Any entrepreneur will tell you that the process of raising the initial capital to get a business idea off the ground can be a challenge. No matter how exciting or obviously viable a business plan may seem to the person who has conceived it, the fact of the matter is that we live in a highly competitive world and finding funding needs to be seen in the light of this as well. Fortunately, contemporary startup culture makes it possible to approach this issue in many different ways, both traditional and innovative.
One of the ways in which human intelligence makes us different to other forms of life is our ability to imagine something completely new and create it. In fact, I believe that the reason why even more people do not have ideas for business ventures, than we currently observe, says something about our education system rather than human nature. That, however, is a topic for another day. Despite this ability to have ideas and to act on them, the great majority of entrepreneurs are not able to bring their vision to life. Several factors can act as an obstacle to entrepreneurship, but one of the most common is lack of funding. The very first challenge to the viability of a business venture is the capital that can be invested in it to get it started.
- Planning and Preparation – Put your best foot forward.
First and foremost, it is important to understand that even the most brilliant of ideas will only attract the commitment of others if it is well explained and presented. Every step of a business venture is affected by the previous one, in very basic and dramatic ways. The better and more organized each step in the process, the fewer the challenges faced in the next. Whatever the method of raising funds a new business venture uses, the business plan should be one that conveys the strengths and challenges of the model as well and as rationally as possible. This is actually not only crucial to attracting capital to the venture, it is also very useful in making sure that the entrepreneur themselves has considered all the aspects of the project in detail.
Once the planning aspects of the venture have been well executed, it is also critical that these are presented in a fashion that can be easily understood and that the appropriate details are conveyed properly. This may seem like a very obvious thing to address but it is surprising how often all the facets of a business idea are not considered thoroughly enough or not conveyed properly. Once we are convinced of an idea, it is only natural to be enthusiastic about it. In fact this is an important trait for an entrepreneur to possess. However, this enthusiasm should not result in missing the obvious. Optimism is one of the great allies of the entrepreneur but overconfidence is not. Apart from reducing the negatives that can be anticipated, this is also the responsible thing to do when trying to convince a third party that the venture is worth their participation or backing.
- Leveraging Your Options – Exploring avenues in a world of opportunity.
Let us now consider what options are available to the entrepreneur, in raising funds for their venture, in today’s world. The contemporary business climate is the process of redefining the way things get done. For the most part, this is a consequence of the many new technologies that are changing the way that virtually every existing industry conducts its operations. This presents both opportunities and challenges for the entrepreneur. A competitive environment is the fundamental challenge that presents itself. The vast numbers of technological innovations I have just mentioned are generating secondary innovations and changes in strategy. Naturally, this means that an increasing variety of new business ideas and ventures are in the market trying to compete for the same pool of funds as you. The opportunities, on the other hand, also flow from this same new ecosystem. We are living in an era in which change is the only constant, even more so than has been usual in the past.
The positive aspect of this, for an entrepreneur with a business idea, is the startup culture that has developed in support of new innovations. Whether it is banks, venture capitalists or crowdfunding platforms, investors are more receptive to ideas than perhaps ever before. In this context, what I had previously noted about presenting your idea in a way that is clear and convincing becomes even more important. Standing out among competing ideas can be challenging but giving yourself the best chance to do so is a non-negotiable first step in the right direction.
- Well Begun is Half Done – Limit your liabilities as long as possible.
Finally, let’s get to the nitty-gritty of the actual financing process. In my opinion, one of the most desirable ways in which the funding of a venture can be empowered is by having a decent working capital available from one’s own savings first. I am not advocating the self-financing of the entire venture, however, it is a great help to have the available capital to be able to do several of the initial steps without having to rely on external funds. These initial steps can include things like prototyping, getting professional help to develop a business plan and even presenting a working model of the basic idea on social media platforms.
The fact of the matter is that most of us respond to something we can see in action and we are also far more likely to support someone who has demonstrated the ability to develop their idea, to at least a little extent. Getting people, whether individuals or institutions, invested in your idea as early as possible is another great idea. This could be achieved by going directly to end consumers and demonstrating an enthusiasm for the product or service.
Another possible avenue is to attract the attention of an existing business or organization whose processes or products stand to gain from the innovation you are offering. Early adopters are one of the most valuable assets for any business venture and demonstrating a market that is interested in your solution can transform the reaction you get from potential investors. Entrepreneurs often make the mistake of assuming that sales is a function that only comes into play once their product or service is ready to be offered to the market. This is not really true at all. Often one of the most crucial roles that a good professional sales team can play is to sell the idea itself, while it is being incubated. While this initial phase of the business is underway it is, of course, really important to minimize overheads. The startup culture of today has also created several solutions that allow a new business to stretch its funds to get the maximum impact. Shared offices and resources are one such solution but there are many more strategies available.
- One Step at a Time – Organize the project into sequential stages with independent budgets.
An emerging entrepreneur should consider dividing their project into phases and steps that can be individual financed. It is often the case that a limited capital investment can be used to demonstrate the viability of an idea, so that subsequent phases of the venture can then attract further funding. Hiring motivated interns who are willing to participate at a lower cost to your business and negotiating outcome based deals with suppliers and other stakeholders is quite often more viable that people initially assume. Establishing lines of credit, investigating the possibility of grants and subsidies as well as seeking participation in incubation programs are all available strategies that multiply your options and create the opportunity for you to appeal to greater number of investors as you project matures.
Having squeezed out as much mileage as possible, with the minimum exposure to liabilities that you can manage, the focus then shifts on being able to sell your idea. This is where the clarity of your message, you outreach to potential marketshare and an early investment in a salesperson or team begin to really create an impact. Remember, if you don’t believe in your own vision, no one else will. It is human nature to respond to self-belief positively, but this quality has to be demonstrated by active steps rather than just words. Each step towards success presents its own unique set of challenges. However, if you have demonstrated your idea, your commitment and your business acumen to a sufficient degree, you have given your idea the best possible chance for adoption and backing. Even more importantly, the funding eco-system, like every human institution, becomes easier to understand and negotiate with, the more you interact with it.
- Believe in Yourself – Motivation is your greatest capital.
As challenging as these initial steps can sometimes seem, they are the key to the success that you are seeking. As entrepreneurs we are driven by a vision and a dream. Always remember that consistent effort and building on small goals, one after the other, is the only ‘secret’ to success. In our heart of hearts all dreamers know that what they have envisioned is not only possible but important. Building from this belief is the greatest ‘capital’ that an entrepreneur has access to. Believe in yourself and pursue your dreams with passion. I wish you all possible success in fulfilling your dream and helping to make the world a better and more innovative place.
