Now that you are a business expert (!) and up and running you can now start to think about outside investment. A big challenge when starting a business from scratch is to garner trust so as I mention in previous posts the ability to self-fund is important in the very early stages. As they say a picture tells a thousand words and your ability to start doing something demonstrates a wide variety of skills and confidence in your idea.
Once you are at this stage and have started the engine the question is will more fuel make it go faster? Most large businesses or ideas you hear about seem to have ridiculous valuations and can raise millions in the markets to make their ideas a reality. The truth is often that these are teams with many years of previous success under their belt but have most likely put a lot of their own money into the project to get it to the stage or raising investment. So, the point you must consider once you are up and running with your idea is can additional funds help you to do more and grow the business faster?
Size matters and as the business scales it gives you the ability to take on talented people to grow the company. Other problems arise but nothing like the risk involved in starting out from scratch. So, what kind of funding should you be looking at?
Well there is a wide range of options from friends and family, credit cards, bank loans, grants from organisations like The Prince’s Trust, crowd funding, to angel investors and eventually venture capitalists. Suffice to say when you don’t need the money there will be people falling over themselves to give you some, but initially keep in mind what you actually need and focus on the best way to achieve that. I have seen people fail because they raised too much money and could not spend it fast enough meaning their businesses were taken over by the people lending them the money in the first place!
I talk about on the blog how I managed to fund my telecoms business with £40,000 on several credit cards. This was a super expensive way to get the business up and running but it gave me a level of autonomy and I was able to get the business established before looking for outside investors. The £40,000 got the business to about £200,000 of turnover with about thirty customers and it was on the back of this we managed to raise £150,000 for further expansion with several private business angels. They took 30% of the business but it meant we could professionalise the idea, take an office and hire staff. In the end I ended up falling out with them and mortgaging my parents’ home to buy them out. I was able to pay back the mortgage with interest within a few years.
At the same time, I agreed that my stepfather, Joachim, would join the business as Chairman and he would impart his wisdom as we looked to grow the business. From those early years he was an incredible inspiration and helped me to ensure that no matter how small we were we were super professional. From monthly board meetings and forecasts to building a team of talented individuals he was a great mentor. We sadly lost him in April this year just after his 66th birthday due to complications having caught Covid-19. We all miss him terribly and as part of his memory my mother has started the Joachim Roeser Memorial Fund which has been generously supported by his friends, family, and business associates.
The purpose of this fund is to support growing businesses and help them realise their true potential. Not only will they receive funding but also mentoring in return for telling their story on End of 925.
If you have been inspired in starting a business or have already taken the leap and are looking for further investment to make your idea fly please email fundme@eo925.uk with your plan and we will be in touch to discuss further.
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