A brilliant idea can ignite your interest to run a business. Nevertheless, a recent article, How to Pursue Funding for Your Company by Melinda Emerson says that if you think that financing is the best option to start your business rather than bootstrapping it with your personal resources, then be careful.
Here’s why.
- It may put you in a difficult situation.
Your potential investors have the control and may present terms and conditions that may put you in a difficult situation, either by undervaluing your company or by charging you a higher cost of capital.
- It may oblige you to focus on funding instead of the customer.
Building a customer base entails focus and commitment, the same with obtaining funding. Therefore, you will lose your focus and commitment needed for building your clientele once you get busy to pursue funding.
- It may put your business at risk.
Generally the proposal to fund your business comes with terms and conditions. There’s a lot at stake, so study and review them carefully and avoid making commitments hastily.
- It may cause to lose your control of your company.
When you opt financing, investors will appoint a Board of Directors and they may vote and agree to remove you as the CEO because as a young entrepreneur they don’t know how you will respond to success or difficulty.
Conclusion
These are the disadvantages of funding your business through outside financing. However, when you start your business with your own personal resources, you get to learn valuable lessons about the market, about the customer, about the product and yourself. It’s a compelling reason to build your instincts and hone your talents. Moreover, you have the liberty to choose the best workspace solutions for your small business. YourOffice offers you a wide choice of office and workspace solutions: flexible office space, team office space and virtual office packages. You’ll have access to a complete array of office support and concierge services as well as state-of-the-art business technology.
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