Funding and Financing are two standard terms you may have heard in the business world. What do they mean? We will describe funding and financing as a single term to make it easier for the casual reader. Simply put, funding/financing is the method by which an entrepreneur will acquire capital for investment in business projects. An investment can create a new business startup or provide funds to a business activity that is currently growing. There are three main goals of funding.
- To provide capital to a new business startup
- To finance a business activity with the objective of growth and expansion
- Mitigating financial risks that may occur during regular business operations
While we are at it, we might as well explain the diverse sources through which entrepreneurs can acquire the necessary funds to keep their businesses running. Business funding sources include self-investment, loans, equity, debit cards, foreign investors, stakeholder’s investment, crowdfunding, and distribution of business shares.
Now that we know what business funding is, it is time to discuss business funding rules. If you ever take an economics or accounting course, you will find books littered with information such as “top ten business funding rules you must follow.” Although it is pretty accurate that following specific rules and guidelines will significantly benefit businesses and result in growth and expansion, experience and judgment matter much more when making successful business decisions. Ask any successful entrepreneur if they follow a strict rule-based guideline, and the answer will always be “no.” This is because successful businesspeople and businesspeople do not rely on rules to forge their path; they take risks and ventures that go against these so-called rules. On that note, here are 7 Business funding rules you must break to become a successful entrepreneur.
- It is time to start thinking outside the box instead of following casual business norms. Thinking out of the package does not necessarily mean that you must take risks at each corner, nor does it mean that you must innovate your business operations. It simply means facing upcoming challenges with a positive mindset. If the economy collapses and the market stocks plummet, there is no shame in taking that risky business venture. However, one should always be prepared to face new challenges.
- Invest your money even if your business is declining. This may sound very unrealistic and downright dumb, but most large-scale corporations you see today are all businesses that fell into recession at a certain point. These organizations only came out on top by taking risks and investing capital in other business projects.
- Do not mind your business history; it does not have to be picture-perfect or brimming with your achievements and failures. It is important to remember that investors are not interested in your past; they only care about your current business idea and your plans going forward. So be ready to present those wild ideas that often pop up in your thoughts. You never know when an investor might consider your idea perfectly viable.
- Stop looking at what the competition is doing. Sure, it is essential to consider what your competitors are doing in the open market, but that does not mean that one should get obsessed with analyzing their competition. It is better to focus on your business and provide your attention where it should be rather than gawking at your competitors, who might be doing worse than you think.
- It is not compulsory to have a business plan that promises high-yielding profits with minimal chances of financial failure. Most lenders are not concerned with profits. They want you to invest their money, return the loaned money on time with interest, and keep them updated.
- Do not try to acquire too high of a loan to show off that your business plan requires enormous amounts of cash. It is better to keep loans to a minimum and to increase the number of lenders. Taking small loans from lenders is much better than taking a massive loan from lenders.
- Do not be afraid of failing. Failure is a part of life and a part of the business world. It is inevitable to happen, and when it does, rise to the occasion and learn something from your mistakes.
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