FINANCING YOUR STARTUP; WHAT YOU SHOULD KNOW.
Money they say is the wheel of the gospel. Just as a car needs fuel to set it in motion, businesses need money to commence. Irrespective of the nature of business, It costs money to start a business. Funding a business is one of the early decisions that every business owner makes before commencing business and during the lifetime of the business. Many businesses are still at the idea stage and continue to hope for growth because of little or no access to funds, while some are frustrated for lack of funds till the business folds up.
As a business owner, the burden of identifying your business’ financial needs lies on you. This is why it is important to analyse your business to know its financial needs as every business has its own unique needs and no one size fits all financial solutions. Knowing your business’ financial needs will guide you in making informed financial decisions.
We have seen cases of people seeking financial assistance either from family and friends, investors, financial institutions when they could have bootstrapped, managed, study the business and set the foundation of the business. For more insight, you can read our article on Demystifying Startup Funding for Entrepreneurs
Failure to do the above has put some business owners in financial webs which they could have avoided if they had taken time to study their business financial needs and understand when and when not to explore help from third parties. Some business owners have lost ownership of their business to investors, some have lost assets to financial institutions or private individuals who offered finance in exchange for assets of the business.
Proper finance management helps to stabilize your company and also prepares you ahead of a failure proof business. Financing a startup can be challenging especially where the business owner has little or no start up capital.
As a business owner, it is important you consider the following while making financial decisions for your business.
Understand your business financial needs.
Have a business plan
Understand your business strength
Critically understudy and analyse the risk of each financial decision you are taking, don’t rush into making financial decision
Work out the terms of relationship between your business and any third party advancing money or investing in your business. Ask questions and don't look desperate.
Engage professionals and seek counsel before accepting any offer to fund your business.