Moving Forward After Funding Failure

One of the toughest things about starting or sustaining a business is finding funding. Whether for a startup effort, an expansion, product development, or more aggressive marketing, every business needs money, and many times that means outside funding. There are a few ways to get outside money for your business:

  • Traditional Business Loans: Available from banks, credit unions, or small business administration and government loans, these are traditional ways of funding. Essentially, a business takes out a secured or unsecured loan and pays it back in installments with interest.
  • Venture Capital/Angel Investors: This funding comes from individuals or groups who invest in businesses in exchange for a percentage of profits and a portion of the proceeds if the business is sold or stock options if it goes public.
  • Crowdfunding: A relatively new method for business, this is when you use platforms like Kickstarter to get funding from those who are interested in your product or service.
  • IPO: When a company sells stock that is publicly traded.

There are other methods of internal funding and less conventional funding like seeking loans from friends and family. Essentially, for all of these different methods, you must prove that your business has either made money in the past or has the potential to make enough money to be worth investors’ time and money.

None of these methods of funding are guaranteed. So what happens when you go after funding and you don’t get it? Here are some keys to moving forward after funding failure:

Evaluate What Went Wrong (If Anything)

Depending on the type of funding you were seeking, there could be a number of reasons you did not get it. It is a good idea at this point for you to see the same issues lenders saw so you can fix them if possible. If it is not possible to fix the issue, then you might have to reconsider your growth rate or even your business idea. Here are a few things that could have gone wrong:

  • Your Personal Credit Score Is Too Low: When your startup is new, your business has no credit rating of its own. Everything is tied to you as the business backer. If your credit score is not stellar, a lender might see your business as a credit risk.
  • Your Pitch Did Not Inspire Investors: Investors hear a lot of pitches, and you should simply be prepared to hear “no” a lot.
  • Your Business Model Needs Work: While your idea might be great, you also need a path to making money, and yours may need refining before you apply for funding. You also may be losing money in ways that are not obvious to you but that investors see. Look for funding holes and repair them.

In his book, Lost and Founder, Rand Fishkin, founder of MOZ, reminds readers that when it comes to business, 5 in 10 will fail. Three of those that succeed will only make a small amount of money for investors, and two will make up for all the rest. Venture capitalists and even banks are looking for those two.

Even LegalZoom failed in their initial IPO before raising $500 million in their latest round of funding, which was designed to give current investors liquidity and move on to investors with a longer term outlook. Even large, successful companies have failed to get funding from time to time. Sometimes, it’s nothing you did wrong at all; you may just have asked the wrong people or at the wrong time.

Evaluate Where You Are Without That Funding

Just because you did not get this round of funding does not mean things are over. It is likely you are not out of business, but you will have to evaluate where you are now, as disappointing as that might seem, and where you need to go from here.

The first thing to do is look at your earnings now. This can also help with the previous step and determining what went wrong. Good accounting practices let you see if you need to scale back growth, return leased equipment, or take other steps to keep your business going. One of the most important steps to this is looking at your current cash flow. What kind of money do you need to cover your daily operations? Do you have that money coming in?

Secondly, look at why you wanted or needed that money in the first place. Was the need immediate, or was it to finance future projects that can be put on hold? If the answer falls into the second category, you can take some time to evaluate those projects and look for alternate funding sources or even shift your company focus.

Seek Other Funding Sources

No matter how you tried to get funding, there are other sources. If venture capital failed, you may have to look at loans. If one or both of those failed, you may want to look more creatively at some crowdfunding options. You may even simply want to look at other investors or banking options.

In business, a “no” often simply means you are that much closer to a “yes,” and that is no different with funding than with anything else. If one thing did not work, try another one. If you heard no, ask someone else, or reset once you have determined what went wrong and fixed it, and then ask again. This means expanding your network and practicing your people skills and sales pitches at conferences and wherever you go.

Even after funding failure, business is about moving forward, even if that means stumbling forward for a bit until you can get on your feet again. There’s no time to stop and wrestle with regret. A business that is not moving forward is already moving backward. Determine what went wrong if possible, take stock of where you are now, and seek other funding sources. This “no” may simply be one more step on your way to a “yes” and a successful round of company funding.

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5 Tools for Boosting Your Startup’s Launch

They say that every beginning is tough, however, the problem with this lies in the question: how does one define tough? Is it merely an effort to end result-wise or when observed from the standpoint of personal stress endured? Both of these aspects can’t be measured objectively, which means that the launch of your business is only as tough as you allow it to be. With that in mind, by utilizing proper tools, you can make your initial efforts much more effective, as well as reduce the amount of stress you’re supposed to suffer from in this pivotal stage. Here are five tools that could help you in this regard.

1.     Google Docs

Eventually, you’ll need a collaboration tool, yet, the choice of a collaboration tool might influence the structure of your projects. This is why it is not something you should pick straight away. Look at all the options out there and, most importantly, ask your team for their opinions. For the time being, most of the sharing, scheduling and collaboration can be done in a tool as standard and simple as Google Docs. Apart from this, Google Docs is a completely free tool, which is why there are virtually no downsides to using it. Even when you do embrace a collaboration platform, you can keep it as a side-tool.

2.     Google Analytics

The next challenge you’ll encounter is the one of your web presence and market research. Both of these things can be handled through Google Analytics. Sure, you can go to business blogs and read about experiences of businesses belonging to the niche you’re currently trying to penetrate, nonetheless, there’s no guarantee that the same will happen to you. With Google Analytics, you’ll be able to thoroughly study your own audience and get actionable first-hand data on their online behavior and habits.

3.     Dibz

As soon as you start, you’ll need to spearhead your digital marketing campaign and one of your first stops will be the issue of SEO. On-site optimization is just one part of the problem, but it is also something you can handle in a matter of hours. Off-site optimization in form of link building is something that takes a lot more time and active effort. This is also why you need adequate link building tools and Dibz is one of the amazing options for you to go for. Needless to say, this platform is great for both the process of link building and influencer opportunities research.

4.     Skype

If you’re running a remote team, you need a tool capable of hosting conference calls. Now, while some may argue that there are better tools for this than Skype, there are several perks of this software that simply shouldn’t be underestimated. First of all, it’s constantly updated, worked on and has an amazing customer service. Second, it’s compatible with various devices, which makes it even easier for you to stay connected with your team, your partners and even your clients at all times.

5.     Wave

Finally, when it comes to the issue of money, your overhead may not be that great but the sources they come through may be quite numerous. You might deal with a number of subscriptions, as well as invoices (both as account payables and receivables), which is why you need a tool that will allow you to monitor and manage this at all times. Due to the fact that money management is the most stressful part of your job as a fresh entrepreneur, this should take a huge burden off your back.

Conclusion

The perk of each of these tools lies in the fact that you don’t need to be an IT expert to use them. After all, Skype and Google Docs are probably the platforms you’re already using, while Google Analytics and Dibz have an incredibly beginner-friendly learning curve. This leaves you with Wave, which, although not familiar, is fairly easy to master and has a dashboard that will help you manage all your incomes and expenses quite effortlessly.