How to start your own business and get funding
The thought of starting a business comes with a super exciting feeling of getting to be your own boss. Here comes the freedom to now make creative decisions and finally a chance to think outside of your boss’ box. That’s awesome, right?
Whether the idea is driven by the need to widen your stream of income or by passion, starting a business with no money comes with its challenges and risk. Talks about the financing of your idea, and the general finance of your business. One minute you may be celebrating a surge in sales and the next, you may find yourself eating instant noodles for lunch. As there are no zero-investment business ideas, Moovick will share with you below, information on how to get appropriate support for your venture and source funding for your high and low-cost business ideas.
Moovick will help you define your business idea
Starting a business might be a pursuit of passion, more money, personal growth, or building a legacy. Your reason for starting entails various aspects that shape your business's nature, operation, and goal.
This explains what makes it stands out among similar others, which is its consumer, structure, and the gap your business is trying to fill. However, Moovick will now give you an insight into what makes a unique business and how to identify a space for sustainable business practices.
How to Identify a viable market opportunity:
1. Research the Market
Conduct thorough market research to understand current trends, customer demands, and competitive landscape. Look for gaps or unmet needs in the market that your business can beautifully address.
2. Analyze Target Customers
Plot that a percentage of your audience will be your customer, hence determine your target customers. Identify their characteristics, preferences, and behavior. Also, reflect on the age transitioning of your audience to become your consumer. An example of this is what a condom-producing company will expect from its audience to become customers. Identify their needs that are not adequately met by existing products or services.
3. Take competition into consideration
Assess those who made the game, those who have been in the game, and the certainty of other competitors like you to emerge. Study their product, pricing strategy, marketing tactics, strength, and most importantly their weakness. A careful examination of these aspects will identify areas where you can differentiate your business and offer a unique value.
4. Consider Market Trends too
Answer the what-if questions in this part, and predict how well you will perform in a market of high uncertainty. Watch out for new technological development and scientific changes that may influence the demand of your business.
5. Solve a Problem or bridge a Gap
Bring in an idea, solve a problem with it, or fill a gap. This means identifying areas where your customers face challenges, unmet needs, and what they want. Lean on your business models and craft solutions to surge you up above others. A strong focus on solving customer problems can be a key differentiator in the market.
6. Check niche market opportunities
Assess the feasibility of your business idea by considering factors like the cost of starting a business from scratch, available resources, scalability, and market demand. Determine if there is sufficient demand to sustain your business in the long run.
7. Test and Validate
Put your idea to the test and deduce whether you have a hit or not. Test your findings with a survey and it will show you how much sense your idea makes. Imagine You set up a booth at a local fair to showcase your new invention, the "Selfie Toaster," which imprints selfies onto slices of toast.
As people pass by, you offer them a chance to try it out. One enthusiastic participant eagerly inserts their selfie into the toaster, only for it to emerge as a charred, unrecognizable mess. You can't help but chuckle as you realize you still have some improvements to make before it's ready for the market.
What is next after identifying your edge in the market is making a comprehensive business plan. As you may already know, a business plan is an important document with a roadmap that outlines your business goals, strategies, and financial projection. Relax, you don’t need rocket mathematics to write a business plan. Here are the key components of a business plan and how to write them each.
1. Executive summary
Start the business plan by providing an overview of your whole plan. This section will summarize everything in the business plan in just an average of 3 pages. Highlight the mission statement, business concept, target market, and financial projection. It should capture the reader's attention and provide a snapshot of your business. Although it is the first section of your plan, it is usually written last to ensure that it effectively summarizes the entire document.
2. Company Description
Now start the lengthy word here. Provide detailed information about your company. Describe your business’ mission, vision, values, and any unique aspects that differentiate your business from others in the industry. It also includes the legal structure, so you may need to get refilled ink for this section.
3. Market Analysis
Do In-depth research and analysis of your target market, industry trends, customer locations, statistics, and competitive landscape.
4. Products or Services
Describe the products or services you offer, including their features, benefits, and trademark. This section showcases your offerings and how they address customer needs or solve their problems.
5. Marketing and Sales Strategies
Write plans for promoting and selling your products or services. This includes your marketing strategies, pricing, and distribution methods.
6. Organizational Structure
An overview of your company's structure, including management roles, responsibilities, and reporting lines. Is that all? Yes, simple as that!
7. Financial Projections
Detailed financial forecasts, including income statements, balance sheets, and cash flow projections. It showcases your cost structure, profitability, and funding requirements.
8. Risk Assessment and Mitigation
Identify potential risks and challenges your business may face and strategies to mitigate them.
9. Exit Strategy
It is an optional section that outlines your plans for exiting or transitioning out of the business in the future. It addresses potential scenarios such as selling the business or passing it on to family members or the government.
Types of funding
Now to the funding part, we’ve been preparing for. It’s one thing to sing in the shower, it’s another to perform on the stage, right? Exactly! Without funding, your idea becomes a blurred dream. For your no-capital business ideas, let’s carefully run through the various funding option available to startups as well as the pros and cons.
Financing with your capital
It is also called bootstrapping a business. It is simply using your savings, assets, or revenue generated from other businesses to fund the new business venture.
- Pros: Maintaining full ownership and control, no debt, quick decision-making, flexibility in spending, and strategic cost management
- Cons: Limited initial capital, personal financial risk, slower growth potential, potential strain on personal finances.
Friends and Relative
Another option for funding is by seeking financial support from people within your close cycle. It may be people within your network such as parents, uncles, aunts, best friends, and workmates. This is an excellent source option if you only need a little more to add to what you have.
- Pros: Access to capital from trusted individuals, potential flexibility in terms, of a supportive network, and possibly lower interest rates.
- Cons: Strained personal relationships in case of business challenges, limited funding capacity, and potential conflicts of interest.
Angel investors are high-income individuals who provide capital to start early startups to have a share in equity ownership. Angel financing is on the rise to become a prevalent practice for startup financing. We can also resound the importance of making a pitch that beautifully presents the scope of your business and therefore attract the angels.
- Pros: Potential expertise and mentorship, free business resources and industry connections, quick decision-making. A source of funds to start a business without money.
- Cons: Equity dilution, loss of control, limited funding capacity, higher expectations for returns on investment.
Venture Capital (VC funding)
More like Sequoila and Benchman Capital. Venture capital firms give substantial funding to startups with, of course, high-growth potential. They expect significant returns from their investment.
- Pros: Significant funding for high-growth startups, access to expertise, industry connections, and mentorship, potential validation of lean business models.
- Cons: Significant equity dilution, loss of control, rigorous due diligence, longer fundraising process, pressure for rapid growth and exit strategies.
Crowdfunding allows companies to raise capital from a series of funders through crowdfunding campaigns. Oftentimes, the funders will only request a customized product or service of your business for their donations. It is simple to have a profile with a crowdfunding platform and present your ideas to its audience.
- Pros: Access to a large pool of potential investors, potential free marketing methods, and diverse funding sources.
- Cons: Time-consuming campaign preparation, effort in marketing and promoting the campaign, fees, and platform charges.
You can get business loans from banks and other financial institutions which are to be repaid with interest. These types of loans are traditionally available to just any business with a solid business plan.
- Pros: Access to capital for specific needs, fixed repayment terms, possible lower interest rates, and potential tax benefits.
- Cons: Debt obligation, collateral requirements, strict repayment schedules, and interest costs.
Government Grants and Programs
While being on the lookout, government grants and programs also offer funding support to startups. Profit startups may have to pay to get grants while non-profits can get grants completely for free.
- Pros: No repayment obligations, non-dilutive funding, support for specific industries or projects.
- Cons: Competitive application process, eligibility requirements, restrictions on the use of funds.
Tips for choosing the right funding source
- Define Your Business Needs and Goals: Consider the specific funding requirements of your business, such as initial capital, growth plans, or research and development needs
- Assess the pros and cons of each funding option and consider the potential impact on ownership, control, decision-making, and growth potential. Determine which pros and cons you are comfortable with.
- Research and Seek Advice: Further research the funding sources you have narrowed down based on the first two tips. Seek advice from mentors, industry experts, or other entrepreneurs who have gone through the fundraising process.
- Consider Fit and Alignment: Some funding options are not a great fit for some stages of business growth. Evaluate how well each funding option aligns with your industry and growth stage.
- Understand the Terms and Conditions: Review the terms and conditions over and over again. Consider factors such as equity dilution, repayment terms, interest rates, reporting obligations, and exit strategies.
Networking and pitching
Panel discussions and startup conferences may have been the traditional starting point of many business connections, but much resourceful networking is now being built on professional platforms like LinkedIn and Angel List. Every business needs a solid network and solid skills for presenting an idea. This is also called pitching. Both are essential elements for a business startup's success. Moovick will delve into useful networking prompts, and hints that will assist in delivering an effective pitch.
You need networking for:
Access to resources
Not just access to people but also to opportunities, contracts, referrals, and service requests. The goal at this point is to know someone who knows someone. These connections can open doors to opportunities that can accelerate your business growth.
Learning and Growth
By networking, you have the chance to learn from the experiences of others, gain insights into industry trends, and acquire knowledge about best practices for business challenges. This knowledge can help you make decisions and avoid potential pitfalls.
Build a support system
Just so you know you can’t do it all alone. Networking helps you build a supportive network of fellow entrepreneurs who understand the business's challenges. These connections can offer guidance and emotional support when needed.
Networking can be built by attending industry events, conferences, entrepreneurial communities, online websites, and mentorship.
Elements of an Effective Pitch
- Make your message as Concise and Clear as possible
- Use storytelling techniques to create an emotional connection with your audience. People buy with emotion and outlook.
- Explain the market opportunity and demonstrate how your solution fills a gap or solves a problem.
- Demonstrate Market Potential for your company and provide evidence of market demand and growth potential. This is your actual selling point.
- Highlight the experience and capabilities of your team members that demonstrate their ability to execute the business plan and achieve success. Investors often invest in the team as much as the idea.
- Finally, Present realistic financial projections, including revenue forecasts, expense breakdowns, and growth plans.
Alternate funding strategies
Some other ways to get funding outside your company may include:
- Sweat equity
- ICOs and blockchain technology
- Online lenders
Legal and Financial consideration
Starting a business can be an exciting venture, but it's important to take care of the legal and financial aspects to ensure that the business is set up for success. Here are some key considerations:
Business Registration: You don’t want to be at the final stage of your plan, and discover that your proposed business name has already been registered. Before starting a business, it's encouraged to register it with the appropriate government agency. The registration process may vary depending on the type of business and the location, so it's important to research the requirements in your specific area.
Licenses and Permits: Based on the nature of the business, it may require specific licenses and permits to operate legally. For example, a restaurant may require a food service permit, while a construction company may require a building permit. Again, it's important to research the requirements in your specific area.
Taxes: Business owners are responsible for paying taxes on their profits. This includes federal, state, and local taxes and any applicable sales taxes. It's important to keep accurate records of all income and expenses to ensure that taxes are calculated correctly.
Accounting: Proper accounting is essential to the success of any business. This includes keeping track of income and expenses, maintaining accurate financial records, and preparing financial statements.
Starting and running a business can be complex. In making it easy, we have discussed how to write a business plan, get funding, network and pitch your ideas beautifully. You are also further encouraged to seek more professional advice to ensure compliance and proper financial management.
An accountant or bookkeeper can assist with financial record-keeping and tax preparation. A lawyer will be best for business registration, drafting contracts, and ensuring compliance with laws and regulations. Seeking professional advice can help prevent legal and financial issues down the line, and can ultimately save the business time and money.
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