Successful Bootstrapping is all about discipline and stamina. -- Kevin Hale
A financial plan is an integral part of business plan. Right from the beginning, startups should be aware of the requirements of funds at different stages and arrange funds accordingly.
1. Own funds- Bootstrapping
3. Angel Funding
4. Crowd Funding
5. Equity- Public Share holding
6. Venture Capital
ü How much will be needed for further development of the product or service?
ü How much will be needed for setting up or expanding operations?
ü How much will be needed for Working Capital
ü Where will the money come from? What if more is needed?
The investment statistics shows that majority of startups invest their own money in the beginning.
The funds are sourced from family, friends or your own savings. This leaves you in complete control of business.
v Small business startups ideas are yet to be fully accepted by the market. There is lack of steady revenue.
v In the early days of startup the entrepreneur wants full autonomy to try and establish his/her business..
v The money from any investor will come attached with strings.
v Customer Acquisition Process:
Startup ideas are mostly not unique and their focus is on creating superior service or a niche and hence the financial numbers will not attract external funding.
v Time Constraint:
The time resource is critical for startups and courting and managing external funding is of lesser priority than acquiring customers
v Hidden Cost of outside money and servicing the interest and capital
v Many startup ventures are poor fit to meet the venture capitalists’ criteria.
v Debt is also an option only when you have paying customers and steady revenue.