Growth

Seed funding: how scenario planning will help your startup grow

Seed funding could help your business grow. Combining it with scenario planning will see you on the path to success in no time.

A startup is, simply, a business that hasn’t gained any revenue yet. If it’s secured funding, however, it might well have some cash but a lot of outgoings. It’s at this point the business owner needs to be asking themselves key questions such as:

  • How are you going to price out your product/services?
  • What invoice or payment cycle will you enforce?
  • How much does it cost you, the business owner, per unit or service?
  • Will you need computer equipment, an office, insurance, etc?

What is seed funding and why is it necessary?

Seed funding is the earliest funding that you may be able to attract. It’s the capital needed to either start or expand your business. It’s usually a fairly low figure as it’s likely your business will still be in its conceptual phase, and it often obtained in return for an equity stake in the business.

It’s the cash injection that could potentially be the break your startup has been waiting for. Think of it as a stepping stone to becoming a money-making business – with it you can start creating a budget and thinking about where it’ll be best spent.

Scenario planning makes managing your funding easy

When you get your funding, how will you invest your cash effectively? Futrli’s scenario planning function allows you to input varying outcomes to calculate exactly that. Give yourself the knowledge of what could happen, and you’ll find yourself a lot more capable of coping with what will happen.

Startups grow into small businesses, which in turn grow into medium-sized businesses. Scenario planning will help you visualise how you get there. This is the first step into real-world business and you’ve got to start somewhere. Input your predicted fixed costs (do some research to make sure your figures stack up) and make that your base scenario. Go from there.

Where to find funding

There are a few channels you can travel down to secure funding. It’s advisable to invest personal assets in the first instance. Without putting your own cash or assets in the mix, outside investors are less likely to believe in your commitment. Think of asking your friends and family, look to crowdfunding, or seek governmental support or an angel investor.

Consider taking a loan rather than asking for investment. Family and friends are likely to want to support you, but less likely to want to be an investor. If you do obtain a loan, you’ll retain majority control over your startup. There is such thing as having too much money. Asking only for what you need will keep you focused as you won’t become complacent with plenty of money to fall back on. And, of course, you’ll owe less further down the line.

 

 

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