3 WAYS TO GENERATE FUNDS FOR YOUR START-UP
It is common for new businesses to fail in their first year. One of the most common reasons is a lack of funding. Every business needs money to survive. Capital is the fuel that powers the long but thrilling journey from idea to revenue-generating business. Entrepreneurs often ask themselves — How do I finance my start-up at every stage of their business?
In my podcast with Anupam Mittal, one of the Sharks in Shark Tank India, we talked about a start-up founder’s qualities that attract investors. We discussed that even though every entrepreneur works hard, why do only a few climb the ladder of success.
We also talked about methods that can help a start-up founder generate funds:
Depending on the type and nature of your business, you might require funding at different times. As soon as you realize you need to raise funds, here are some other funding sources.
Following are some ways which can help you find a funding source:
1. Be Passionate About Your Idea
Founders of start-ups usually have a passion for their creations. They believe in the product or service they hope to offer. They believe the new product will improve existing products or will be able to solve a problem better than the current product-in other words. But how passionate are they? Are they willing to hear “no” over and over and over again?
In the beginning, you will have to raise your capital as a founder. You can do this by using your savings, borrowing money from others, or borrowing from friends and family. However, you must be prepared to demonstrate that you believe enough in the product/service to invest your own money. It will be your responsibility to get the business off the ground.
2. Take Help From Friends & Family
You have a safety net in your family and friends. They are likely to believe in your abilities and care about your dreams. Consider reaching out to your extended family, friends, and acquaintances to see if they help you with your start-up capital. Tell them about your venture and your passion for it. Communicate effectively.
From your friends and family, you can quickly get a low-interest loan or even a loan that is interest-free. In the same way, as bootstrapping, this funding method does not require documents. However, it is possible to lose your friendship if the venture doesn’t go as planned. Tread carefully.
3. Pick Your Team
Most start-ups have little or no staff as a cost-saving measure — usually just one or two founders. The issue is not about whether a business has one or ten employees, but whether it has sufficient vital employees to cover its most important areas. If you develop the subsequent use of blockchain technology, do you have a blockchain expert on your staff? You must have an expert in the technology or market you are entering.
Another area is operating control. Investors want to know that you or your staff have developed policies and procedures to control the business and ensure their investment is not wasted. Your business has to have moved beyond the “fake it before you make it” phase or investors will not have confidence that your company is “a real business.”
You need a strategic plan and resources to grow, hire a team, build a product, or scale and enter new markets. To thrive and grow, you have to find funding for the start-up.
Every route isn’t suitable for every start-up. Before making a final decision, it is imperative to conduct an in-depth study and objective analysis. Furthermore, avenues differ invariably according to the stage of a start-up. It would be best not to rely on trial and error when looking for start-up funding for your venture. Make an informed decision.
Listen to the full episode here.