When you first had your idea for your business, funding was possibly the very last thing that you thought of; the excitement and passion of building your dream would have come first. However, funding is vital if you are going to get your business off the ground and it isn’t always easy to come by. That’s why so many entrepreneurs choose to self-fund their business. Here are the reasons why it can work brilliantly.
1.Your business model might change
When you first start your new business, you will probably have a fairly firm idea in your head about how it is all going to go and what you are going to do. However, as you begin trading, these ideas and the reality might not quite match up, and you may have to do a lot of switching around to get to a point where you are happy and where profits start to be made. If you have organized funding based on your initial business plan, those investing the money may not like the changes made, and they could pull out, or at least prevent you from doing what you want to do.
Therefore, it’s best to start your business with your own money, at least until you are at a stage where it becomes more stable, and you have a solid business plan to present to investors.
2. You’ll be more cautious
If your business is financed through third parties, or a business loan, it can be tempting to spend a lot of money at once in an effort to scale up. If you do this before you are ready, you can fall into big problems as you’ll run out of money before you gain enough of an audience, and then your business can easily fail. If you are using your own money, you are less likely to do this, and more likely to think things through and plan them properly before spending anything.
This cautious approach is a helpful way to do business as it means that you’ll only action something if it really is going to benefit you. Your money will last longer too, allowing you to do more. It’s exactly the same approach as you would take if investing in top virtual reality stocks; you wouldn’t invest more than you could afford to lose.
3. You retain control
If you have an investor on board, or you are reliant on a bank loan, for example, you will be necessarily giving up some control of your business. Whether it’s a little or a lot, not being completely in charge can cause difficulties and can even stunt the growth of your company. Banks and investors will want you to succeed, but they will want to know their money is safe first, and if there is any risk involved, you may be prevented from moving forward.
Using your own money means you get to retain complete control over your business which means you can take it wherever you want it to go. Asking for advice is always a good idea, though, especially if you’ve never run a business before.