Starting a Business? Issues You've Likely Overlooked
Staying focused on what your business truly needs is essential to a successful ramp-up, especially when it comes to funding. In a recent hangout, we chatted with experts in banking, non-profits and venture capital to advise you on common mistakes startups make and how you can avoid them. Here’s what they had to say:
Understand all your options. Revenue is the cheapest form of funding, followed by debt and equity, according to Seth Levine, managing director at venture capital firm Foundry Group. Our experts suggest you know how each option could impact your business and what you’d gain and lose.
Don’t limit yourself. These days, a slew of entrepreneurs want to build the type of company that could be acquired by Google. That route might not work for your business or your customers. Levine reminds entrepreneurs to think beyond the tech sector when building their business. “We think about entrepreneurship sometimes too narrowly,” he says. “The vast majority of businesses don’t fall into the tech sector.”
Think small. Remember that some social investors focus on investments of $5,000 or even $10,000, says Wole Coaxum, a business banking executive at Chase. These amounts might not make headlines, but will allow you to retain more flexibility. Small infusions can have a big impact on fledgling businesses.
Look for grants. Grants can offer no-strings attached money, says Levine, whether from governments or non-profits. As Levine says, it’s “not a bad way to fund your startup.”
Know why you need the money. Don’t think about funding as a security guarantee or a failsafe so you can quit your job. Our experts remind you to think on the cheap. For instance, as Coaxum says, you might not need the Rolls Royce of prototypes to get your business off the ground. Don’t overthink the risk you’re taking. These days, “the average cost to start a business is less than that to buy a new car,” says Marc Nager, CEO of entrepreneurship nonprofit UpGlobal.
This article is editorial content and reflects the personal views and opinions of the participants.