I happened to read an interesting conversation between a startup CFO and CEO on startuptimes.in. Here is a thought-provoking dialogue:
CFO asks CEO: What happens if we invest in developing our people and then they leave us?
CEO: What happens if we don’t and they stay?
Well, let me make my point here. The life of an entrepreneur is a perfect balance of intense rigor, immense pressure and occasional leisure. Entrepreneurial skills should entail an ability to raise funds required to run the startup and manage finances accordingly. Only a few entrepreneurs have a mindset to change age-driven experience and subsequently raise funds innovatively. Others generally follow the conventional route. That being said, here are a few financial tips for startup companies:
Credit Card Payment
If you do not have enough finance to purchase some stuff that is required to kick-start your venture, it is suggested to use your credit card and make payment. For example, if you are working as a freelancer and what all you require is a laptop with good internet connection, just purchase a laptop and complement it with a Wi-Fi connection. Once you have a bunch of projects in your hand, pay your credit card bill. Do not use credit card to purchase any fancy equipment or expensive business trips. Use your best judgment.
Founders and Co-founders should invest their own money into the venture. Self-investing is the only way to have complete control in the early stage of the venture. If you depend on angel-investors, you have to offer some equity. Soon, you may lose your grip on your venture. ‘Your’ venture becomes somebody else’s venture. Do NOT let this happen.
Help from friends and family members
Conventional loan applications involve various types of hassles. Friends and family members are the best sources of finances. You can communicate freely with them and express your financial concerns. If they have faith in your idea, they will be ready to help you. You need not offer any equity to them. Remember, they offer moral support as well.
Suggested Read: Decoding Crowd Funding with Tulsi Khemka
This is a low risk option. Once you have a viable prototype for your creative project, you can gain the initial capital via crowdfunding. Those who have helped you in raising funds via crowdfunding will be able to provide valuable feedback on your prototype. Always receive feedback – it has a bitter taste, but has a better aftertaste. Crowdfunding positively impacts your venture. If investors see that crowds are readily investing in your venture, it is only a matter of time that investors invest some BIG money in your venture.
Suggested Read: How to Craft a Successful Crowdfunding Pitch
Business Methodology of selling your products before-hand
While it is common to sell your products once you gain the necessary traction, you have to embrace the business methodology of selling your products before-hand. You have to display the capacity of selling your products prior to the scheduled time and raise some money for your business activities.
Well, these are some serious financial tips for today. Let me end this with a humorous quote- A million people walk into a Silicon Valley bar. Nobody buys anything. The bar is declared a huge success. Please help me credit the author, if you find the source. And yes, keep watching this space for insights. Cheers!