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How to Start a Small Business with Limited Investors

If you're wondering how to start a small business, it is possible, even with few investors. You should remember, however, that establishing your very own business is a huge decision and can change your life. As a new business owner, you are bound to experience difficult challenges that will come along the way. Many individuals are good at selling or building things, but when it comes to the actual business side, things are different.

Developing a Good Business Plan

Creating a good business plan is a good step towards success and will help give you a rough estimate on your sales. This is the most vital element that entrepreneurs need to consider. Many small businesses do not succeed because they fail to develop a good and solid foundation for their business plan. When looking for investors who can partner with you, it is important to develop a good concept and a convincing business plan.

Funding your Small Business

Most businesses require a capital for things like marketing, physical facilities, inventory, incorporation expenses, taxes and so much more. Studies show that two of the most frequent reasons why most businesses fail is because of poor management and ill timed financing. It all boils down to simple cash flow; sometimes, there are companies who have stopped operations because they couldn't make it to the next few months until the financing comes in. There are two basic ways for you to finance your small business, namely:

  • Equity financing. In this type, you are to look for investors and sell partial ownership of the company in exchange for cash. A company investor assumes all the risk. If it does not succeed, they lose their money, but if it does, they are expected to make a greater return than the interest rates.
  • Debt financing. There are small business loans available these days that can help you fund your business.

Because your investors take on a higher risk compared to lenders, they are usually more involved in the operation of the company. They can offer advice and even set up connections to help grow the business. Your motivation should be the long term sustainable growth of the company even when your investors try to withdraw their stocks. Make sure you don't give up too much control of the business.

Equipping yourself with Business Knowledge

You wouldn't want to make the same mistake a lot of beginners make: not having any knowledge in accounting and business management. There are a lot of available accounting programs that you can use these days. Quick Books is an easy and user friendly program that will help you track your company expenses and cash flows. You can also enroll in accounting courses for beginners.

Establishing Realistic Goals

A business is expected to run with a good performance with the help of a realistic plan that you can implement and adjust as you go. Make the necessary adjustments to your business plan. The better the plan, the smoother your business runs. Be optimistic and strive beyond your limits.

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