Financing Your Next Business Opportunity

When you are exploring business opportunities there are so many different things to consider and funding is the top of that list.  The decision over whether to self-fund or raise capital from investors is not a small one, and not one to be rushed into. It’s important to remember that you are the one in control and the final choice lays with you. Avoid making decisions based on how convenient they are and while taking advice and guidance is always wise, don’t let anyone make the final decision for you.

The decision you make should be based on your priorities and intentions with your business venture; wealth creation, or control of the business. It should be noted, you can create wealth while controlling the business, these two are not mutually exclusive in the long term. But when it comes to funding, you may have to consider them separately at first. Let’s take a look at your funding options and the pros and cons of asking for support, or going at it alone.

Self-Funding a business is the best way for you to retain total control over the business and the direction it takes. Self-funding might see you tapping into your personal savings, sourcing loans from family and friends, bank loans or sourcing small business funding resources. Self-funding does place some limitations on you as a business owner as your funds will be limited and finite. But it can also make you a better business owner because it forces you to consider all your decisions more carefully.

Self-funding will push you to create a business plan that focusses on self – sufficiency and carefully planned spending. It encourages you to develop and train yourself or key people in your organisation so you can save on outsourcing important jobs. And chances are you will become an expert on social media marketing as all the most important platforms are entirely free to use. But there are downsides to self-funding. You often start out with fairly limited funds anyway, and have to make those stretch over all your business expenses. You may have negotiated the most affordable deals with your suppliers and other business contacts, but this will have meant sacrificing some quality. You will struggle to find the funds to buy a new piece of equipment or software that helps your business. And while free marketing is great, your marketing will always be one step behind the people who can pay for promotion.

If you want to generate wealth then you want to consider raising outside capital for your business venture. This could include specific business loans or reaching out to wealthy investors looking for their own opportunities.The advantages are clear; you will have a lot of money, and you’ll have it fairly quickly once your investor commits. The backing of an established investor adds legitimacy to your business, which takes time to earn when you strike out alone. You also gain years or even decades of business experience and acumen by bringing a second person in on your venture.

Having more money from day one means you can invest in the best equipment, or hire more skilled staff to take on certain roles within your organisation. Various set up costs are comfortably covered and you can afford to splash out on your marketing right from day one, promoting yourself everywhere.

But the downsides must be acknowledged as well. The major failing of raising external capital is that you have to be prepared to sacrifice some control and ownership of your business. You are also under external pressures to succeed and earn back any invested money much more quickly. This could lead to expanding too fast and causing further issues. There is also the possibility that after months of careful work and planning during which you may not have earned a penny, after your pitch, they simply say no.

As we said earlier, that entirely depends on you. Self-funding is limiting, but if your business plan and your budget are carefully thought out you can make it work.Raising the capital externally forces you to share some of the business with a partner. But you can actively seek out investors who share your goals and interests and then make it clear to them what areas you won’t compromise on, and what areas you will.

A third option is to combine both methods. Invest into the business by yourself for a while and when you’re established and have some market credibility, you can seek out investors to take you further. This way you’re still earning and building your business while you prepare a pitch for the investors, and have far more chance of securing their investment.

To find out how Eazi-Apps can help you decide on the right business funding, contact us today.