How to manage your startup without raising funds?
There are advantages of having an investor-free startup journey.
Many innovators across the globe are sitting on their products or services because they haven't secured any external funding yet and they think that without it, their business plans and startup ideas are doomed to fail.
Starting something from scratch is a daunting task and doing so without any sort of backing even more so.
The general idea these days is that securing venture capital or external aid is the only way of setting up a startup, and is also an essential component for its subsequent success. While it's true that VCs are a common denominator in the success of many startups, it is definitely not a prerequisite for it. What many founders of today, tend to forget and overlook is the fact that many goliath companies of today, like Microsoft, Virgin and Dell started their successful journey without any external funding.
The global economy is in a state of recession. The COVID-19 pandemic, which has affected the world at large, has turned our lives upside down. Given such tough times, potential investors are also dwindling. But having or not having funding is not the key deciding factor in how successful a startup will end up to be. There are various ways in which a startup can start making profits even without investment or funding. Many industry experts are of the opinion that external aid, in fact, does more harm than good, in the long run.
We are all traversing through unprecedented times.
Can startups really build without funding?
You are your own boss: The moment that external aid is used is the moment you lose your autonomy over how you run your business. Predictably, investors don't like to lose money, so they will monitor and advise you with regards to finances and administration.
The percentage of say they have over your business is also directly proportional to the amount of cash you obtain from them.
Change is easy: If you are bootstrapping your business, then you are at liberty to change your path or plan as per the needs of the company and the society, as you see fit. But when investors get involved, you start being accountable to them. It's not like the investor is giving you their money for free.
Every paisa is somehow refunded as per the clauses of the agreement. As a result of this contractual relationship, any sort of change may be difficult to enforce if it clashes with the values or interests of the investor.
Often a waste of precious time: It is a common occurrence that a lot of time is spent in chasing down potential investors, perfecting your pitch and following up on funding related leads. This time would be better used in evaluating customer feedback and in understanding their needs, in an effort to mould your product or service better.
It has been seen that in businesses which are bootstrapped, this time is spent analyzing the market trend and developing the product as per what the market demands.
What can you do instead?
Believe in your product or service.
Review your deliverables a great many times and know your strengths and weaknesses like the back of your palm. This will help you in allocating funds better and make better decisions with regards to finances and the future of your company.
Lack of funding is also a grounding experience, which helps in setting up practical and achievable goals.
Inculcate great customer relations.
If the product or service is your first priority, this should be your second, because they are one of the most important deciders as to whether your startup will be successful or not.
Market your company in such a way that fosters trust and loyalty and make your services as customer-friendly as possible, so as to encourage repeat business.
Have an innovative marketing plan.
As a startup, it might not be possible to pay tons of money for widespread advertising. Make sure to have meaningful interactions instead, or employ unique and quirky strategies to grab the attention of potential customers.
Startups often end up trying to challenge big companies and their products, but that's generally a recipe for disaster. Ensure that whatever you are trying to sell is unique, suited to optimise an aspect of the customers’ lives.
Challenging the big companies from the very get-go may not be the best idea, as you require to first secure your footing.
Always ensure efficiency.
This is of utmost importance.
It's incorrect that you need a huge team to run successfully. What you truly need is a well-oiled machine, where the values that your startup stands for matches with that of your team, and they are equally loyal and dedicated to the company as you.
Sell! Sell! Sell!
Funding doesn't have to come in the form of lakhs or crores. It has been seen that many companies design their business models in such a way that they can collect some payment before the service or the product is delivered turning customers into a growth capital source.
Not only that, but selling also ensures that you remain on top of what the customer needs or wants. Startups must therefore not make the mistake of trying to tether themselves to venture capital firms or other investors. Wasting resources and time over this is definitely not a good move, as we have already seen.
While it's not necessary to bootstrap a business forever, it is not the best idea to run behind investment from the get-go, without concentrating on improving the product or the service. Moreover, while it's true that many startups that are running successfully credit it to their investors but keep in mind that it is not often such a rosy affair.