It would be great to start a business with all the money you could ever need to launch; funds for inventory, hiring, marketing and office space would be a dream come true. Many businesses turn to bank loans and investors to help close that money gap and get to their ideal launch position. But in taking money from others, are business owners putting themselves at a disadvantage?
Working to self-fund your business venture, though challenging, has extraordinary benefits – both philosophical and practical – that will pay off in the long term. Here are some key reasons why you should prioritize self-funding your business.
Hone your entrepreneurial and management skills
Growing your business from scratch means that you’ll get a taste of all aspects of your business: product/service development, marketing, finance, hiring and more. While your goal is likely to hire someone (or whole departments) to manage these tasks, you will be a better leader for having once done these tasks yourself.
Self-funding seems a less popular option because of the challenge involved. However, if you have the skills to obtain the money required to launch your venture, you’ll also develop the skills you need for growing your business, developing partnerships, attracting new clients and creating innovative services.
Whether it’s starting your business in debt with a loan, or bringing on investors early, you may miss out on key developments that will ultimately make you a better businessperson. If you didn’t have to sweat for you dollars, you may take them for granted.
Maintain control of your dream job
You decided to start your business because you had a vision for your work and your finances. Even if you’re using other sources of funding, chances are you have a good chunk of your own money (and certainly your sweat equity) invested in the business. Does your bank or investors care as much about your business baby as you do?
Other funders have one priority: getting a return on their investment. Their decisions are driven by that goal, which may clash with your own ideas about the kind of business you want to run. If you place a premium on being a good neighbor in your community but your funder only wants to increase profits, what happens when these two philosophies are at odds? Self-funding allows you to run your business the way you envision.
Invest in yourself
There will come a point when business is booming and you’re ready to take things to the next level. How will you finance an expansion, or a new product line? Of course, there’s outside funding (which it should be obvious by now isn’t recommended), or you could reinvest from your business’ profits. There is another option: betting on yourself by using your personal savings to boost your business.
Using your own money to fund your business is an investment in both your business and in you. What kinds of decisions might you make for your business knowing that your children’s college fund will grow, and not an investor’s pockets? Self-funding forces you to hustle for your business in a way that might just be the competitive edge your business needs to thrive. If you’re looking for help getting your business venture off the ground or growing your financial prospects, MCG Solutions is here for you. Contact us today to get started.