It’s also an ideal financial planning smart goal to increase your savings and manage expenses. Moreover, it’s not everyone’s cup of tea to remain in the traditional work setup once they retire. In such cases, starting a business offers a new lease of life.
Whatever the motivation, it does take a lot of work and time to start out on your own. And the last thing that should stop you from doing it is your age. You might think all start-up founders are 20-year-olds, but new research busts that myth1 . When you’re older, you have a greater chance at launching a successful business. It’s already widespread in places like the U.S., the U.K., Ireland and Australia. The 50+ age group is helming profitable new companies.
Technology and the modern world have a lot to do with this. Today, a brick-and-mortar store isn’t the only option. It’s easy to set up a home office or an online store. All it needs is for you to explore your own passions and interests and channel them to start your own business – but first you need to raise some capital.
The big questions to ask yourself:
- Is this the right business to start?
- Is this the right time to start the business?
- Are you the right person to start this business?
5 best practices to keep in mind when raising capital for your own business:
● Review your financial situation – A financial check-up or assessment is a must for starting your business successfully. Things like paying off debt and preparing a budget are pillars on which your entire start-up runs. It gives you scope to analyse your expenditures to find out avenues where you can get lean. It’s also advisable to have at least 3 years of expenditures saved up. Many people consider relocating before starting a business. You may want to compare your living costs and downsize your home to meet your budgets. You may also re-examine your lifestyle expenditures such as restaurant bills to check where you can save more. All of these will ensure you have some funds at your disposal. One cautionary warning is that you should avoid tapping into your retirement funds even though it may be tempting.
● Collaborate with strategic partners – There’s nothing better than finding the right set of people who can support your business and the cost of running it. You can rope in early adopters who can make an investment if they feel your product or service will be able to solve customer pain points. They can not only offer help in shaping your value proposition but also help you garner rich returns. There are many examples of collaborations between start-ups and strategic partners.
● Consider bootstrapping
– The most cost-effective way to maintain the financial health
of your company is to bootstrap. Paying as you go from the revenue you receive from early adopters and carefully managing your expenses can help strengthen the financial resources for your company. When you’re starting out, cash can be scarce. Bootstrapping early will give you the market validation you need for raising capital later. Some tips to bootstrap are:
- Limit fixed costs by sharing office spaces, using existing tools and technologies, delaying capital purchases, negotiating fees with all stakeholders etc.
- Treat variable costs like your own money and seek trade credit terms with suppliers, using digital communication mediums, hiring interns etc.
● Go after non-dilutive capital – Although not all businesses thrive on grants, solicitations, and RFPs, you can consider them thoroughly before ruling out these channels. Nowadays, most places have grant programs or loans targeted towards high-growth businesses at low-interest rates. The benefit of going for these sources is that they offer startups a considerable amount of capital for milestone-driven goals.
● Establish a credit line – Although it may seem impossible at first, bankers will turn to you once you have been vetted by your creditors.
It may not be a rosy path to funding for your business. However, with the right financial planning and capital raising strategy, you can make your start-up a success.