How you choose to fund your company will determine its prospects and chances of success, and there are some fantastic benefits to self-funding. Starting a business with very little financial resource focuses entrepreneurs on making money over spending it, and fosters a great deal of creative thinking.
However, lots of entrepreneurs take self-funding too far, reluctant to reach out to investors for fear of releasing equity in their business and losing control over decision-making.
While holding back from broader investment has some advantages, it has substantial disadvantages too.
For many entrepreneurs I’ve coached over the years, funding from outside investors is without doubt one of the fundamental keys to their success.
Why? Well, often, in the early stages of their set-up, entrepreneurs want to take control of as many aspects of their business as possible, becoming heavily involved in lots of things that they’re not necessarily good at.
At best, this means they have a handle on how their business is progressing and all the decisions related to it, including where to apply their efforts and energies.
At worst, it can lead to burnout. It can kill enthusiasm for their enterprise, slow their growth, and reduce their freedom to work on the business in the way they’d like.
Investment can free up entrepreneurs to focus on what they’re good at. It allows them to hire trustworthy people to bring in new skills and ideas, and to grow the business more rapidly once they’re clear on the model and the direction they’re going in. And, of course, funding can also open the door to mentorship, credibility and solid advice from investors, as well as access to their networks of contacts.
However, lots of entrepreneurs take self-funding too far, reluctant to reach out to investors for fear of releasing equity in their business and losing control over decision-making.
While holding back from broader investment has some advantages, it has substantial disadvantages too.
For many entrepreneurs I’ve coached over the years, funding from outside investors is without doubt one of the fundamental keys to their success.
Why? Well, often, in the early stages of their set-up, entrepreneurs want to take control of as many aspects of their business as possible, becoming heavily involved in lots of things that they’re not necessarily good at.
At best, this means they have a handle on how their business is progressing and all the decisions related to it, including where to apply their efforts and energies.
At worst, it can lead to burnout. It can kill enthusiasm for their enterprise, slow their growth, and reduce their freedom to work on the business in the way they’d like.
Investment can free up entrepreneurs to focus on what they’re good at. It allows them to hire trustworthy people to bring in new skills and ideas, and to grow the business more rapidly once they’re clear on the model and the direction they’re going in. And, of course, funding can also open the door to mentorship, credibility and solid advice from investors, as well as access to their networks of contacts.
I’ve written before on the huge benefits of self-funding and when it can be the right approach for a business, based on various factors such as available cash and resources, market conditions and expected rate of growth.
However, as soon as you have proof of concept, it’s wise to consider whether going for funding right away may be the better option for your business. Raising capital with a purpose can not only transform the way you work day-to-day, but it can provide an essential stepping stone to the growth and success you really want.
However, as soon as you have proof of concept, it’s wise to consider whether going for funding right away may be the better option for your business. Raising capital with a purpose can not only transform the way you work day-to-day, but it can provide an essential stepping stone to the growth and success you really want.
Find out the best ways to raise investment for your business at my next event How to Attract the Right Investors on Thursday, 9th November, 10am-2pm, at the British Library's Business & IP Centre, with guest speaker and Business Angel, Colin Coghlan. Other dates are available. Connect on LinkedIn, Twitter or Facebook for special offers.
RSS Feed