10 Tips by Peter DeCaprio about How to finance a startup
The journey of a thousand miles begins with a single step. The startup is not an easy task. You start from standing on the ground and walk your way up to reach the Moon. The starting point for you in that direction may be a brick wall in front of you, but there’s no reason that you would give up or stop short in the middle.
Rather, you would learn from all the obstacles and try to find a way around them. You have to stretch yourself every day, break your own boundaries and walk on each step of your journey with determination not stopping short at anything.
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The initial hardships in starting a company are always accompanied by the question: Shall I give up or continue? But instead of thinking of quitting, focus on the next step. And before you know it, you will be at the top.
Now that I have shared with you my motivational thoughts for entrepreneurs who face hardships in starting their companies; let’s discover what some good ways to finance a startup are.
Don’t wait to finish your business plan to apply for financing – Peter DeCaprio
The best mistake entrepreneurs make is taking their business plans out of the closet after they have already started a business. Remember that it makes no difference how long you took to write your business plan if it’s not executed now. All that matters right now is what you are doing with your company today.
Always consider equity funding first:
Equity funding is way better than debt funding because repayment of funds comes after getting returns from the venture whereas interest payments are made during the process of repaying the amount borrowed, increasing the chances of financial burden which may affect your new business adversely.
Seek professional advice before selling equity in your company:
Though selling stock is one of the most popular ways to get funded it is very important that you think through the process. You may not get all of what your business is worth, so get advice from someone who’s done this before. Also, get legal help before offering stock options.
Take advantage of existing resources for financing:
There are many organizations that provide free advice to startup entrepreneurs and offer training workshops to new business owners. This makes finding finances easy than ever before.
Variation in equity structure:
Make sure the investors of your company have some sort of protection mechanism in case things go wrong down the road with their investment, because when things go south people will try to point fingers at everyone else but themselves. So make sure they understand there are some risks involved, and structure the equity of your company accordingly.
Do not be afraid of sharing profits:
If you are a business owner you might understand that it makes no sense to share the profit with someone else who is not putting in their hard work and risk into the venture. However, if there’s more than one person involved then it’s better to split the profit between them as per their contribution made towards the company which will motivate them to work even harder for its sustained growth.
Research before asking banks for money:
Peter DeCaprio suggests to start by doing some research on various banks and learn about how they fund startups or small businesses so that you can determine where best to apply for such funding opportunities as per your requirements. Make sure the bank you go to is willing to give you a loan for more than your initial investment so that it can become easier to repay later.
Savor all sweet moments:
Do not forget to celebrate every small success achieved on your way towards becoming an expert entrepreneur. Every little achievement must be celebrated as it will motivate you further and keep you energized all the time which will help in overcoming hardships faced before achieving your end goal of entrepreneurship.
Keep managing income and expenses balance sheet:
Even though this may sound like a trivial point, keeping track of income and expenditure is very important because if there’s no money coming into the company then how would one pay off his or her debt? And if there’s too much expenditure then it will lead to depletion of your initial capital which you might need someday. So make sure that the money comes inside and goes outside at the same rate.
You cannot do everything by yourself:
It’s important for new entrepreneurs to understand they must delegate their work to others if they want things done efficiently because trying to manage all tasks by themselves takes up valuable time which could be utilized more productively in other areas like generating more income or increasing the company’s market reach.
Conclusion:
There are many entrepreneurs who think that there is no other option than to give up their dream of becoming an entrepreneur because it seems like such a distant possibility. But in reality, nothing can be further from the truth because today there are numerous resources which make financing your business easy and viable by providing you with various options to choose from. This article has hopefully given you some insights into the various methods available for getting funded and hopefully, this will help you in making the right decisions in order to become a successful entrepreneur and achieve all your goals.
