The practicalities of starting your own business
Lisa Leighton is member of First For Business’ Dream Team.
“Dear Dream Team, I believe I have a strong business idea, but my head is spinning when it comes to the practicalities of starting my own business. How much of my own money should I invest? What sort of advice and financial aid is available? Should I follow my hunch and just ‘go for it’ or do lots of market research first?”
Here’s what Lisa had to say…
Firstly, you’ve got off on the right foot by asking questions; ask as many as you can! Knowledge is power…the more information you have at your disposal the better equipped you will be to meet the challenges ahead. Let us begin…
How much should you invest personally?
This will depend on the amount of money required to start-up. This differs from business to business and whilst being near impossible to determine exactly, you will need to assess what this number is in as rigorous a manner as possible as part of an overall business plan. And it’s worth remembering that the first number you arrive at is probably too low!
The amount you invest will also be driven by the overall funding structure of your venture. If you are funding it yourself you will need to invest as much as is required to get your venture off the ground. If other external investors or funders are supporting you it is often the case that they will want you to have “hurt money” invested, ie should the venture not succeed then losing your invested cash would be financially painful for you. In the eyes of both debt and equity investors this helps to ensure that everyone’s goals are aligned.
Market testing v “go for it!”
In taking your product/service to market you want to be as prepared as you possibly can be and having a thorough understanding of your potential market will be key to your success.
Online crowdfunding platforms are revolutionising the way that new start-ups not only fund their business but also market test their product(s). Rewards and donation based platforms provide a direct connection with your market place and can garner valuable product feedback – this would form part of a wider crowdfunding exercise and you would need to be comfortable with giving away equity, but it might be an area for you to explore.
I hope this has been of some help and I wish you every success in your new venture! Stay tuned for more questions answered from the Dream Team.