A start-up or startup is an undertaking or project undertaken by an individual entrepreneur with the objective to try, prove, and test a scalable enterprise system. Typically, start-ups occur for one of three reasons: to provide stimulation to the economy, to build a business opportunity, or to find success in an emerging market. The entrepreneurial mindset is one of the key ingredients in the success of start-ups. Start-ups usually require a significant investment of time, money and energy, but they also require careful planning and management. It can be a daunting task to start a business because it requires an unusual combination of highly specialized knowledge and soft skills, technological savvy, marketing acumen and entrepreneurial intuition. Thus, many entrepreneurs who embark on this journey to find themselves overwhelmed by seemingly insurmountable challenges.
In order to be successful in a start-up quest, one must first understand the start-up process completely before proceeding any further. When you invest in a new business venture, you should expect that the financial commitment you will make is one of your largest expenses. In many cases, start-up costs can run between one and three thousand dollars. While the amount of capital required to start a small business can vary, the general rule of thumb is around one hundred to five hundred thousand dollars. If you are a start-up entrepreneur looking to obtain capital from family, friends, a business entity, etc., the total amount of money you will require will greatly impact the final price you will receive for your start-up.
One of the biggest pitfalls for new ventures is overlooking one of the most important aspects of start-ups – identifying potential venture capital resources. Unfortunately, when faced with a significant start-up cost, many entrepreneurs make the mistake of assuming that venture capital is only available to larger organizations. The fact is that start-up costs do not always correlate with available venture capital. Some small business owners do not realize that there are many sources of start-up capital available to mid-sized or large companies.
The first thing you should do as you begin your search for potential start-up funding sources is to identify potential target markets. As a small business owner, you have unique opportunities to enter new businesses because of your personal knowledge and expertise in the field. Furthermore, because you will have little or no start-up debt to support your start-up, it will be easier to raise venture capital for your new business. Small businesses must also develop marketing campaigns that will draw in customers. Many times, businesses fail to attract customers because they focus on advertising and marketing strategies. If you want to succeed in your venture, you must make sure that you develop effective marketing strategies to ensure that your new customers know that you exist.
Another way to obtain start-up capital for your new business is to tap into existing resources. In addition to traditional financial resources such as credit lines from banks or loans from family members, there are also other sources of start-up capital that can be used to launch your new company. For example, existing financial institutions may provide start-up capital for a relatively low cost, if your new business has passed their initial business plan review. You can also seek venture capital from other companies or venture capitalists if you believe you have a unique product or service that can’t be offered by any other company. If you are not a business that is well-established, you may also be able to obtain start-up capital from a wealthy individual. Regardless of the start-up capital source you choose, however, it is important that you thoroughly complete the due diligence necessary to determine whether or not your investment will be successful.
If you have enough information about the start-up costs of your business but do not have a clear idea of the total startup costs, you should consider obtaining a start-up loan from a private investor. In addition to providing financing for your start-up costs, a private investor will also provide you with a cushion during the critical first six months of business. While most angel investors are focused on obtaining a portion of your equity rather than providing start-up capital, they may provide you with a significant amount of equity if you are able to repay the loan in full by utilizing funds obtained through your start-up business. Although obtaining start-up capital from a private funding source can provide significant start-up costs, it may also provide a substantial amount of equity if you are successful.