Everyone has heard about the frightening statistics which show how few startup companies actually survive beyond two years. Apart from the fact that it can be more than a little challenging to survive the fierce competition of those first couple years, there are some other things that most startup companies can expect, and which can be used to accomplish growth and success.
There are really four basic possibilities that can be pursued by startups to secure funding for growth, with those for being angel investors, venture capital firms, early-stage investment firms, and friends and family. Assuming that your startup company has a product or service that does provide real value to a specific audience of consumers, the first round of financing generally falls on friends and family, with the other three options intermittently available.
Debt equity versus bootstrapping
Another pathway for startups to achieve growth is called bootstrapping, and unlike traditional debt equity financing, it does not involve selling off any portion of your company in exchange for funding. Bootstrapping instead involves funding your business through the revenue generated by customer sales. The advantage to this approach is that it allows the startup company owner to retain more control of the company, and does not involve the sale of any portion of it.
However, the drawback to this approach is that it will generally take much longer to achieve success than any other kind of funding source, perhaps as much as five or 10 years if sales proceed at a slow pace. Debt equity on the other hand, will supply a major infusion of cash very quickly, but it involves a significant loss of control and sometimes ownership as well.
Internal challenges may represent one of the biggest hurdles to achieving success for a startup company, but they also provide one of the most significant opportunities for achieving success. If you can develop a strong corporate culture in your company, with a talented team of employees that are committed to achieving company objectives, those internal challenges can be converted into assets which help enable the pathway to success.
Does your startup company need funding?
Most startup companies need funding at some point, in order to maintain daily operations or possibly to fuel new growth. Contact us at Business Capital Providers, so we can consider some possibilities for helping your startup get to the next level.