Most entrepreneurs would inform you that one of the tough aspects of starting a business is generating and managing the financial resources for the business whilst it grows into a substantial company.
Most new entrepreneurs or start-ups usually don’t have enough capital to finance the business to its potential, due to this entrepreneurs tend to seek ways that would help generate finance for the business.
Below are a few points that could be considered by an entrepreneur to generate capital for the business without making an investment pitch that may lead to giving up equity at an early stage. The alternative ways that entrepreneurs or start-ups can consider to raise money are;
Self Funding – An entrepreneur may have a current job in which you work and earn some money. Some of the funds in the savings or retirement account could be used to fund the business. This may seem risky as the business is yet to prove its profitability but an entrepreneur should not expect to receive money from investors without investing some personal funds in the business.
Most investors would want to see that the founders are confident about what they do by investing their own cash into the business.
Boot Strapping – This is all about starting up a business with minimal financial resource. For example, utilizing free social media channels or tools for adverts and marketing instead of spending money on television or magazine adverts; co-habit with another company or move to a business incubator to save office cost.
Through this method you are required to reduce your spending habit and manage every amount of money earned in a cost effective way.
The more you are able to bootstrap your resources at the start-up phase, the more it would be easier for you to raise and manage capital as the company expands.
Strategic Partnership – There is nothing more amazing than negotiating and concluding great partnerships that would benefit your business to save cost at the start-up phase.
Business to Business partnerships can help provide solutions to the problems that exist in the market. For example; if you manufacture a product, you could partner with stores that sale similar products in your industry; this partnership would help increase your market visibility, save you some marketing cost and both parties would benefit from the product sale.
Capital Requirements as Milestones – If not well managed, having excess capital at the early stage of a start-up is just as bad as having little to no capital. Matching financial requirements and expenditure to achievable milestones would keep the company afloat and minimize the chances of overspending on irrelevant things and giving up equity in the company before it is actually required to do so.