To launch a brand-new company in an entrepreneurial day and age means to set the stage for financial freedom and a thriving career as a business owner. It also means to take on the cumbersome challenge of running and growing a company in a competitive field.
Nowadays, there isn’t an industry or a niche in the world that isn’t rife with competition. Some of which aren’t much of a threat, but some of which can make it almost impossible for new brands to get ahead – at least not without adequate funding.
If your goal is to first launch a local business and one day take your venture into international waters, then you need to ensure a steady influx of cash to fuel all of your crucial processes. This includes business development and sales, marketing and PR, HR and talent acquisition, and of course, innovation. This is why today we are talking about some of the best tips that will help you overcome your funding challenges and pave the road to success.
Ascertain your funding needs
First and foremost, you need to determine the amount of capital you actually need in order to make your business idea a viable one in the long term. Depending on the industry and your business model, you can expect the initial capital investment to range between a low figure of around $3,000 for microbusinesses, and upwards of $5,000 for home-based ventures. Naturally, this figure will rise dramatically if you’re looking to get into the IT industry, and other highly-competitive fields.
The important thing is to determine the amount of investment capital needed, but also the amount of cash flow necessary to keep the business afloat during those crucial first months after launch. You should also allocate an emergency fund of around 10% of the capital investment. You need to understand and prepare for the costs of your running your new business and combine all of these expenses into a comprehensive budget forecast.
Try your luck with crowdfunding
Before you start looking into angel investors and other funding options that might want to obtain a key stake in your business, consider funding your startup through public donations. If your business idea is innovative enough, and if it has a unique selling point and value proposition that you think people will truly care about, then crowdfunding just might work for you. That said, understand that to launch a successful crowdfunding campaign, you will need to invest time, money, and creative effort.
Crowdfunding is all about dazzling your target demographic with valuable information and captivating storytelling, as you need to get your message across in an engaging way that will inspire people to take action. Your campaign needs to have compelling images, videos, and written content that will portray the vision of your brand in the best possible way, and make it stand out from a crowd of other soon-to-be companies on the platform.
Don’t put your own money on the line
Probably one of the biggest mistakes that aspiring entrepreneurs make is that they put their own money on the line, fund their business out of their own pocket, and even worse, reinvest their salaries into their business during those first few months after launch. While it is true that it will be some time before you’re able to take out a paycheck for yourself, that doesn’t mean that you should risk your own livelihood or jeopardize your quality of life.
Typically, you’ll be able to get more favorable terms on a personal loan that you can use to fund your living costs while you’re getting your startup off the ground, and paying your employees for their hard work, which is imperative if you are to keep top talent at your side. Once you start making a profit, you can start repaying your loan without putting any additional financial strain on your company.
Create a scalable business model
Scalability is one of the pillars of a successful business model, especially nowadays when it’s easier than ever before to grow your business beyond your country’s borders. However, this doesn’t mean that this is not a costly undertaking, which is why you need to ensure scalability for your startup by showing the potential to increase revenue over time without wasting financial resources. Yes, you will need to constantly reinvest in your business, but cutting costs wherever you can while improving efficiency and output will allow you to grow with minimal risk.
Look for angel investors and venture capitalists
Finally, and especially if you’re launching a startup in an industry with a high average investment capital, consider reaching out to angel investors or venture capitalists. The former will typically deal with smaller business ventures, and will not invest more than one million dollars at a time.
The latter will typically deal in larger investments, upwards of two million dollars, but the important thing to remember is that both parties will ask for a controlling share in your company, meaning that they will have a say in how you run your company. Choose your investors wisely, and make a deal to buy back their share of the company once you make it big.
Wrapping up
Nowadays, it might seem like it is easier than ever before to launch a business, but the benefits that technology and modern business solutions bring to the table don’t negate the fact that funding a startup is still an arduous task. Be sure to use these tips to overcome your funding challenges and set your business up for long-term success in your niche.
