How can entrepreneurs overcome funding challenges?

Entrepreneurs can overcome funding challenges:

• Have a scalable business model: Investors are always looking for a return, so the realistic scalability of a startup’s business plan, including his report, is more likely to catch the attention of investors. This is intended to show that a business can generate the highest possible revenue with the lowest spending ratio within a specific time frame.

 

• Determine the uniqueness of an idea: If you are trying to develop a successful model, the idea of ​​copying an already successful model sounds very attractive. However, relying on the same model as your competitors (if you can call them “competitors” at this early stage) is proving to be a failed way to start a business. Remember that your ideas must be unique and authentic. So if you have an idea to solve the same problem that another company in the same industry has already solved, make sure you’re not copying the same model that’s already out there. Your business plan should show how creative your idea is and how it includes improvements that can contribute to the market.

• Have a realistic timeframe: Most entrepreneurs underestimate the time it takes to raise capital, hoping that the less time it takes to raise money, the faster the process. If you give yourself the time you need and put in the right amount of effort, you can raise the money you need to run your business or gain the experience and valuable feedback to start over.

• Work till the last: Don’t give up no matter how many times you refuse! Just keep doing what you’re doing, import the process, and sooner or later you’ll get results. Sometimes you approach an investor who was initially interested in your startup, but when you call them again, you find yourself caught in an uncertain yes-no maze. It can be really frustrating, but all you have to do is keep searching. Time and experience will allow your business model to become more mature and ready for future stages of growth and scaling. 

 

• Business Networking: The more complex your network is, the more you can learn and the more options you have, so try to increase the number and quality of connections as much as possible. Of course, it may take some time, but it’s definitely worth doing. 

 

• Opportunity prioritization: Finding the right investor must be done after ensuring that you are ready for the challenge. Make sure you have the necessary equipment, interesting and innovative ideas, a good business plan, and a trusted co-founder who can support you and provide additional knowledge and opportunities to secure the necessary funding. Join as many business networking websites as possible to increase your chances of meeting investors and industry leaders. Useful business networking websites include Ryze Business Networking, Opportunity, and Lunch Club. Social media such as Facebook and LinkedIn are also great for business purposes.

FasterCapital is one of the online incubators and accelerators. It provides business as well as technical services. In the Tech Cofounder program, FasterCapital takes over the technology development and covers 50% of the cost. FasterCapital also has an extensive network of global investors, so your chances of raising capital from our network of angel investors is much higher with a commitment letter.

 

• Checking global and original banks and special Credit Cards openings: Some banks offer special credit cards for entrepreneurs and small business possessors. But you shouldn’t miss the point that this is the most precious option, and because the utmost of credit cards are particular, also you’ll be liable for any debt. 

• Approaching Venture centrals: Surely, this isn’t a usual option for startups in the early stages, as adventure plutocrats generally tend to invest large quantities of plutocrats, so trying to find adventure centrals interested in your ideas would presumably be in vain. Before approaching any adventure capital and losing the chance altogether, you have to be really prepared by having the right approach and enough understanding about the assiduity and the challengers out there. Also, make sure your Pitch Deck, Business Plan, Financial Forecast, and other documents are each ready and in good shape, directly speaking.

• Starting a crowdfunding crusade on crowdfunding platforms: These platforms are considered the perfect places and capitals for entrepreneurs and investors worldwide, but as the name suggests, they’re generally crowded, and you generally need to have access to a wide and well-established network of musketeers and connections of professional people for support in order to succeed in your crusade which needs to be unique and duly- executed and planned for. After a long trip of raising capital, it’s presumably not surprising that you’ve forgotten why you raised capital in the first place. 

In India, the trend towards startups is growing exponentially. India is home to the 3rd largest startup ecosystem in the world, recording annual growth of 12-15% year-over-year. According to the 2021-22 Economic Survey, he will have over 14,000 startups in the country in 2021-22.

 

As the country experiences a second wave of startup booms, entrepreneurs need to learn a lot and learn different tricks to succeed in their ventures. From estimating funding needs to finding suitable funding sources and using capital effectively, Indian startups face many challenges. However, these challenges can be overcome with the right business strategy.

 

Below is a brief overview of some of the finance-related challenges facing Indian startups.

• Lack of financial backing: Initially, startups require large capital investments. However, for such companies, especially new ones, the availability of funds is a significant issue. As an entrepreneur, you can raise money from family, friends, and colleagues, or rely on venture capitalists, angel finance firms, crowdfunding, and more. Regardless of the source, you should develop a sound financial plan that describes exactly what capital you need and how you intend to use your financial resources to generate profits in the future. The temptation to raise as much money as possible is great for startups, especially since large valuations and capital raising are hailed as hallmarks of success. However, it’s better to raise the money you need to meet realistic growth goals than to constantly have distractions and stressful fundraising.

• Revenue Forecasting: In the early days of a startup business, there is usually no revenue. Some companies typically reach break-even (no loss or profit) within a year, while many others take several years to reach break-even. During this time, entrepreneurs have to invest huge amounts of capital, and the returns are generated as soon as the company exceeds the standard benchmarks. However, to overcome this challenge, it is necessary to assess whether the startup idea has the potential to generate future profits. Companies should also develop a concrete plan that focuses on how the startup will generate revenue at least four to five years after its inception. Founders are not expected to provide detailed projections, but should start by making some assumptions about the ultimate use of the funds and future monthly earnings projections.

• Unexpected costs: Unexpected events like the COVID-19 pandemic can derail even the strongest business plans. Therefore, founders should have reserves in place for future eventualities. The ideal way is to set up automatic transfers to a special account where the company keeps accumulating and doubling money to help them get through difficult times.

• Poor Cash Flow/Short Cash Flow: Cash flow is a top priority for any business, regardless of size. Liquidity is critical to growing your business and properly allocating resources to different aspects of your business. The rules for calculating cash flow are simple. Just the deduction of the total expenses from total income. A positive number means your business is profitable and on the right track. On the other hand, if the resulting number is negative, it means the company is in the red and the situation is worrying. There are many ways around this. For starters, you should consider changing or fine-tuning your policies. You can also ask for an upfront fee, but this is too risky and may alienate your customers. You may consider signing a contract with a new customer. Here you should define when they should pay you and clearly state the consequences of late payment.

 

• Pricing Errors: Entrepreneurs often make mistakes in pricing their products and services. They simply add up the costs and then add the margin. This doesn’t always work because the resulting price can be very different from the actual market value of the product, which can alienate potential customers. Sometimes you have to consider how your competitors are pricing similar products and keep your prices roughly in order to attract customers.

• Infrastructure Support: Every business needs a basic infrastructure to support its functions. However, incurring infrastructure costs can be a heavy burden. However, with the growing trend towards cloud-based businesses, some startups have moved away from the idea of ​​having fixed infrastructure elements.Also, shared workspaces, business development centers, etc. have allowed New Age startups to stay on the table. We now have easy and affordable access to basic infrastructure such as chairs, meeting rooms, cafeterias, dedicated booths and phone lines.

• Complex Regulatory Environment: The business environment for startups in India is very complex. Although the government has made some efforts to ease the rules and regulations in this area, the current business environment is still very difficult for businesses. Long paperwork, lengthy bureaucratic processes, and lack of information make it difficult for startups to get work done on time. However, companies should plan for the time it will take to exceed the Indian regulatory environment. Also, make sure all documents and licenses are complete and in order. Other requirements such as registration, GST number, etc. should be practical and full details provided.In addition, businesses should be careful to keep up with required reporting such as accounting, tax forms, etc. there is.

 

These are the key financial challenges Indian start-ups often face during their growth process. However, while financial hurdles are real for every business, good financial management can help any business be financially prudent from the start and remain competitive in the market.

Conclusion

A lot can be learned from these common startup funding challenges. Venture capitalists tend to take less risk with small, brand new companies. As a result, startup entrepreneurs rely on personal savings and network his loans to fuel their ventures for early and verifiable success.

However, finding funds from various sources requires overcoming the aforementioned hurdles. I hope this post helps you get your startup funding going smoothly.