How To Raise Money For A Startup

Money is dirty. Money is a sin. We’ve heard it too often. That being said, who can live without it? As for startup companies, you need to deal with it so often that you can’t just shake it off and back away from this topic. Sometimes when you are in the middle of everything, you tend to overlook the details. Even if you do not want to be a safe player, it is still best for you to manage your business plans as specific as possible. COWORKRS knows that money matters to you, but how and why? What do you need to know from scratch when you enter this inevitably cruel business arena? What do you need to pay more or less attention to? Are these part of the questions on your mind? Don’t worry. This blog is here to help you out.

Two ways to approach this problem—you either raise more money from the beginning or cut the budget.

Two ways to approach this problem—you either raise more money from the beginning or cut the budget.

RAISING MONEY

You are ambitious, and you want to run your own business. The first step you need to make is to ensure that you have enough funds to keep your company running smoothly for the first season, at the very least. Here are some aspects you should attach importance to.

1. YOUR TARGET CAPITAL

Some people bluff that they don’t need much capital to build a successful business. There may be some rare exceptions, but the safest way is to do research and be down-to-earth. First, personalizing your own business plan. Narrowing down your target market and doing research accordingly. Things you need pay extra attention to include the following:

a. Your potential customers:

Having a grasp of their background information. For example, their income (which is very crucial in terms of estimating how much money you need to raise!), their region, education, age, and gender, etc.

b. The size of your company and the regular expense:

You need to decide how many people you will employ and their salaries. Even the cost of the equipment and some business meetups should be added to the list. Most importantly, don’t forget about the working office. Finding a right place to work is not only a must in your business plan but also a decision that may help you drastically increase employer’s performance. COWORKRS provides several different office building in New York City, with the price that is more suitable to startup companies. Contact us now for more information!

c. Your competitors:

Listing your competitors and analyzing their strength as well as weakness. Also, keeping in mind that they are doing the same to you! So when calculating how much your initial capital should be, you should raise it higher than planned.

d. Aim high or aim low?

It doesn’t matter. There are two sides of the coin. However, you do need to aim realistically. Finding a sweet spot that suits your company in the long run.

2. DIG OUT YOUR OWN PENNIES

So now you have a perfectly tailored business plan. Congratulations! Now you’re thinking about how to get the money. But do not rush to others first, sit down and think about what you already have. Your savings, equity, even your retirement accounts are all your valuable resources that are owned by YOU. Playing safe is fun, but isn’t being your own boss even better? You start off as entrepreneurs because you want to take control over your business. Why not taking control over your money from the beginning? If you can depend on yourself solely to start a business in terms of money, you can show your donors later that you have the confidence to put yourself wholly into your business. You risk some. You earn some.

3. FINDING FINANCIAL PARTNERS, OR NOT

Financial partners, aka suppliers, distributors, and donors, are from now own your God. You may be familiar with the process of asking for money directly from others if you have come this far. If not, don’t worry. COWORKRS have figured it out for you:

a. The credibility of your financial partners:

do not be blinded just because they have cash. You do need to carefully do research on their reliability, their investment history and etc.

b. Taking advantage of B2B business model:

long story short, if you’re running or aligning with a B2B business, you’re ahead of others. Finding if there is any business that can directly or indirectly benefit from and link to your products or services, some may find it rather easy to have some early adopters on the same boat.

c. Consulting with your early adopters and utilizing equity:

early adopters are the ones who care about your revenue as much as you do. Don’t shut your door after they give you the money. Keeping an open mind and listening to their ideas. Once you have more people on the same page with you, you also have more resources, which are one of the most valuable things in business. If your adopters can turn into your strategic partners, that is the best case scenario. Some companies later are best partners with their original strategic partners, and such cooperation endures for years. Thinking about it: wouldn’t you be proud if you have fostered a kid who later became POTUS? However, investors usually hold a part of the ownership of your company based on the amount of fund they invested and the agree-upon value of the company, it also means that you will give away some credits to others when your business becomes more and more profitable.

d. Debt:

Debt is very common. Currently, more and more students are living with debts after graduation. If you’re a new college graduate and a would-be entrepreneur, be ready for more debt. Scary as it sounds, debt, however, makes you the captain of the ship. Asset lenders usually keep an eye on the market value of your assets, and lending you a certain, if not limited, amount of money.

4. BOOTSTRAPPING

According to entrepreneur.com, bootstrapping means to finance your company’s startup and growth with the assistance of or input from other. As an entrepreneur or simply a business person, this word shouldn’t sound new to you. Bootstrapping has been one of the most secure and inexpensive ways to keep a company’s cash flow. It reduces your interest and stops you from borrowing money. Here are some bootstrapping tips:

a. Making the best use of shared office services:

Shared office should be your first option. Finding one that meets your need is even a way to cut the budget. COWORKRS provide many different types of shared offices in New York City. Click here for more information!

b. Utilizing your original sources: Don’t buy anything unnecessary first. If the computers and servers are still working, do not replace them.

c. Delay capital purchase.

d. Negotiate more! Do not be ashamed to bargain.

e. Going after the trade credit terms with important suppliers.

f. Hiring interns from local business and schools.

When you actually put yourself out there, it may even be harder than you think. You may be overwhelmed and “accidentally” raise more capital. Do not raise it more than twice over your target capital, because when your cash flow well, your profit will be your business’s lifeline, not anyone else’s money.