How To Raise Capital For Your Startup Before Retirement
In your 50s, the most important concern you might have is that you have limited time. The years are passing and there are still a lot of things to do - one of them being to start your own business. For some, it’s a great retirement planning strategy.
Mar 2023
3 mins read
Share:
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.
Share:
PGIM India Asset Management Private Limited
(CIN - U74900MH2008FTC187029)
Toll Free Number: 1800 266 7446
Email: care@pgimindia.co.in
This is an Investor Education and Awareness Initiative by PGIM India Mutual Fund.
All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindiamf.com/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindiamf.com/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
The information contained herein is provided by PGIM India Asset Management Private Limited (the AMC)
on the basis of publicly available information, internally developed data and other third-party
sources believed to be reliable. However, the AMC cannot guarantee the accuracy of such information,
assure its completeness, or warrant such information will not be changed. The information contained
herein is current as of the date of issuance* (or such earlier date as referenced herein) and is
subject to change without notice. The AMC has no obligation to update any or all of such
information; nor does the AMC make any express or implied warranties or representations
as to its completeness or accuracy. There can be no assurance that any forecast made
herein will be actually realized. These materials do not take into account individual
investor's objectives, needs or circumstances or the suitability of any securities,
financial instruments or investment strategies described herein for particular investor. Hence,
each investor is advised to consult his or her own professional investment / tax advisor / consultant for advice in this regard.
The information contained herein is provided on the basis of and subject to the explanations, caveats and warnings set out elsewhere herein.
The views of the Fund Manager should not be construed as an advice and investors must make their own investment decisions regarding investment/ disinvestment in securities market and/or suitability of
the fund based on their specific investment objectives and financial positions and using such independent advisors as they believe necessary.
