The Funding Ready Start-up
A business owner funded in Shark Tank unpacks how you can become funding fit.
Last year we were fortunate enough to pitch our start-up, Plan My Wedding, to the Sharks in South Africa's inaugural Shark Tank. Even more exciting, we were one of the few businesses that secured an investment.
What the entire experience has taught us is that as start-ups, we place too much emphasis on the importance of funding. Attracting an investor is exciting, and the growth that funding can bring is positive for the business if used correctly, but the reason we received funding in the first place is because we were already building a sustainable business. That's the kind of business investors are attracted to.
Too many start-ups focus on finding funding to the detriment of actually building and bootstrapping their start-ups.
Here's the reality: The way to get funded is to get started. Too many entrepreneurs spend their time pitching investors, planning and refining their business plan, rather than building a business that investors want to invest in.
Investors can bring immense value to your business, both in funding and mentorship. But, what they are really interested in is a return on their investment. Your investor won't have the same amount of passion, drive and willingness to succeed as you do in the business you've created. That's your job. They also might not be able to give you the time you need, at the time you need it.
As the entrepreneur, it's up to you to take action on what you know or need to know in order to work on your business. And here's the key that so many start-ups miss: The ability to do that is one of the core reasons an investor will invest in you in the first place.
Before we secured our spot on Shark Tank, we were already pulling together the resources we could get our hands on. We were living the business, bootstrapping it and hustling every step of the way. We didn't view finding an investor as the be-all and end-all of our business. We were making it happen. Of course, finance is important — even necessary — to business growth. But there are many ways to grow revenues; funding is just one option.
We've also learnt that if you really want to secure funding, you need to tick all these boxes anyway. Investors back entrepreneurs who are already out there, finding innovative ways to grow their start-ups. Here's what we've done to grow our business, and why we believe the Sharks wanted to back us.
1. Get on the journey together
Entrepreneurship is lonely, but it doesn't need to be. Find other start-ups who are on the same journey and help each other out with tips and advice in each of your areas of expertise.
Leverage each others' knowledge bases and networks. We have two great contacts who recently started their own social media companies and who constantly give us tips on how to engage with people over social media. The key point here is "learn what you can from whoever you can.'
2. Connect and join networks
Get out there and meet liked-minded people. There are various hubs and local incubators in every city (Google Start-up Grind is a great event held monthly in most cities). We constantly attend networking events that bring together seasoned entrepreneurs, speakers and the local start-up community.
These are a platform for knowledge exchange, with speakers from local incubators and venture capital firms sharing their own experiences and lessons in business planning and expansion.
This way you can combine the best in local and international pitching with live streaming of international events, training workshops and guest speakers, all aimed at keeping entrepreneurs informed and equipped with the right tools.
We tap into every free webinar or talk on a subject we're interested in that we can. We also formed a group with fellow entrepreneurs where we meet once a month and help each other talk through business challenges and connect each other with other entrepreneurs.
3. Convince people to work for you for next to nothing
You're not ready to hire a big team, but you also can't do absolutely everything alone. So what are your options? We've started leveraging our contacts and forming barter agreements. If you need extra hands, interns are a great option and this creates a platform for them to learn and grow within your business. They are often hungry to learn and prove themselves, as well as gain experience, and will go beyond the call of duty to prove this.
In the beginning, keep costs low and make progress on as little capital as you can. Keep your costs to a minimum, even if you have to use some personal funds or funds from friends and family. There are two benefits to running a lean start-up.
It allows you to bootstrap your business, and if you decide to approach investors, you can prove that you can budget and stick to your budget. Investors aren't there to pay flashy salaries and help you buy a BMW. They want to see that you can be frugal and use their cash to build the business.
4. Focus on revenue
One of our investors has a good anecdote explaining the importance of revenue: Before you can go anywhere, you need to put petrol in your car. You can worry about your speed (profits) when you hit the freeway and start gaining more momentum. In other words, create a product or service that you can start selling.
If you can't do this because you're building an expensive prototype, use your professional skills to launch a side business to support your start-up until it generates revenue.
In our business, we didn't have enough funds to complete a phase of our website. So we started focusing on other revenue avenues. For example, doing the planning of a client's wedding ourselves instead of through the site where it was done for them.
My business partner, Chelsea uses her website developer skills (which she taught herself through a free online training resource, EDX) and helps people design their websites. She offers this service to other entrepreneurs.
I'm doing coaching sessions with my certified training in NLP (Neuro-Linguistic Programming) and ASE (Authentic Self-Empowerment), where I help entrepreneurs deal with the mental side of owning their own businesses and the various self-limiting beliefs and challenges entrepreneurs face.
With these additional income streams, we finance future product improvements and development.
But be careful; you don't want to lose focus. As a start-up, consider these questions when approaching any new revenue stream: Will this ultimately distract you from your primary purpose? Can you adequately juggle multiple projects at once? Are you disciplined enough to ignore "paying work' when necessary?
5. Hustle (get busy)
This is the be-all and end-all of current entrepreneurial catch phrases, and it basically means: To proceed or work rapidly or energetically; to hustle about putting your business in order. If you need followers, likes or leads, go on any of the social media platforms and search, add and befriend those in your target market or people who you feel could be influencers.
This not only lets you see what they're up to (and what they care about), but helps them to build a mental image of you and your business, which helps you build rapport before you offer them your service. You need to be out there. You never know which contact might lead you onto bigger deals. If you don't try, you won't succeed.
6. Be an expert
Whatever field you're in, focus on becoming the expert in your field. Research your market, industry and best practice extensively. Understand your customers and their needs. Find or add key features or service offerings that will make you stand out from your competitors.
Explore ways to give your customers better value at a lower price than your competitors. Innovative technology (new entrants into the market) and services have a long, proven history of upsetting more established firms. Every day we find ways to do things faster, better and cheaper.
As start-ups, we have many advantages. We're smaller and more adaptable to change and we can adjust our strategy and focus faster than more established businesses. With Plan My Wedding, we have designed extra features and resources to our site that will guide couples through their wedding planning journey.
While some businesses in our field are directories with tools to download, we offer this and more. Ours is now a "one stop shop,' encompassing all the components of planning a wedding into a single platform. No site offers a guided process with all the extra features we can and will offer, and we've capitalised on that gap.
We also know that eventually another company will offer even more, and so we're aware that service needs to play a major part in our business and our brand. We have representatives in each area of the industry that manage and help vendors improve their businesses on our platform. This keeps us relevant and the go-to-choice for suppliers.
Pulling it all together
Don't discount the role funding can play in your business. The right investors will help you grow your business. Just don't view investment as your only growth tool. There is so much you can do, on your own. Focus on what you want, on where you want your business to be one year, five years and ten years from now. Fix it in your mind and create your own reality.
Don't pay attention to the odds. They're stacked against start-ups, and if we focused on them no-one would ever live their entrepreneurial dream. Get out there and make it happen.
And then the magic happens: Your business is fundable because all your basics are in place, and now you have the luxury of choosing whether you want that investment or not. You're no longer chasing money; you're strategically building your business.