Home / Angel Investor Report Articles / Step 19: How Much Have You Invested Yourself In The Business?

step 19 how much have you invested yourself in the business

“Everyone needs to believe in themselves, because if you don’t, nobody else will” – somebody rightly must have said these lines. To get your idea or your start-up business on to the next stage, it takes some investment. Before you get out and seek help from other or generally ask people outside to invest in your start-up business, you should better take a note of all what you have invested in your own self.

Did you fully utilize your time to look into and research about your target sector, understand your strategy for marketing, discover your competitors and the revenue model of your business?

Did you ever take a note of all of this in your business plan?

The sad part here is that there are a lot of entrepreneurs who get too charged up and excited about giving a shape to their business idea because the first step they take is to get out procuring funds to have their idea out into market. No doubt it is a good thing to be enthusiastic and wholly passionate about your start-up business, but one also needs to keep in mind, however, is that, towards the end of it all, it is a business after all and that is exactly how most of the likely investors and consumers would be seeing it. These people would want to understand and know as to how they could profit by investing their precious money and time in you and your idea.

The whole key and concept to investing in your business by your self is not only talking about the financial aspect of the business, but giving your self wholly to it. When you’re in the naive stages of starting or beginning your business, you probably would not always have all the money needed to set the whole thing up, but it can grow by bounds if you spend it in the right sense.

A lot of entrepreneurs put forth their product or the service as the best thing because according to them, what they portray is there is no direct competition in the market for their service/product. This is not correct from the view point of an investor. Though there perhaps might not currently be a direct product/service competition in the market, there is most often always at least a rival from a substitute service or product. Interested investors would always be aware of these things and may immediately brush aside your whole concept if you deliver them with your ‘no competition for my product’ say. What the investor will as a matter of fact see is that you probably didn’t take the time to complete your due effort and research – hence you didn’t rightly invest in your self on your own.

Another field where the entrepreneur can come short is in the following situation:

Entrepreneurs seeking for funding are actually taken aback when investors ask them ‘How much have you invested in your business from your own pocket?’ You ought to be ready to show the investor how ready you are and willing to invest a certain amount from your own pocket, before you look for it outside. There have been many times where the business owners scowl on making 1 or 2 payments upfront or simply step back from the whole ‘getting funding’ process as they do not want to list their homes as validatory.

If you own a house, then the good news is that you can actually use it to obtain an equity loan. You need to however clearly understand of what a home equity loan really is; it’s a second mortgage and if you cannot or are unable to pay it back, you could end up losing your property.

If you have a life policy for life insurance that develops up cash value then you also might be able to borrow against it. What happens is that sum you actually borrow is deduced from what your donee would receive in case you die, if you don’t pay back.

You could also use a credit card to procure money to start up your new business. This, however, definitely is not one of the recommended ways as the financing with credit card involves huge interest rates which could grow in a random manner. Nevertheless, there have definitely been others businesses that did use and do use credit card for their financing.

In the case you are working a full-time job and want to start up your own small business in the extra time you have then you could also borrow money from your 401k retirement plan.

Before heading out for funds you can always ask for loans or funds from your friends or family. The downside to this kind of financing is that relations and emotions could get in the way of dealing; hence, if you ever borrow money or take a loan from your closed one, you must handle it as professional business dealing. You would need to have an attorney make a loan agreement and also read out the terms of the loan to both the parties. If you have borrowed a huge amount of money then you could consider taking in the individual letting you the loan as an investor and permitting him some equity in your start-p business. Post that, as your business continues to make more money and scale heights, their investment in it as well as the return on their investment would also mature.

It is advisable that you do not invest all of the cash or money you have with you into your business. Always invest an amount which is substantive to have a good start to your business, but it shouldn’t be an amount that if you happen to lose, no matter what happens that you would want to end up your life.

In actuality, start-up businesses are financed through various sources, including self-financing, financing from friends and family and many other resources.

As an owner of a start-up, you ought to take out the effort and time necessary to invest in your self. You ought to come to the investor’s bench all prepared, done your home work properly, ready to show the world that you believe in yourself by investing your own money where you are asking the others to put in theirs. Towards the end, if you are hard core passionate and excited about your business idea and your start-up, then it is contagious enough to motivate the others to invest in your business and buy your service or your product and get you all the support you need.

Other Articles

Role Of The Investor: