Over 70% of Americans starting a new business in 2023 are self-funding it, according to a recent survey commissioned by Intuit QuickBooks. But relying on your own money isn’t the only way to get a small business up and running.
Although it can seem simpler to invest your own money in a startup, other funding sources are within reach for new small business owners. Just ask Ami Kumordzie, CEO and founder of Sika Health, who raised $6.2 million from her personal network and her first round of venture capital (VC) funding.
In the inaugural episode of Mind the Business: Small Business Success Stories, Kumordzie shared advice about fundraising from her experience raising millions to start her business. Listen to the full episode below.
1. Fundraising is a skill you can learn
Kumordzie’s biggest need was for engineers in the technology industry. That meant her first order of business was getting enough money to hire them and pay their salaries. For that, she needed to raise millions of dollars, which she raised by pitching to people in her network and, eventually, big-time tech investors.
“It’s made to sound really magical,” Kumordzie said. “Like all of a sudden you woke up and had this great idea, and then a bunch of people started throwing money at me — and that’s just not how it works. By the time I was pitching to, say, Forerunner [Ventures], I had done my pitch a thousand times.”
A combination of practicing her spiel, taking advice on how to better convey her message, and creating documents to back up her pitch was a recipe for success, Kumordzie said. That helped her be prepared when more funding was at stake.
“Fundraising, like any skill, is one that can be learned, one that can be improved, and one that can be perfected over time,” she said.
2. You learn from “no”
You come out ahead every time you ask for money, even if you don’t get funding, according to Kumordzie.
“You either win or you learn. There’s no such thing as losing,” she said.
No one starts off with the perfect pitch to potential investors. Kumordzie used insights from each funding conversation to improve her pitch.
“The times that I learned the most was from the no’s,”Kumordzie said. “It was through that learning that I was able to correct and navigate, change this or that about the way that I tell my story and the audience to whom I tell it to so that I could find that right fit that I eventually landed on.”
3. People invest in people, not companies
Nurturing your relationships and communities are integral to fundraising for your business because investors ultimately say yes to you.
“Fundamentally, fundraising is a form of relationship-building,” Kumordzie said. “People don’t invest in companies. They invest in people. What that means is that it’s really important — for all aspects of your business, actually — to constantly be building your network and to be building relationships.”
It’s important to believe in yourself, your idea, and your unique position to bring the idea to life.
“You need to be able to convince yourself as well as investors of two things,” Kumordzie said. “No. 1: that the problem that you’re solving is a big, important, and urgent problem that needs to be solved. And No. 2: that you are the right person or the right team to solve that problem.”
Kumordzie had plenty of other advice about raising money, including how to fundraise with a smaller network, and explained how she beat the odds as one of the 0.34% of Black female entrepreneurs who venture capitalists funded in 2021.
About the Mind the Business podcast
New business? No problem. Mind the Business: Small Business Success Stories, from the team at Intuit QuickBooks, is the source for tools and resources for small business owners as they face new hills to climb. Hosts Jannese Torres (Yo Quiero Dinero podcast) and Austin Hankwitz (Rate of Return podcast) connect with entrepreneurs across industries as they start and grow their businesses. From securing funding to building a team, they’ll uncover what it takes to power success.
Related:
- How to create a website for my business: 8 steps and tips
- How to start an e-commerce business and succeed in 2023
This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.
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5 tips for organic business growth
It’s no secret that startups have a prodigious failure rate. In fact, according to a recent Entrepreneur.com study, the four-year survival rate for a startup is just 49%.
With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.
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Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.
As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.
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By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.
On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.
While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.
Here are just a few of those strategies to help you grow your business organically:
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Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company.
With home-based and e-commerce businesses, you can avoid expenses like rent and commuting during the early, lean years of your company. As an added bonus, working out of the home lets you write off parts of your mortgage and electric bill. You can then invest these savings back into the business to help you grow in the long term.
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A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.
Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.
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No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.
Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.
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As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup.
To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.
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From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research, and consider all the growth strategies available in order to give your business the best shot at success.
Do you know how sales taxes are impacting your bottom line? Check out our sales tax calculator.
This article originally appeared in the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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Featured Image Credit: Chinnapong / istockphoto.
