This article talks about ten reasons as to why start-up need to be self-funded rather than funded by an investor:
The world keeps changing with the changing technology and trends. New hurdles, new challenges are faced everyday by everyone. Among this constant changing world there are many new startup companies that are doing their best to make a name for themselves and change the world for the better.
The crucial decision to every startup is considering how are they going to be funded and how are they going to expand their company in the competing environment. This decision usual comes down to two choices which are either funding themselves from their own pockets or getting funded by some other party in terms of investors or capitalists or loans. The startup companies arrives at a solution for this decision based on their type of business and the amount of funding they require.
Following are the ten reasons:
1) The startup company gets to make their own decisions. The operations that undertake in the company would be from the decisions of the startup themselves and thus any consequences or mistakes faced will be an opportunity for the company to learn from it and handle better for mistake free the next time.
2) All ideas and concepts that inspire the startup is fresh and raw, they are not influenced by anyone else or any other company who has contradicting ideas or concepts to what the startup wants to achieve as a result.
3) All operations taking place within the company and handling any situation is the style of the startups own making. The startup gets to make their own company rules and regulations thus having sufficient room to make changes when needed to best suit their plans to achieve their goal without any alteration in it.
4) The startup gets the opportunity of freedom to have an informal type of corporate culture within their company when self-funded thus allowing everyone within the company to express their own ideas. This creates an environment to achieve consensus soon.
5) When the startup faces any financial crisis or hurdle or if they get a good offer from some other company which is willing to buy their company it is easier for the startup to liquidate their assets and generate an immediate cash flow. They don’t have to wait for any approvals or any restraint when they find a good opportunity to be better.
6) The vision and mission set by the startup are their own and nobody will have the power to influence a change in that. The startup can always have the confidence that what happens is always an original work of their own which also gives them a sense of morality and motivation.
7) The startup gets to make a name of their own creating a brand image solely owned by them among the competing rivalry companies in the market. This also allows the customers to perceive the startup as strong, persistent and trust worthy.
8) What happens within the startup stays within the startup. If any mistakes or errors are made, they are within the walls of the company and they have the opportunity to make it right and make room for being better next time.
In the case of the startup not being self-funded and if any mistakes are made it leads to exposing the error even if corrections can be made which would result in bad faith, loosing brand image and loyalty within customers which may even lead to a maximum length of the startup getting shutting down.
9) The startup can always focus on their core values and look forward to expanding the company without having to look over their shoulder every day. The cash inflow and outflow is in their records of control which allows them to make room where necessary for dedicating themselves to important tasks with extra time and money.
10) There is no split in the revenue generated thus giving the startup better chances to invest their money again further more into their activities and operations to achieve more goals with better results.
Self-funding creates a sense of self-righteousness and it allows the startup to gain more experience from learning to pick themselves up when challenges arise making them stronger with every decision they make.