When we asked ten female business owners what the most challenging aspect of starting a business was, eight mentioned financing as a particular challenge.
We cannot deny that capital is an enterprise’s life force. To run day-to-day operations, perfect a product, and run a world-class marketing campaign, funding makes it easier; funding makes it better.
In this article, we have compiled a list of seven things we believe you should know about funding your business.
1. Start small, grow big! Aka Bootstrapping.
Making do with what you have is what bootstrapping entails. It involves starting small and reinvesting your profits in your business regularly.
Companies such as Mailchimp, Shopify, Gofundme, and Surveymonkey are examples of bootstrapped businesses that remind us that external funding is not the only way to scale your business.
Begin small, automate your processes, fine-tune your business model, and gradually expand!
2. Start with your family and friends.
We understand; it can be difficult to seek assistance from those closest to you, especially when they do not share your vision.
Get those who do and pitch to them until they, too, see the vision!
3. Partnering up helps!
Two heads, or in this case, two pockets, are better than one.
While you focus on operations, a financial partner helps you offset all of your operating costs. When looking for a partner, a shared vision is a must.
4. Do detailed market research!
This is important because it allows you to better understand the market you are entering.
It would protect your capital and prevent any pocket leaks.
5. Taking out loans is not as bad as it seems.
The word “loan” sends shivers down our spines. But it shouldn’t.
Banks, credit unions, peer-to-peer loans, and other institutions offer loans.
Choose a reputable lender with reasonable interest rates, and make sure you thoroughly read and comprehend the terms before signing the loan agreement.
6. Angel investor vs. Venture capitalist
Angel investors and venture capitalists are wealthy private investors who provide financing to small businesses with high growth potential in exchange for an equity stake.
The main distinction is that venture capitalists prefer to be involved in the business’s day-to-day operations, whereas angel investors do not.
These two investor channels are promising ways to fund your company. Choose what works best for you, then look for venture capitalists or angel investors interested in your field and contact them.
Remember to perfect your business pitch!
7. Look out for government funds or funding competitions
The government is not always out to get us.
Several government agencies have been established to assist small and medium-sized businesses with funding needed to scale.
Look for those whose requirements you meet, prepare all necessary documents, and apply!
Funding competitions are also held to assist businesses. They could be administered by the government or by private organizations.
When you hear about one, prepare your proposal in terms of the problem you’re trying to solve and give it your all!