If you need business funding and want to land venture capital, know this: Only a sliver of companies receive VC funds to start or grow a business. But you can still find funding by being creative.
“You’re going to have to get creative to get your venture off the ground,” said Elizabeth MacBride. She and Seth Levine wrote “The New Builders: Face to Face with the True Future of Business.”
Levine, co-founder of Foundry Group, a VC firm, says the people who are starting businesses today are different from what most people envision. They are more racially diverse, often female and older. They frequently find themselves “disconnected from the people who control the capital and finance system,” he said.
So, you’ll need to focus your time and money on creating value to attract resources to start or grow a business.
Seek Out Advice And Mentorship To Start Or Grow A Business
In many industries, you’ll need to work hard to find others to collaborate with.
“Businesses outside of the tech sphere (often) don’t seek out their peers in the same way that the tech world encourages founders to,” Levine said. “It’s a huge advantage to have a strong network of like-minded peers to turn to as you build your business. It’s often essential in the building of great businesses.”
The false idea that entrepreneurs work alone “kills many businesses,” MacBride said. “Find your community of entrepreneurs, capital and network.”
Stay True To Yourself To Start And Grow A Business
Silicon Valley hijacked the definition of entrepreneurship to such a degree many people misunderstand how to launch new businesses, Levine says. An obsession right away with “size and scale has been toxic,” he said.
It’s also a trap to think the choice is tech or nothing. “There will be big successes in other sectors outside of technology,” MacBride said.
Start Or Grow A Business Where Your Skills Align
Entrepreneurs often become enamored with an idea like opening a restaurant even though they have no specialized skills for it, says Patrick Burke, managing partner of consulting firm Burke & Schindler.
“It’s practically impossible for an entrepreneur to create a sustainable advantage in a business where they don’t have any particular acumen or skill,” said the author of “The 10 Biggest Business Mistakes And How To Avoid Them.”
Leverage what you’re already good at. You’re more likely to build a business foundation that will attract what you need to start or grow your company that way.
Dole Out Equity Strategically
Offer equity to team members only if they have a skill that cannot be acquired with money alone, Burke advises.
“This super high bar generally relegates (most) team (members) to the status of employee — where they belong,” he said. “I tell entrepreneurs that the equity in their new business should grow to be their most valuable asset, so it should be treated as such from the get-go.”
Be Creative About Capital To Start Or Grow A Business
Don’t overlook sources of funding that might work better than venture capital funds. This includes crowdfunding and joining one of the new networks for diverse founders, Levine says.
Think Big And Act Big
Remember, Burke said, most big businesses were once small. Eventually though, “you need to expand your thinking,” he said.
Starbucks (SBUX) founder Howard Schultz thought bigger upon returning from Italy. He told his partners they should start selling brewed coffee in their Seattle shops. Up to that point they only sold beans and coffee equipment. That exploded the growth of the company to what is now over 30,000 stores.
Thinking bigger, acting bigger and actually getting bigger are “three wholly different things,” Burke said. “However they must occur in that order.”
It’s imperative you develop a bigger vision and establish and track concrete goals for sales, profits, or new outlets. If you don’t, Burke said, “bigness will not happen.”
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