While you can certainly start a business for free, an idea that is properly backed, completely funded and heavily supported has much more scope. A business with cash reserves can make moves that a business without cash cannot. The opportunity cost of a business that has no money is going to be high. A business with no money cannot hire, it cannot grow, it cannot promote, and it certainly cannot expand. What’s more, when there is no cash on offer, the onus is on you as a business owner to do everything – and do everything well. When there are no cash reserves to back a business, any loss made cannot be covered easily at all. A lot of problems can emerge if a business goes out into the big wide world – and the biggest of all is the fact that opportunity and choice go out the window – you’ll have to make do with what you have.
If you’re serious about business and invested in your business, you’ll need to get people to back it. Moral support is great, but you need money and the type of people you’ll need to reach out to our investors. This can come at a cost.
If investors are not sold on your idea, they might request changes be made to the plan or structure so that they have more faith in parting with their cash. On one occasion a small change might be a tiny price to pay for a backers faith – but if you’re making seven changes to your business to please seven different investors, you’ve got a serious problem on your hand, and you may have opened a can of worms. What if investors make conflicting changes or contradict other investors? These situations can lead to backers pulling out en-masse and a complete loss of any financial capital, which could end a business. To avoid this, make your business an offer that an investor cannot refuse as is, and be very, very wary of making any changes to the structure of your business
If you think you’ve got a winning idea, but are wary about corporate investors, crowdfunding might be the way to go – if you know you’ve got a passionate following of your product, business or even personality. Crowdfunding can really put you on the map, but there are long-term issues to be considered, and you’re in debt to your backers and will need to offer things in exchange. If you can’t deliver on these debts, your crowdfunding campaign will fall apart, and you’ll lose backers. This isn’t a good look for any business!
If you’re in need of cash, keep an eye out for business grants from authorities or organizations. A good application here can set you up with the capital you need to move forward. These grants are quite common, but there will always be a bunch of applicants. This is why you need to stand out, but you’ll need to do just that to attract any kind of backer for your business.