Starting a new business and sustaining it for the first few years requires substantial focus, and you may need financial help. You can choose to get this help through various sources. However, it’s always best to try and self-fund your business. You will need to rake a lot of money from all angles and cut your expenses as much as you can, which can be like surviving on dry grass, proverbially speaking. However, if you can manage to survive this way for a few years, the rewards can be immensely satisfying. Foundr have written a great post on funding a startup which we have summarised below:
Self-funding Your Business
Funding your business will depend on your business costs. If you can start with the basic needs, and build slowly at a minimum cost, that’s manageable. In contrast, if it requires a large sum upfront, that’s a different matter. The latter often involves the purchase of merchandise for processing or hiring high-cost resources to operate in your business, let alone the necessary apparatus and space.
Among the most cost-effective businesses to start includes those in the IT arena. You need the basics to begin, and then you scale with accordingly. Renowned examples of this include iconic pioneers that started of garages and living rooms. A note of caution: you may establish and run an operation from your living room, but you will need funds if you want to scale quickly.
You can search for and contact angel investors. You will need to network or run independent searches for people know for investing in startup ideas. You will come across a diverse range of such investors, including those who like to take on risk disguised as potential. However, you’re more likely to land yourself an investor if your business model is proven.
Help from Friends and Family
Some people consider support from family members as the safer route, especially if they don’t need an enormous investment. You can agree on terms that may not be the norm according to the market, which can allow you flexibility for establishing and growing your business.
You can network in your local community for business funds too. Being a part of a community like a church committee or social group can help you. If you have a good name in your social circle, people will trust you more and are likelier to invest in your idea.
If your new business has a successful model, you can apply for a business loan at some financial institution or through banks. There is a standardized approach that requires documentation and proof from your end, and you can attain a loan for a specific amount based on your credit score and income.
The last thing that you want to do is share your profits, but it may be the best way to secure investment and long-term benefits. Partnering with the right person can help you take your business to higher levels. However, it would help if you handled this partnership strategically so that you maintain your independent value.
You might think of alternatives to the funding sources mentioned above, and some of these may be hybrid versions of those mentioned above. Whichever ones you choose to implement, you need to make sure you understand the entire process from beginning to end.