Entrepreneurship has never received more limelight than today. Earlier, entrepreneurship was considered only for the elite with financial backing. The impression has completely changed in the last five years and entrepreneurship is now open to anyone with an innovative idea and a good skill set. This is the reason that more and more talented entrepreneurs are trying their luck in launching new ventures.
One of the main elements that you need to run or even make a business successful is funding. Where many have great ideas to start a venture, it is unlikely that all of them have access to huge funding. Fortunately, there are methods that you can utilize to source funds for your business. In this article, we will talk about that. Let’s have a look at 5 tips and strategies that you can use to source your next venture.
1. A Proper Business Plan
Ideas are worth nothing if you do not know how to utilize them. Everyone has an idea and it is only the execution that matters at the end of the day. This is why you should always have a solid business plan to back up your idea. The business plan should answer the major questions that an investor might ask. The questions can be about your five-year growth plan, your marketing strategies, your break-even point and even about your future financial progression. A proper business plan should be able to answer all of these.
Also, when you are preparing a business plan, make sure that you are talking numbers in it. If you are only elaborating on your idea in the plan, then there is no use of it in real life. You should always back your idea with numbers and analytics.
2. Talk Numbers
Always know the numbers of your business. Be it your cost per unit or cost to acquire a single customer, you should know everything by heart. If you consider yourself bad with numbers, make sure that there is a finance or an accountant guy to help you from the very beginning. There are entrepreneurs out there who think that they are making a profit where in reality, they are actually losing money if you add up their time and other variable costs in the business. That should never happen to you.
The only thing that investors care about is the numbers and the future projections of your business. Therefore, make sure that you are strong with these points.
3. Keep it Simple
Do not go to a pitch with a grand plan of expansion within the next few months. Always try to go slow when it comes to expanding your business. All big businesses that are now successful have started with a small idea and they stayed with their small idea for a long period of time. Amazon, who is the largest online retailer today has started only with the idea of selling books online. That should be your approach too.
You should try to master one area of your business rather than spreading your wings to fast within the first year. Keep your goals simple. For example, your goal for first-year can be achieving a 20% market share within a specific segment. Make sure that your goals are measurable and not too broad. That’s another mistake that entrepreneurs make.
4. Leave The Door Open For Opportunities
If you just keep your eyes open, you will get a lot of opportunities that you have never thought of before. Startup and entrepreneurship culture is now a part of entertainment too. Previously, when you wanted to get funding for your business, your only option was to reach out to investors or to go for a bank loan. The scenarios have changed a lot with TV shows like Shark Tank from ABC. Investors are now more interested in investing in you than they were ever before. However, it is up to you at the end of the day to keep an eye out for the opportunities that might arise.
If you are confident about your idea, do not hesitate to go for every opportunity that comes in front of you. Whether it is a business competition or an investment program, you should always be the first person to apply if you need funding.
5. Equity or Loan
This is a dilemma that many entrepreneurs face in their lifetime. When you are trying to source funds for your business, should you offer equity of your company or should it be a loan with an interest rate? This is a tough decision and the choice varies based on a lot of factors. In general, you should definitely go for the loan option if you think your business can be worth a lot more than it is today.
On the other hand, if you think that you need the expertise of an investor or if you are not sure whether the business will grow or not after a certain extent, going for equity is not a bad option either. If you are going for equity, make sure that you are finalizing every piece of the deal beforehand. There can be many different forms of equity deal. It can be a simple percentage share of your company or it can also be a royalty deal with a part of the company. It is up to you and the investor to discuss and formulate a deal that works for both parties.
Whenever you are sourcing funds for a business, make sure that you are keeping the lawyers involved. Even if you do not have a regular lawyer for your business, you should definitely have one when you are sourcing funds as it will save you a lot of trouble and hassle in the future. There are expert lawyers out there who only work with entrepreneurs. Try to find one of the good ones and you will see amazing results.