Self funding your business is still your best option.
You are not alone.
It seems the experts think so too.
Why is going for funding early on, a bad idea?
There are many things that can happen when you choose to go for funding right from the start.
Self funding is a challenging option but one that assures you that do not really cross boundary lines when it comes to investing in your business.
Mark Cuban who has invested in many companies and is associated with Shark Tank thinks that raising money for your brilliant idea can be a costly mistake.
He believes that you should go it alone as long as you can.
Once you raise money, it becomes an obligation –
Getting investors should not be your growth strategy.
As Mark Cuban puts it, once money is raised, you are obliged to report to whoever that lent you the money and do things his or her way.
Raising money is not an accomplishment – it is an obligation.
You will be more worried about spending it on the right resources and managing it, while paying it back instead of focusing on your big idea.
Big investors may have business goals different to yours –
Not all who invest in your business will think like you do.
Their business goals and the direction of the business they want to take, might differ from what you have in mind.
This can cause conflict, resulting in alienation and unfruitful relationships that can impact your business negatively.
They may be more focused on recovering the investment while you might want it to grow before you think of recovering investment.
When you invest in your business yourself, you only have yourself to answer to. You will be able to build the business from the beginning and grow in the direction you want it to grow in.
Do the best you can & build your customer base from scratch –
As Mark Cuban puts it, it is better to build from the beginning, focus on building your customer base and doing the best you can.
A good product or a service gets good referrals and customers will notice.
Eventually, growth will come as you focus on doing the best you can.
He cites Sara Blakely, the billionaire founder of inner wear Spanx – she had no formal training but only knew that a need existed for invisible inner wear. It took time but she never accepted outside investment and is today known as the youngest self made billionaire in the USA.
Keep your beginnings small –
Without investment injected early on, you would be able to start small and then grow. Cuban and other believe that this would be a more organic way to experience growth rather than starting big with investment injected from investors.
With more manageable, smaller growth, you will find yourself ready to expand at the right stage rather than expanding because you have received a big investment.
It will also enable you personally to manage your growth rather than allowing investors to instruct you on how the business should measure up.
Grow with the business – you will enjoy the journey –
We all know that expansion, growth and traction comes as time goes by.
No business has experienced all three at once – in an instant.
When big investment in injected, you have no time to allow creativity or new ideas or innovation to boost your business.
Rather, you would be busy with paying salaries, managing debt payments and all other obligations that come from growing big before your time.
So if you are considering setting up on your own, make sure you have a way of self funding for the short term – until you can grow your business and source funding.