Why an Employee Handbook is Necessary
Why an Employee Handbook is Necessary
August 14, 2019
Pros and cons of Virtual business
Pros and Cons of Virtual Business [Paperless Business]
August 20, 2019
Getting Startup Capital

Getting Startup Capital

Asking family for startup capital

Asking funds from family members is easy yet tricky. Easy as in if you have a family which is rich and they trust you, they will invest in your business. Tricky in the aspect that there are high chances that your business will fail and all the funds invested by the investors can be lost. This can sour your relationships with your family members for life. This can be very excruciating as you would be caught between handling your business as well as investors who are family members.

In lieu of asking your family to invest in your startup, you can take a loan from them. This has some advantages. First, your stake in the company is safeguarded and you retain control of the company. Second, the interest rate that you pay for the loan can be lower than the market rate. Third, in hard times when you are not able to repay your capital, you can ask for some time from your family and friends. It is much easier to ask time from them than a bank. You also do not have a fixed loan schedule to get worried about. If a loan from financial institutions is taken, you have a fixed repayment schedule which if not adhered to, can have drastic consequences on your business and you.
All said and done, be careful to ask your family and friends for funding. There is a reason many people say that do not involve your friends and family in business matters.

Protecting capital

Growth vs profit, cash burn, customer acquisition or conservative growth, this is the major conundrum in the minds of the startup founders. This is a question which has to be answered case to case. If your idea is scalable, you can afford to lose money to acquire customers for future growth, your investors are patient and are ready to back you and give more capital if needed, just go ahead with the idea.

On the contrary, if your investors are not that supporting, they do not agree with your vision to acquire customers for present cash burn, it is prudent to do what the investors say or give them an option to exit if you have a bigger investor.

Nonetheless, it is also not advisable to go on a spending spree with profit not even in sight. We have companies like Uber who keep raising capital, have no gone public, but still, are nowhere near profitable. Remember, any investor invests in your idea because they think there is a scope to get healthy returns on their investment regularly or a big exit.

Have a business plan

Having a business plan ready which is necessary to pitch your idea to your prospective investors. A working proof of concept of your idea on a small case is the icing on the cake. A working business model gives more confidence to investors than just one which is in theory.

The business plan should not be a copy of any other popular startup which is already working in your target industry. For example, if you will give your idea which is eerily similar to Flipkart or Amazon, or it is in their working domain, how likely are you to get funding?

A business plan should be comprehensive in nature, covering how you will set up shop, what manpower you would require, what business partnerships would be needed. Revenue projections if given should be projected with ample research. Bring industry experts to guide you. Industry experts give you advice with years of experience. Who knows, if you have an excellent idea but it cannot be just implemented? It is better in that situation to not to implement your idea.

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