You have the perfect business idea. Maybe you’ve designed the best widget ever or you’ve developed a new process that could revolutionize an existing product or service. You’ve received encouragement from friends and colleagues. You’ve carefully crafted a clear and concise business plan, but you’ve determined you may need funding. What do you do?
Issues related to startup funding can be numerous and complex. If only there was a simple, straightforward solution that would let you get on with it. Unfortunately, there really are no true shortcuts. There are a number of initial questions, however, that you should ask yourself. Their answers should get you moving toward the best solution to your funding needs. Here are four that every entrepreneur should address.
How Will I Utilize the Startup Funding?
Most startup experts advise entrepreneurs to make a list of financial needs, the likely amounts needed, and the priority of the need in achieving overall success. Then, working from the bottom of the list, is there anything that you can actually do without? This exercise will give you the best idea of your real needs.
How Soon Will You Be Profitable?
If you project profitability in relatively short order, that may raise the question of whether you need startup funding at all. Understanding the profitability timeframe may at least help you determine the nature of the investment that you should go after. For example, if the profit line is relatively short, a loan may be best, since it won’t dilute your interest in the business.
How Much Control Are You Willing to Give Up?
This is one of the most difficult issues most entrepreneurs face. The more funding you get, the more control you may have to give up. Don’t expect a funding source to share your passion and optimism. They are likely to have that same level of passion about their cash, so expect some candid negotiations in this regard.
Can You “Play in Groups?”
Just as outside funding brings with it a loss of at least some level of control, it also brings the need to work well with others. Can you communicate? Are you stubborn or volatile? Can you take constructive criticism? You may have been the first with the “aha moment,” but funding brings either partners/shareholders or creditors. If you can’t cooperate with others, you may find that your funding issues come at too great a cost.
You May Decide Startup Funding is Appropriate or Perhaps You’ll Resort to Bootstrapping
Armed with the answers to these initial questions and, assuredly, many others, you may have a clear path for your startup funding or you may decide that bootstrapping is the preferred alternative. Either way, you are likely to need the experience and dispassionate counsel that is available through a seasoned group of business attorneys.
The law firm of CKB VIENNA LLP provides legal and business consultation to nearly every type of business, from large to small – even startups. We have helped entrepreneurs identify and face funding issues and we have provided broad counsel in other related areas. And while the firm is skilled in all forms of litigation, our attorneys also provide preventive training and offer guidance designed to avoid the consequence and cost of litigation. CKB VIENNA has a long history of representing clients in all types of business matters. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909.980.1040 or complete our online form.