Funding

Always a difficult one, do I self fund or do I borrow? That all depends on you and your circumstances! Do you have enough savings to support your daily or weekly outgoing?
Here is where I see it. Your most valuable asset is your talent, right! This is the thing you are trying to sell. So how much funding do you need to sell this talent. If it’s a physical product then of course you will need a lot of cash. If you are the product, then funding is optional. You do of course need funding for other various aspects such as marketing, daily expenses and of course a wage..

So where do we get funding from? There are basically four main places Banks, Venture Capitalists/Angels , the 2Fs and D,  and You

Banks.

Avoid, unless you have put together a business case as described in the previous blog. Banks are only interested in themselves, not your business, so lending to you should be based on a low risk investment with guaranteed return. they are not your friend and could become lead weights around you neck. If you are drowning they will be the ones holding on to the rubber ring and choosing if and when to throw out the lifeline or not.

VCs/Angels

Are you big enough yet? (You are why you reading this blog then?) In the early stages of a business that is worth nothing these guys wont invest. These guys will only do it for a quick return, so they will want to look at your business inside out. If they dont see a quick return or envision a quick return on your product its unlikely they will invest in such a fledgling company. So sorry unless you have the next answer to Facebook, then lets leave these guys for now. We will discuss them in a later blog. These guys will be better for you than the bank in certain ways but be prepared to give up some equity in return for the funding.

The 2Fs and a D

Family, Friends, Delusional.

Can be very useful to ask your family for cash to start-up a business, and if its Mum and Dad, are they going to say no to little Danny’s start-up request. But Mum and Dad might not have the capital unless they re-mortgage and you wouldn’t make them do that would you….you would…wow!!!! So how about sister and brothers, of course depending on your relationship with them, and their own cash flow, this could either strengthen it or cause fallout. My advise here is unless you know any downside of starting the business wont effect your relationship then leave family alone unless they are willing to gamble their investment with you, and of course still give you that unconditional feeling if things go wrong.

Friends are similar to family in that they may give the money but they are more likely to want something in return, such as share of the profit, equity and input. If you want to be the person on complete control of your startup then weigh up what if anything you are willing to sacrifice. Though we have not discussed money made, we will in a later blog, do you want to give away some of your hard end money, how much are you willing to give up. If you give them equity they may think they have a say in how your business works, unless they are on the same wavelength as you do you want this to happen. Friendships can be lost and for what……money? think carefully.

Delusional or whatever way you want to look at them. You may know someone in you local rugby club that is willing to say give you a few grand after hearing about your company, if these guys hardly know you but are willing to throw cash at you then they are plonkers, don’t take the money, it will only give you more pain and stress that you don’t need as believe me when they start looking for a return of sort they could give you a big headache.

SO!

So this leaves YOU. Use what funds you can afford. Paying for a web domain and a little advertising are not that expensive. start selling items in your house you don’t need. You still have the 9000 miles of Scalextrix track and 1980-90 F1 racing cars in their dozen. when was the last tie you used that…sell it!! Scalextrix is still good business. Sell other stuff you don’t need, golf clubs gathering dust, shoes you have only worn once, dresses you will never wear again (this doesn’t count for me..I am male…or maybe it does!!). Sell them on Ebay, though the costs for commission and then Paypal (also owned by Ebay) means 20% of what you sell goes to Ebay so account for only getting 4/5ths of what it was sold for. Sell on Facebook, loads of areas have local selling pages for people to offload some of their goods. Though take note people will be looking for a bargain so you might not get as much as you want for some goods. But for what ever you sell add it to your start-up capital and use some of it to fund a marketing campaign to get your name out there.

And talking of marketing as this is being read by no one……I deliberatly intended it that way because future updates will be on the use of social media and other ways and means to increase your visibility.