Here's why you shouldn't take investor money for your business
Many entrepreneurs believe that if you take as much money as possible from venture capitalists as soon as possible, your business will skyrocket. In fact, sometimes instead of looking for investor money, you should focus on consistent growth.
A startup doesn't have to be funded by venture capitalists or local investors. Try to stimulate growth with business income.
This will also be your extra motivation to attract new customers. When you don't have a lot of money from the start of your business, you have to constantly think about the quality of your product, working with every customer and saving every dollar. You have to work with limited finances and it is absolutely the most invaluable experience for a businessman.
Sure, it doesn't sound easy, but if you're willing to go about your business, take the time to throw yourself at investors' money.
Let's break it down and outline the five main benefits of not taking investors' money:
1. You retain your freedom
When you provide your own business with money, you have a lot of challenges and stressful situations from which you have to find a way out, but you own 100 percent of the business. If you have a co-founder, or several partners, every decision you make will have to be coordinated with them. Financial issues will also take much longer to resolve, and with more questions.
2. You decide where your business will go
Once you have investors' money in your account, you have to rely on their opinion and try to adjust to their vision to keep everyone happy. At the same time you also want to realize your ambitions. Your investors may not always have the right experience and knowledge to help you grow your business to where it needs to go. But you just have to listen to them, because it's their money that fuels your business. Is that money worth giving up your own business control capabilities?
When it comes to making decisions, you can't just let your investors' voices pass you by, and making a decision on the fly will almost be unacceptable. If having sole control is important to you, then bootstrapping is your best bet
You, as the owner, founder and most interested person, will be in a working atmosphere at all times and will know exactly what's right for your team. Perhaps you'll need to bring in more employees, or introduce additional services for your customers? Investors may think it's not the most necessary investment, and you won't get their approval. That said, when you do the financing yourself, you won't need to ask for their approval. You'll be able to make your own quick decisions based on your experience.
3. No deadlines
Capitalists most often invest not because of altruistic intentions, but to make money. Sometimes it's a reputational investment, or money that may not come back to them until decades later. Either way, it will come down to potential profits. An investor can't have as much time as a business owner.
Most capitalists will walk away the first chance they get when they realize they've made all the profits they need, or they feel your business project might fail. If you decide to play the long game, you will want to have more stability, not count on random money that can disappear at any time when investors don't like something.
4. Enjoyment of your own efforts
When you build a business without help, you get extreme pleasure. A sense of satisfaction, a sense of accomplishment, when you look back and realize that all your efforts, mental labor, and the contribution of your personal finances have paid off. When your small business turns into a big company that opens up opportunities for other people and provides customers with a great product or service, there can't be a more satisfying feeling for a businessman.
If you grow your business through other people's capital, it will allow people to say "he only succeeded because of the millions he had in the first place." This discredits your achievement, but when you've achieved everything through your own labor, no one can take that away from you, and sometimes it's even more enjoyable than the money aspect.
5. You are forced to build a new business model
When the success of your business depends on you selling well and making a profit, you have to build a working business model right away. Many large startups turn into capital pits, which are lost at a tremendous rate. Large organizations prove that the demand is there, but the profits are not always what they need.
Bootstrapping forces you to create something new yourself that will attract new money and generate consistent income. The pressure will make you think faster and welcome new ideas into your business.
Was this article helpful?0 Posted by: 👨 Joseph N. Lewis