How Has The Recent Rise Of Alternative Funding Affected The Success Rate Of Businesses?
Having a business idea with robust marketing plans is not enough to establish and run a successful business. You need funds to fuel your dreams, and the capital can come from the most unexpected places. 2018 is not the year to rely on banks and credit unions for seed funds for start-ups or enterprises. The time it takes for application and approval can weather and wane your entrepreneurial enthusiasm. It is the time to turn to other sources of funding that may range from subdivisions of national funding agencies or private firms or individuals with money willing to make more money.
In the real life, getting a business up and running is a lot tougher than it seems from Hollywood movies, success stories, and inspirational blogs. Apart from tightening your plan from all sides, you need to ensure that you are opening the right gateways for the funds to gush in. Setting up a business might be tougher when there are multiple owners. As individuals, it is natural for you to not see eye-to-eye with the co-founders, but it is imperative to have a mutual business interest. The foremost objective of any new small business or a large enterprise is to make enough profit so that you can return the promised amount to the investors.
What are the new-age funding options smart companies choose?
Therefore, the smarter fundraising options include angel investors, crowdfunding, venture debt, and microloans. None of these options involves collaterals, and all of them are ideal for business owners. Several established businesses are now applying for public funding for the need for new technology and expansion. Almost all reputed companies including the 5LINX Enterprises, Inc, co-founded by Jason Guck plan on going public. These companies aim at raising the capital by launching IPOs, also known as Initial Public Offerings.
Companies like these have the edge over the newer ones while going public since they have the reputation of being stable and profitable. Their founders and CEOs have already proven to their target investors that they are capable of taking care of their money, and rake in more profits for them over time. You will often see that these companies turn towards an alternative funding platform like angel funding or venture debt alongside their IPO initiative.
Why do you need to think about better fund sources?
Almost 75% of the startups fail within the first three year period. They cite cash flow problems and finance management issues as the leading causes of failure. Not all of them are pyramid schemes and snake oil businesses, but letting the investors down can cause immediate trouble for the new companies. Even veteran entrepreneurs had found themselves in trouble-soup when the markets dived into volatility in the late 2000s. Many businesses had to declare bankruptcy to get away from the clutches of their investors. In reality, most companies fail to make money due to improper management and inadequate experience.