The Law of Resources - Law #22 under the 22 Immutable Laws of Marketing
“Without adequate funding, an idea won’t go off the ground”. The unfortunate reality is that a mediocre idea backed by a million dollars will get further than a great idea alone.
Would you alone jump onto the enemy lines without a backup? In most cases NO, and if you do then not without a proper plan behind. So is the case with Entrepreneurs seeking resource investment into their vision in the form of financial funding. We have already by now understood that it is not the good product that will help you win the market but a good and well planned marketing strategy. And to initiate, plan and execute the marketing strategy one will need funds, lots of them if you have to survive the period within which you will sustain and then succeed. To get a funding is to part with a stake in the company, sometimes minority stake and in some cases majority stakes and so goes the control over the company. Majority of the entrepreneurs who take this path are caught in a catch 22 situation one day or the other where they no longer feel a part of the company they dreamt of building. Such was the case for most of the fund seeking entrepreneurs so far but not anymore.
Today we have plenty of examples where entrepreneurs were able to raise funds with minimum efforts and with almost no arm twisters included. The best example is of ‘Coolest Cooler’ where the promoter raised a whopping $ 3.2 Million against his actual target of $ 50,000 only. This happened because of the online fund raising portal called ‘Kickstarter‘. This is a website where potential investors get to meet potential investment seekers with their business plan or a product prototype. In the case of the cooler example, the promoter had posted a video of the prototype of the coolest cooler in working condition and had invited interested investors to take a look. This project got so viral that an article got published on the ‘Business Insider’ magazine and increased the potential of the project multi fold. There are multiple website similar to the Kickstarter concept such as Gust, Fundable and seedrs.com.
There are also group of investors working as Angel Investors who invest on start ups have their own websites to which one has to submit their business plan and the investment required and if found interesting will get the funding. Why are the Angel Investors taking the risk might be your question. The Angel Investors are a group of individuals who have their own money or third party investors backing them are on the lookout for a good and reliable business plan to invest on. As a result they have stakes in numerous start ups at various levels. Usually, their investments are diversified that makes them immune to losses to a certain extent. If one industry fails the other will safe guard their interests is the main mantra here, like a wise man once said ‘Never put all your eggs in the same basket’.
There are instances where entrepreneurs are smart enough not to sacrifice their job initially and build a business model on a part time basis and once the business grows to a level where it needs complete attention is when they move over completely. However, a need for funding cannot be completely written off. Irrespective of what the business is, there should be some amount of investment required. If the entrepreneur can manage it independently it is good, else the only way out is through fund raising. One should not compromise the longevity of a business plan just because he did not have sufficient funds required. Let’s say you would want to start at a small scale business with whatever budget you have and let’s say you are even successful in getting customers and growing the business as well. Once the big boys in the industry get the scent of this they will not think twice before pushing a large corpus of funds towards the business line you are in and capsize your small boat with a huge tide of marketing activities which you cannot sustain.
It is therefore very wise to plan well ahead and seek funding as and when necessary in order to scale and reach the market before the big boys wake up. I remember a close associate of mine once telling me ‘you should always approach an investor when you least need money – you will have a better bargaining power then’. This actually makes good sense in the market as the more desperate you more you tend to lose in the form of corporate stakes and controlling parity. However, this is completely individual based and depends on how one handles the situation whist negotiating with the investors.
What digital media has done today is giving an equal opportunity to all. It depends one’s skill and talent in reading the trends well in advance and setting up a business. Be it an online business or an offline business, every business today needs a good digital identity to ensure they are not missing out when someone is looking out for what they deal with.
