Attracting the funding necessary to get your new business enterprise off the ground is a difficult task that demands knowledge and dedication. These professional tips will give you an accelerated start and point you towards finding a funding approach that works for you.
A lot of factors have to be aligned for a new business to prosper, with each industry having its own advantages and limitations. However, the need to attract financing is a common theme across the entire business spectrum, and it goes a long way towards determining which companies swim and which sink. In some cases, a parent company or another entity will provide the seed funding, but numerous business owners aren’t so fortunate to have stable backing when they are just starting out.
While securing enough money for product development and promotion remains a key task throughout company’s existence, startups are particularly vulnerable to cash shortages and must work towards unlocking new funding sources very diligently. Here are some practical ideas that could be of assistance in this process, regardless in which country/business line you company is active:
Decide on your primary products and markets
If your access to liquid assets is limited, it would be wise to be very selective about the programs you intend to run during the early period of business operations. Launching too many products at once and promptly failing to support them with adequate marketing efforts is likely to drain your budget in a hurry, forcing you to rely on external investment too much. Focusing on a single product line that has the greatest potential for producing a quick turnaround is a much safer strategy for startups with thinner financial backing, at least until a steady source of funding can be identified. It is far easier to expand a sustainable business model to reach new markets and include additional products than it is to maintain too large system with too little cash at hand.
Fundraise through multiple channels
Many businesses apply for a few loans at local banks and get discouraged if they get rejected. There is no reason to stop at the first funding possibility when you can easily gain access to a massive amount of online financing tools, ranging from startup incubators to micro-financing websites. Company owners also should be proactive and open-minded when it comes to fundraising, expanding the search to channels that are not considered orthodox, such as home mortgages or loans from friends. Securing early cash infusion can mean the difference between launching a successful startup and going back to square one after just a few months. That should be sufficient motivation to look beyond the obvious lending sources and perhaps dig a little deeper into the world of digital funding platforms – which may offer better conditions for startups than traditional banks do.
Formulate a winning sales strategy
Customers are the most significant source of funds for any company, particularly for those looking to survive their first year in the market. Most small companies are obsessed with improving their expertise, sometimes forgetting to follow up with a comprehensive sales strategy that would guarantee faster return on investment. This aspect of the business must be carefully planned from the beginning, ensuring that money will start coming in soon after the first products are launched. If the original series is received well, it might be possible to raise some capital through pre-sales of upgraded models and redirect a portion of this money into capacity building. Steady revenue streams can also send a strong message to potential investors and provide small business owners with some leverage for negotiations.
Reach out to small investors
A few lucky companies manage to get a large round of R&D financing from an angel investor or a big multinational fund, although this is an exception rather than the rule. Most new businesses struggle to gain the attention of big players in the financial market and must look for less glamorous alternatives. If you happen to know a few successful people, you might want to have a private chat with them and present your business idea over lunch. Better still, you can use the local business register and other sources to identify the most successful companies in the immediate area and pitch some of them the project they might tangentially benefit from. Since the invested sum doesn’t have to be huge, some of the contacted businessmen might recognize a chance to buy in while the shares are affordable.
Manage your cash flow efficiently
While any company in the world would prefer to have unlimited budget, the reality is that even the largest systems are wary of excessive costs. Cash flow management is hence an essential skill that can save the day when you are juggling between late incoming payments and a pile of invoices that are due to be paid out soon. Cutting unnecessary weight is essential, but not at the expense of product quality or customer experience. Savings must be achieved through increased efficiency and improved procedures, not reduced demands, and this takes a special kind of manager to do. Saved funds can be used to hire additional workers, introduce new products and services, or step up the marketing campaign, directly leading to faster growth of the enterprise.
Make smart investments and reap great benefits
Finally, the best way would be to identify a funding source known to support small and medium business and try to establish a long-term partnership with such a company. Perhaps investment banks and mutual funds are too cautions to pour resources into unproven projects, but there are companies that can teach you how to build up your own capital by making smart investments characterized by very high ROI. Through the method known as Fractional Share Ownership, you can own A-list stocks and periodically collect dividends – or sell for a profit and transfer the cash into your primary business. The cycle can be repeated, with yields increasing over time until your finances are completely stabilized.