While economic experts continue to forewarn of a global recession in 2016, small business markets around the world remain relatively positive. Take the U.S., for example, where 77% of small business-owners claim to have a positive commercial outlook for the year ahead and 72% of respondents believe that their firm will before during the next 12 months than it did in 2015.
This type of sentiment shines like a beacon to aspiring entrepreneurs, and encourages them to launch their start-ups while the market remains robust. While it may be one thing to have a desire to launch your business in the existing climate, however, it is quite another to action such a vision and make it a practical reality.
How to Self-fund your Business
One of the main barriers to starting an independent business (or launching any kind of solo endeavor) revolves around the issue of funding. We have seen huge developments across multiple markets during the last decade, however, with the result that it is now easier than other to self-fund specific projects and pursue commercial goals independently.
This model has been particularly prominent in the publishing sector, where technological advancement and the evolution of online platforms have helped authors to engage their reader base directly and without the need for a traditional publisher. So while self-publishing was once considered as a last resort for writers, it is now a viable business model that enables them to retain 70% of their earnings (as opposed to the 20% offered through alternative options).
There are similar benefits to self-funding your business as an entrepreneur and going it alone in your chosen your market, particularly in terms of maintaining control and retaining all of your existing equity. There are also huge challenges associated with self-funding, however, so here are some tips that can help you at every stage of the process: –
Create Additional Income streams that can create a risk-free start-up fund
As a general rule, you may be loath to commit your personal savings to an independent business venture. After all, this type of personal wealth can provide a financial contingency for the future, and using it as a start-up fund can leave you with nothing in the event of failure (which despite the opinion of leading influencers and motivators is an option).
Instead, it may be worth considering the creation of new and additional income streams that help you to develop a risk-free start-up fund. One of the best ways to achieve this is through the gradual accumulation of passive income, which can be built without direct action or regular maintenance. With this in mind the financial markets offer a viable vehicle for securing returns, so long as you research your chosen products in detail and have clear fiscal goals in mind from the outset.
While your ability to create a diverse and fluid portfolio will be central to the level of success that you achieve, gold (along with similar precious metals) is likely to provide a secure source of wealth in 2016. The issue with this market is that it is saturated with service providers and brokers offering competitive rates and numerous investment packages. Fortunately, this article on the Personal Income blog offers an objective appraisal of the market, highlighting both the primary factors for consideration and the highest performance service providers on the market.
If investing is not for you, it may be preferable to utilize an existing skill or passion to generate additional income. This can include a range of activities, from selling your marketable skills as a freelancer and developing a blog that accepts guest content and paid advertising to creating bespoke products for a small, target market.
These types of activity can reap significant benefits if they are timed well, as was evidenced by the emergence of bespoke, independent bicycle manufacturers as the cycle industry in the UK developed a market value in excess of £2 billion ($ 2.84 billion. This highlights how additional income can be generated in the modern age, so long as you focus on marketable skill-sets and tap into existing market trends.
Create a repeatable, scalable and cost-effective business model
As you begin to accumulate funding, it is important to consider the implementation of a business model that optimizes your chances of success. The key is to create a repeatable and scalable model, and one which minimizes any initial hiring or start-up costs. The main elements of this model should focus on the areas of strength that underpin your business vision and you as an individual, which should then be built upon gradually as your scale your growth (and spending) over time.
This should start with the goal of minimizing your initial costs, primarily by committing to hard work and assuming many different hats as you look to manage strategic business elements such as sales, marketing and cost management. Not only will this build on your existing business knowledge across multiple tasks, but it will also enable you to oversee sales transactions from start to finish and identify areas of potential improvement.
The main benefit of this is that it optimizes the profitability of your business from the outset, consolidating your initial funding in the process. This type of flexibility is important in any market, especially as you look to grow your business strategically and improve on any areas of weakness. As you repeat core business processes you can gradually begin to scale your venture, spending on specific elements that can drive higher turnover such as recruitment, marketing drives and sales software.
Grow your business and Teams organically
According to Bloomberg, eight out of 10 new entrepreneurs fail in their business ventures during the first 18 months. This equates to a staggering 80%, and many of these firms fail due to the lack of a scalable business model. More specifically, they crash and burn as founders look to grow at a pace that is disproportionate to their revenue streams and profit margins, quickly exhausting their initial start-up funds and resources in the process.
This is a particularly debilitating issue for self-funded entrepreneurs, who cannot rely on external investors who already have an equity stake in the business. It is therefore crucial that you grow your business organically and gradually over the course of its first two years, as you look to expand according to a strategic plan, prevailing profits and the level of cash flow in your company.
Cash flow is king for self-funded entrepreneurs, so make that the profitability of your venture is sustainable and well-founded before attempting to grow it further. You can also apply this risk-averse approach to recruiting, both in terms of growing your annual wage budget and improving the dynamics of your employees. By creating multi-skilled and positive teams that fit your company culture, you can reduce the costs of employee turnover and surround yourself with people who share your vision in its entirety.
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