Tuesday, November 5, 2013

Do I need cash to start my Start-Up?

By: Stan Washington
Date: 11/05/2013

On a recent radio program I was asked the question "where do I get money to start my business?" My answer to him was "start your business before you get the cash!"  This shocked the audience and the radio host! She paused and regrouped and asked me the question "Start your business before you get funding? What do you mean?"

Here is what was behind my answer... Too many people jump into business for the wrong reason or without having a plan or by thinking it's an escape from corporate.  They think of a nice business idea without thinking through the financials of what it will truly take to operate their business on a larger scale. Here are my thoughts

Before investing a large amount prototype your concept!
Take your concept before a very small audience on a much smaller scale to see if the concept works.  It is worth the investment to understand all aspects of your business concept before you send your concept out to a large audience.

Work out the kinks before you ask for money
There is nothing worse than making a lot of noise about your product or service and having it fail the day you open the doors. By starting small, you can work out the bugs in your processes while understanding the landscape.

Fully understand your spend
What is the true total cost of ownership?  Have you looked at all costs of your business or have you only figured up how things will work in a perfect world? You may need help here to determine all costs you may run into for your business.

Consider crowdfunding
Many people are raising capital through grass roots efforts and bartering.  Sites like Kickstarter have become a way of raising capital from many sources.  Make sure you know all terms and conditions before jumping in.

How will you pay your investors?
Once you raise money, remember... It's NOT yours! Yes you now have room to breathe but you must track all investors and determine a way to pay dividends in your company.  They invested in order to make money off of your concept so make sure you factor this in before you seek cash!

Listen to the full broadcast on YouTube https://www.youtube.com/watch?v=RpsG2viMA7I

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