Studies reveal that lack of funding is a significant reason why more than 95% of new businesses fail every year. For any business, money is the bloodline. For executing the idea you have in your mind, revenue generation plays an important role, requiring the fuel called capital. At every stage of the business, the owner needs finance to bring together different organizational aspects. Moreover, the realization of far-sighted goals is unimaginable without a smooth flow of money. Depending upon the type and nature of the business, the requirement of funding gets assessed. Once the realization of funding gets accomplished, you have to look for different avenues that will help you to make finances available.
In this regard, Eric J Dalius puts forward specific essential funding tips for novice business organizations. These funding options are applicable for business organizations worldwide, irrespective of their resources and location. Moreover, each point needs further evaluation before its final implementation to meet each business venture’s needs and requirements.
The different steps that will help you to grab fund for your business organizations
Bootstrapping the start-up venture: bootstrapping is also known as self-funding, an effective way of financing start-ups, particularly at the initial stage of the business. For new business entrepreneurs, the trouble of getting funds is quite evident. Moreover, they also lack plans and strategies, which are essential for potential success. In this situation, investing on your own becomes the only option available to them. Apart from deriving support from your savings, they may also get contributions from friends and family members.
It is an easy way of raising business funds as it involves fewer formalities and less raising costs. In addition to this, both family and friends are quite flexible with interest rates. Bootstrapping or self-funding is the first option for funding as it has various advantages. When you invest your money in your business, you get a complete hold of the organization. In addition to this, it positively impacts future investors who see this as a good point. However, it is a suitable option only in case of initial requirement for funding is minimum. For business options that require money from the first day in colossal proportion, bootstrapping is not an option.
Crowdfunding: one of the recent ways of funding new start-ups is crowdfunding, which has gained increased popularity. It is a process of making contributions or loans, or investments from many individuals simultaneously. The entrepreneur puts up a detailed description of their business on various crowdfunding platforms where they mention the plans, goals, and funding requirements with their reasons. The consumers get detailed information about the organization and thereby provide money if they like the idea. Any individual may contribute cash to help the business in which they have trust.
Moreover, crowdfunding has the benefit of generating interests and thereby helping in marketing the products with financing. It cuts out brokers and professional investors’ roles by providing funds directly into ordinary people’s hands. However, you must be cautious that crowdfunding is a competitive area for earning funds, which requires a strong foundation for tackling different situations. As an entrepreneur, it is your responsibility to work on the online platform with every possible effort to create a positive impact on the investors.
Angel investment: Angel investors have surplus cash and are interested in investing in upcoming start-ups. Moreover, they work in small groups of networks for collectively screening the proposal before investing. They may also offer advice or mentoring along with the capital. Many prominent companies have received investors’ findings that emerge as reliable sources of funding at every stage of business growth. These Angel investors prefer to take more risk while investing for higher returns.
Venture capital: Capitals are funding options available for companies with massive potential as these capitals professionally manage funds. These organizations invest in business against equity and may exit when there is an acquisition or an IPO. Venture capitals provide mentorship, expertise and act as a litmus test regarding the organization’s direction and thereby evaluate the venture from the point of view of scalability and sustainability. According to EJ Dalius, this investment option may be appropriate for small and medium business organizations beyond the start-up phase and have already started generating revenues. It is an option for fast-growing companies that provide an exit strategy and draw millions of funds for their organization.
Accelerators and business incubators: for start-up ventures, accelerators, and business incubators are a reliable funding option. You may find it almost everywhere, thereby assisting hundreds of start-up business organizations every year. Keep in mind that incubators and accelerators are not synonymous.
Incubators perform the role of a parent for the organization who helps nurture the organization by providing training and shelter tools. Accelerators, on the other hand, play an essential role in running the organization. Both the programs run for four to six months and require time commitments from business owners. By utilizing this platform, you will establish good communication with investors, commenter, and other fellow start-ups.
Take a look at some recent funding options:
The process of raising funds by winning a contest: one of the recent innovations in funding is the emergence of games, which has tremendously helped enhance fundraising opportunities. It also motivates entrepreneurs with creative ideas to set up business organizations. In this regard, Eric Dalius says that the business owner must either build a product or prepare a business strategy. By winning the game, they also get massive media coverage along with funding. The entrepreneur has to make every possible effort to make the project stand out amidst the fierce competition. The plan must be comprehensive to convince the jury that the idea is worth investing.
Bank loans: all the bank loans are an age-old option open to business owners; there are new kinds of business loans available for them. Primarily there are two kinds of finances for business organizations. The first one being a capital loan and the other is funding.
Starting any business organization is not an easy task and requires a proper amalgamation of resources and funds. There are various options for generating funds. The points discussed above may help you to get a proper understanding of how to grab money for your business organization. Any responsible business owner must be clear about their financial requirements and reliable avenues for meeting these requirements.