepreneur as you are the one responsible for the bottom line. Which is reasonable knowing that 90% of startups around the world – fail! Getting your business funded especially is not an easy task. Building a business requires a lot of effort, planning and money. You can’t make money without spending it first.
Of course, there are businesses built on little or even no investment. But not everyone wants to go down that path as, in that case, you will need to have and use a lot of resources. That’s why most startups look for funding.
But what if you don’t have the funding you need? What do you do to set your business up for success? That’s what we will discuss today.
Your path to create a growing business before seeking external funding –
Every great startup begins with an idea. You have a wonderful business idea. That’s a great start. Now it’s time to sharpen it.
No investor will want to give you their money unless you have something to show them. You have to convince them that your business idea is viable. Which means, before doing anything else, you need to be sure what you want to do and how that will make you money. To do so, put your idea on paper and refine it until you think it’s perfect.
Once you have poured your heart and soul into your idea, you might want to get a few more pairs of eyes on your plan. The more experienced the eyes, the better. Show up in networking events. Talk to everyone about your ideas. You will be surprised how many people are ready to provide advice – even for free.
Entrepreneurs have often found investors and resources by talking to people and asking for advice. In fact, the co-founder of Vidyard, Michael Litt has never made a formal pitch in his life. All the funding he received came from asking for suggestions and building relationships.
Knowing who your potential customers are is one of the most important steps for a successful business. A right idea can be ruined if it’s not delivered in the right way.
Which demographic of people are the potential customers for your product or service? How old are they? Where do they live? What do they eat for breakfast? Be as detailed and specific as possible.
How to gather all this information? First of all, gather data directly from your target market. This can be done by creating surveys, testing focus groups, interviewing people, using Google analytics and creating social media polls.
You can also look for secondary data in some other sources like universities, industry associations, government surveys, online business databases and business development agencies.
A minimum viable product or MVP is the most basic version of your product created with the least possible effort and resources. It’s just functional enough to satisfy your initial users. Think of it as a test project for your business. The idea is to create something with little or no investment and put it out in the world on a very small scale.
An MVP will give you ideas about what to improve and feedback from real users. If the test is successful and users are interested in your product, you can impress investors by showing it. If the test does not go as satisfactory, you can rethink and redo your product to make it better.
5. Time to write a business plan.
Writing a business plan is not as overwhelming as it sounds. There are plenty of resources out there to help you with it. And you don’t need to be too detailed in the beginning. Focus on the important parts like target market and financial plan.
When making the financial plan, don’t forget to account for the costs of running the business in its initial stages. Do you need increased inventory buildup prior to festival season? What about your experiential marketing budget? Take your time to think through every possible expense and come up with a ballpark budget. That’s the amount you will need whether from an investor or by funding it yourself.
Keep improving your product as you gain feedback from users. Your MVP will not be enough to stay competitive in the market. Even when you are looking for investors, your business should not stop following feedback from your target users and improving to fulfill market demands.
Where and how you can find investment –
They are the most likely people to help you. In fact, many entrepreneurs depend on their friends and family for the initial stage of investment, usually known as the ‘seed round’. You can offer them a stake in your business or just ask for personal loans.
Many government and non-government banks and financial institutions offer loans to small businesses at a smaller interest rate. You can also opt for a government grant if your business is eligible.
Crowdfunding is the term for funding a project by receiving small amounts of money from a large number of people. It’s usually done through the internet. Platforms like GoFundMe and Kickstarter can help you get your business funded as well as receive feedback and brand awareness.
Angel investors usually invest in companies that are in early stages and can increase their investment by 10 times. They are usually people who’d believe in you or your idea. Many angels will be in it for a stake at your company.
They usually invest 25 to 50 thousand US dollars into a startup. And they’ll do their best to make sure your business has a solid plan and is capable of growth. The positive side of finding an angel to invest in your company is that you will not only get their money but also gain access to their knowledge and expertise.
Those are the options you should pursue in the beginning. But if you need a large amount of funding and are okay with giving up some control over your business, you can pitch to venture capital firms. You can use credit cards for an instant cash option. Or you can bootstrap it.
You may not need to ask for money from anyone if you don’t want to. Many companies don’t. You can pay for the startup costs out of your pocket and once your business gains revenue, you can cycle the money back into it.
Contrary to what many people think, getting funded is not the only way to create a successful business. Money is, of course, a big contributing factor. But hard work and passion is much more important. As mentioned before, entrepreneurship can be one of the most rewarding opportunities in your life only if you are passionate about what you do.
