Startup struggles happens. It is no news but these obstacles often reveal opportunities for growth; and despite the fact that they can mostly hinder business opportunities, it all depends on the entrepreneur’s ability to test his/her strength, resilience to not accept defeat and a matter of his/her perspectives.
Here are some keys to help you get through these rough moments. ( we already looked at some causes of these financial struggles in my last article)
What is Self-funding?
Self-funding simply means financing your business from personal accounts ( personal funds) until your business have the sufficient revenue.
It’s just that simple, but how do you do this in order to avoid the financial difficulties or running out of cash?
It is quiet relieving and better when startups manage their businesses or support their ventures without external business funding when they are starting off. I also self funded my business for a couple of years without having to depend or solicit for external funding. It keeps you grounded to the essentials of financial management as an entrepreneur and also allow you to work within your available funds.
Even though most business models don’t work well with self funding startups, just develop yours. That is why you are an entrepreneur. You must be creative enough to create a business model that works for your business.
Create services and products that are not capital intensive.
Create an accounting book. (It’s is very important, since you are self funding. When your business starts to achieve sufficient revenue, the business can refund your money. Treat it as a loan)
Get a financial plan, work within the budget plan and develop a financial projection.
Cash flow management
Startups Struggle with cash flow leading them into serious financial problems. Having a constant cash flow as a small business or startup is not at all easy, I must admit. Every startup business have been there or likely to; I have been there. Retaining profits as a small business is difficult but somehow, most entrepreneurs find a way out. It all depends on your business model and self funding strategies.
Start-ups are bound to face cash flow problems. They do not have consistent cash flow because they do not have income usually coming in. They do not have a cash built up from profits nor have retaining profits. This is because startups and small businesses usually spend up front. It is usually incurring cost than cash in.
Some business experts described cash flow as a blood line of startups and small businesses. It is really that important. It is actually the life that holds the business down and gives it a promising growth. Without a cash flow forecast or projections, startups are bound to fold up. So there is the need for startups to know how to manage their cash flows strategically so not to run out of cash and stay in business.
Every entrepreneur must know and identify falls in their accounting balances. You do not need a professional accountant as a startup to know when you have financial problems and when to identify negative cash balances. As an entrepreneur, you need the basis of every aspects of managing your business. It is key to inform your future business decisions. Learn it, if you have to. It does not prevent you from having a free financial adviser from your business bankers. It will save you cost and earn you some good experiences too.
Crowdfunding has increasingly become the new “cushion” from saving startup businesses from drowning. It is not an absolute secured (100%) financial aid platform but it sure has aided many startups; maybe not in this part of our world (Africa) but gradually taking roots in most parts of the world.
Obtaining financing is one of the biggest hurdles of most entrepreneurs and challenging to overcome.
It is a platform that gives startups and small businesses the opportunity to meet prospects (network potential investors) at a go. Most of these platforms have accredited investors ready to finance startups who meets their criteria. Many startups across the globe are raising funding from platforms such as these. There is no harm in taking a chance. One of the common crowdfunding sites is Kickstarter. You can also check for other ones via Google.
Note: when taking an opportunity with these platforms, be sure to know what exactly you getting into with regards to its terms and conditions. Seek the help of a legal adviser if necessary.
Developing a side business is a great way to earn the extra cash to support your business. It is very strategic. Almost or most entrepreneurs have or have had side businesses that have aided the growth and sustainability of their businesses. I have had quiet a number of side businesses which have been a “savior” in many financial difficulties.
What can you easily do at a leisure hour to earn an extra income?
There are hundreds of side business options to look at. Most which are easily accessible.
While others require a little or no capital, it is reasonable to find one that requires no capital especially when you are facing shortfalls in your cash flow.
Examples of some side businesses are; doing coaching in your experienced fields, tutoring, master of ceremonies(mc), public speaking, selling some of your business concepts or viable business ideas among many others. If you have the excess funds to start something that requires just a little cash and time, you can give it a try too.
Starting a side business can be a great way to earn some good income, and may even turn into another business or at large a group of companies if well handled and planned. Don’t go for something complicated to end you in losing focus on your main venture. It should be very simple, easy, fun and something you love to do.
Other ways to look at safeguarding your business from financial crisis are;
Friends and families (very common and known financial cushion)
Angel Investors (Quite different from crowdfunding)
Bank loans (If you have the necessary requirements)
Embrace change and have patience (businesses do not grow in a day, it takes a lot of hard work, strategic planning, focus and consistency)
Having shared just a few ways in which startups and small businesses can face their financial hurdles, hope you make the right decisions on how to strategically avoid financial hurdles and possibly in the future.