How to fund my business
Financial resources are one of the major elements affecting the management new or old organisations; for the simple reason that currency lubricates trade 😉
Starting a project, or business is veeeeeery exciting, but it is an experience that requires serious management and sufficient funds to smooth the deployment of the related activities.
Should I raise funds ?
Thanks to movies, it is easy to think that every business need to raise funds because it is easy, fun and assure success to your company. Unfortunately, in the real life it’s not always the case.
The Entire Economy Is MoviePass - New york Times
It is not your money
According to J.B:Maverick, “It's impossible to determine whether lowering costs or increasing revenue is more important…A specific marketing focus may be the key to financial stability and steadily increasing profits.”
It is not your money, so you certainly should avoid end up with more debt that you can handle, or file bankruptcy without being able to repay your creditors.
How to cope?
Ask yourself 4 questions, What resources do I need? What is the total cost of those expenses? How long will it take for you to deliver on your end of the bargain? What are the requirements that I should comply with ?
Know what you really want: get organized
No need for sophisticated software, you can do it with a pen and A4 paper sheet to list your expenses and key activities. An easy way to do that is to answer the following questions :
Will I need a direct channel or physical presence? if so which surface would be ideal?
How much for a rent and bills related to rent (local taxes, water, power, cleanliness)?
Do I need to have a license?
What are the other administrative costs for the launch?
What are the recurring administrative costs during the operation or deployment of my organization?
Will I need a staff?
What would be the cost of a field study?
You can even download a budget template for more details. Now that it's done, it's time to put these expenses in a "variable expenses", "fixed expenses" and "administrative expenses" table. When done, estimate these expenses over 1 year and 3 years. This is about estimating your expenses, depending on the market situation, the costs mentioned could vary, so stay cautious and flexible.
It is done! Now look for the funding opportunities
Another sensitive step is that of the disposition of capital. There are several ways to finance your project / organization:
Own financing
The ideal option, because you keep total control and you are safe from debts or liabilities that could be more expensive than profitable.
Venture Capital
In this case, investors put a capital at your disposal in exchange for shares in your organization. A bit like if your best friend makes 100,000 available to your business and after every sale, you give him 5,000. The advantage here is that you are not indebted, but you pay the risk taken by the investor, this risk is also guaranteed by the fact that he becomes one of the owners (like you and a lot of big companies around the world). This is a guarantee for the simple reason that the investor also has a say in decision-making, it is his way of reducing the risk.
Crowfunding
A novelty thanks to the internet. Here, it's about turning to platforms where people interested in your project could send you small amounts. In general, these people do not expect compensation for the capital available, but to thank their commitment, it is good to send them a symbolic gift for example one of your products, make a public announcement of thanks.
The challenge here is that your project is not the first on the platform so it's up to you to develop a pretty glitzy communication strategy for you to reach your financial goals.
Bank
The main lender in our economies is the commercial bank. Banks make loans on fairly strict terms so take the time to study what you are offered before saying yes. Of course, you do not lose power in your organization but your commitment is to repay the loan according to schedule.
“Ndjangui”
The lack of access to the banking system makes the turret system almost vital. It acts as a micro-credit, open for loved ones. Each of the individuals can in turn borrow in the tontine, provided they repay.