Here are the 5 tips to ponder upon for choosing the best domains for startup:
1. Keeping scope for scalability in the
business model
Small business administrations often face
difficulties attracting investors as they cannot communicate how they will
scale their business. Investors will want to know how you take your startup to
the next level using their money. And how they will get the return on their
investment.
For that, you need a business model that
increases profits without raising costs at a similar or higher rate. If your
business results in an extension of time, money, & resources, stakeholders
are less likely to open their gates. Here’s how you can make your business
model scalable and attractive for investors.
2. Figuring how much to raise
Seeking funds from angel investors or a
bank loan, first, you must know how much finance you need for the business.
More is not always good. More funding means more liability for your startup.
• Write a business plan — Write a business
plan including a realistic financial projection. Pan down expenses the loan or
investment will cover and how much return it will generate. Ensure to justify
each financial need in the business plan.
• Set milestones — Planning fancy furniture
or unwanted automation won’t please your investors. Instead, you need to
showcase how you will spend their money to grow your startup. Be specific and
create measurable milestones, like achieve a particular market share.
• Positive cash flow — Creating a financial
model is critical for startups striving for expansion. The model demonstrates
the cash flow how you spend on training, production, marketing, etc. It’s
crucial to align the funding request with your cash flow.
3. Understanding fundamentals of funding
A business from scratch lives through
different phases of development. Funding options vary depending on each stage
of the business lifecycle. For example, funding in the seed phase is used in
market research and product development to attract additional investors.
Whereas, during exponential business growth, you need additional finance to
keep up with the demands. And venture capital financing comes into the picture
when the business reaches maturity and strives for competitor acquisitions,
mergers, or initial public offerings- IPO.
4. Choosing the right source
Finding the right source for startup
funding is complicated. As mentioned earlier, during the initial stage, young
entrepreneurs prefer personal investment. However, when business grows,
financial requirements also increase. Consequently, you might need more than
one option to fund your business venture. However, investment terms matter the
most. For example, sourcing money from Angel investors compromises a part of
the ownership in exchange for funds.
Every source has its own limitations,
processes, and challenges. Thus, only if you know what potential financing
options are can you choose the most suitable.
5. Funding wisely
When you take investment, you become
accountable to your funders to spend their fund as you said you would. You need
to be transparent if you plan to change course. Investors don’t fund your
startup to have luxurious furniture or infrastructure. They want your business
to grow and gain a high-profit margin so that they can receive more profits.
• Stand by the business growth plan
• Spend mindfully on what is essential for
the business
• Keep it transparent with your investors
