Looking Beyond Startup Capital

An average aspiring entrepreneur believes money (Capital) more than any other thing is required to succeed in business. If someone told me otherwise 16 years ago, I will out-rightly conclude that, such person knows nothing about doing business, but today I know better. In fact, I look beyond capital to excel.

A popular and successful entrepreneur is always convincingly argued that, starting business at this age required little startup capital compare to the industrial age as a result of technology. Yes! But the truth still remain that, no matter how small the startup capital it required to start any business, the know-how go a long way more than anything to succeed.

Don’t get me wrong, I am not disputing you need a good startup capital to excel as an entrepreneur, but at what stage do you take the issue of funding so serious is what you should take into consideration. Chances are majority startup who are desperate about capital at the beginning of their entrepreneurial journey are among the 95% that will close up in the first five (5) years as confirmed by the popular research. Out of the remaining 5%, those who raise capital when it is not ripe enough to do so will share a higher percentage among the 95% that will close shop in the next five (5) years.

One thing I have found out as an emerging entrepreneurial is that, you will be attracting funds rather than desperately asking for it if you do the needful to ensure the business keep running with the absent of reasonable capital. This also determines the level of passion you have for what you choose to live for, one of the major requirements to sustain and thrive in business.

Looking beyond startup capital at the initial stage of your entrepreneurial journey will expose you to solutions to many business challenges and opportunities than throwing money into it. It is also understandable that many business opportunities could be missed due to unavailability of the financial requirement. But availability of capital has given many startup unnecessary confidences that lead to bad deals.

An exposed entrepreneur and business adviser will be aware that, it is not all business that can be bootstrap. If that is your own scenario, I still advised you look beyond capital to consider many issues that could affect your dream of starting in the first place. Few among many issues you should consider when raising startup capital include;

1.      The Source of the Fund: An average startup entrepreneur is selfish in nature, therefore want to own everything. As a result, little preference is given to partnering with someone who can compliments financially or otherwise or raising capital from investors as equity. Rather preference is given to grants or loan.

While every sources of capital has its pros and cons, taking bank loan at the beginning will likely mere rather than make the business emanating from emotional stress of repaying the loan which can block your ability to take good business decision. Although, the loan could be a motivating factor to work tirelessly but in most cases it is negative more than positive.
2.      Sacrificing more than Necessary: Many startup has get their finger burnt regretting the bad decision they made when they are desperately in need of fund. Just because of the buzz of equity being the best source of capital for startup. They dive in without taking due diligence, giving out too much equity at the beginning that may lead to loosing control and becoming minority in the struggle they started.
3.      Don’t Underestimate the Required Capital: If you look beyond the capital, requesting less than the usual as a chance to get the fund will not help your situation. A good investor will notice that and will not give you the money. Even if you get funded, you likely will be short of capital before the business started generating reasonable income putting yourself in a worst situation.

Asking enough or even little more will but you in a better position to get funded and to have enough capital to position the business for sustainability.
4.      The Cashflow Analysis: Having a grasp about the business cash inflow and outflow is another looking beyond the startup capital you must consider. This will give you the opportunity to know how sustainable the business could be beyond external fund.

I am not in anyway against raising startup capital since I understand that many factors among which are the nature of the business, the required startup capital, experience and many more determine if and if not from the beginning. I am only advising you should be thorough in taking such decision. The decision I will not love you live to know the negative side of it.

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