I have been writing and providing consultancy for years, and a lot of budding entrepreneurs who visit me come with unrealistic expectations regarding their startup.
Some want to turn millionaires within a year, and some wish to start making profit the first month. All these expectations are unrealistic at most and will only cause you to feel disappointed and dejected. It's important to be realistic about your approach and understand the time lag and the fact that there's an equal (actually, in most cases, higher) chance of you not finding success. Failure is as much a part of business, as success is. If stats are to be believed, 90% businesses fail to continue after first five years.
In this article I am going to talk about ways to get realistic about finding funds for your startup. If you think you'd be able to raise capital within a few days, it's time to get a reality check. All this take months and often years, even if you have the most badass idea in the world. So, read this piece and make your expectations more realistic.
1. Review Your Business Budget
A startup at the end of the day is a startup. If it requires millions of pounds to start, it's going to fail or never take off - especially if you do not have your own money. Self funding is a good idea, but not everyone is able to find success bootstrapping. Most people turn to raising funds, but forget to change their expectations accordingly.
You must come up with a startup with a low budget mass index. Remember, your business should be able to fend itself, and the only funding you should go for is the funds you need to start the business.
Have a look at your business plan and remove expenses that don't add anything to your business. You must reduce your initial capital as much as you can. It's simple maths. It's easier to raise less money than more money. Only keep expenses that are absolutely essential to run your business.
Doing so is important for other reasons as well. When you present your business plan to potential investors, they will question you about all the expenses. And if they find unnecessary expenses, they might lose faith in your plan or ask you to redo it. And that's just a lost opportunity - something you do not want to happen to you.
Also, if the expenses are too heavy, you will soon be out of cash and may need more funds to keep the business running. Always, plan keeping long-term future in mind. It will not only help you start your business, but also help you run it better.
2. Have Low Expectations
I mentioned it earlier, but this deserves its own heading. It is important to go with low expectations if you do not wish to feel dejected. It's an uphill battle, getting money out of others is never an easy task. You will be asked a number of questions, and they get more and more stringent as the amount increases.
Also, be ready to accept offers lower than expected. Just because you asked for £50,000 doesn't mean you'll get it approved. Even 10% of the amount can be good and should not be declined. However, make sure the terms are in your favour and not against you.
Also, look at sources that have a higher chance of approving your request. You need to research a bit about your financier before applying for finances. See what drives them and hit the bull's eye.
3. There Are More Funding Options
Winning investors may be difficult, but thankfully this is not the only option that you have. You can turn to banks, and your friends and family. And above all, you can turn to crowdfunding which became a £26 billion industry last year.While crowdfunding has its critics, there's no denying that it's a great option to raise capital for your startup. According to Nermin Hajdarbegovic of Toptal,
Entrepreneurs, developers, and enthusiasts have to be committed to weeding out bad apples in crowdfunding, for the greater good of our industry.
Yes, crowdfunding has some bad apples, but they can be weeded out. You need to find the right source and present your idea in a killer manner and you'd nail it. There was a time when crowdfunding was considered suitable only for certain kind of projects, but today all kind of projects are being funded by crowdfunded sources, including real estate which grew over 150% last year.
Remember that you will get rejected a number of times, and rejection is perfectly okay. Do not let it affect you. Instead, look at why you get rejected and find loopholes in your plan so you can start again with more gusto.