Tuesday, January 23, 2018

Does Your Startup Really Need a Financial Consultant?

Guest article by Anthony Coggine, HR professional and business writer

Does Your Startup Really Need a Financial Consultant?

In the digital age, accessibility and autonomy are becoming a defining part of startup culture. With a growing freelance economy and so much public information aimed to help small business get off the ground, a growing number of entrepreneurs and small business owners are questioning the needs for services often associated with traditional business practices, such as consulting services. With so many conflicting views on whether or not startups really need financial consultants, it really all boils down to the individual needs of each business.

Here are some of the main arguments, both for and against, taking on a financial consultant that will help you decide whether or not your startup could benefit from these services.

A second set of eyes
You would be hard pressed to come across a business that doesn’t understand the value of a second opinion. When it comes to financial modeling, there are various benefits that come from an expert opinion, but it can also be a risky move if you don’t pick the right person.

      An experienced financial consultant can help you create a customized budget that will help you control your finances and highlight where you can make improvement
      Financial consultants tend to have a wealth of experience and can introduce new concepts and ideas that will help improve your financial performance
      Financial consultants can help you develop a financial model that makes room for lucrative opportunities

      Hiring a financial advisor is an investment, thus it’s important that you have goals in place for your new hire to ensure you aren’t wasting time and resources
      A financial advisor that doesn’t specialize in your industry or understand your company culture could potentially point you in the wrong direction
      Taking on a consultant's means opening yourself to someone else's opinions, which can backfire if you aren't ready to introduce new ideas

Before making a final decision, it’s essential that you establish any issues that you might be facing. In addition, map out your expectations in order to understand the various pros and cons of taking on a new team member and whether or not that will work for you.

Financial health isn’t only about dollar signs
Growing businesses often start out with a small core team that handle pretty much everything from marketing to human resources and financial matters. Bootstrapping your business naturally instills a sense of pride and unity within teams, but as you start to grow you run the risk of burning out your team members. While most companies take on financial consultants to help organize money matters, there are also numerous advantages for the human side of your business, as long as you know how to reach them, of course.

      Financial advisors can evaluate your team structure and make suggestions on potential new hires or training needed to streamline team efficiency and productivity
      Finance experts can help you execute a strategy that caters to your specific needs, whether that means cutting down on certain resources without compromising growth
      Taking on a financial consultant can help relieve burden from less experienced team members who may be taking care of financial tasks to save on costs

      Hiring a consultant to help you improve productivity is only possible if you have a good sense of team dynamics, as an outside hire cannot help you improve without your internal knowledge
      Taking on a financial expert that doesn’t have experience in your industry is risky as they may provide advice that doesn’t pertain to your company
      Startups should most likely avoid financial consultants that primarily work with corporate entities as they may not understand the needs of startups

If your startup has recently received funding or is experiencing an uptick in growth, taking on a financial consultant can help you transition smoothly as you grow.

Evaluating the pros and cons of taking on a financial consultant is a reliable first step that will help you assess whether or not your startup could benefit from an outside opinion and the services provided by a consultant. Luckily, as the startup ecosystem continues to grow, an increasing amount of finance experts are now expanding their skill sets to include early stage businesses in the digital age.

Friday, January 19, 2018

5 Smart Startup Funding Strategies

Guest article by Anthony Coggine, HR professional and business writer

Finding funding for your startup can be the most daunting task. In order to launch your company, you’ll need to raise the proper capital. But, where do you find people who are willing to invest in your idea? And, if you are able to secure funding, how do you determine the terms of said funding? How much of your company are you willing to hand over? How much control do you need? This guide attempts to answer these questions for you and help you form a plan of action for your startup’s funding.

There are many paths to funding your startup, but only one is the right one for you. Below are 5 smart startup funding strategies that may work for you:

1. The Self-Funded Startup
You may think that every successful startup courted venture capitalists. We see startups that secure hundreds of millions of dollars from large firms and giant tech companies, but seldom do self-funded startups make the news.

The truth of the matter is that not all companies requires millions of dollars in initial funding. A small online business owner may need only a few thousand dollars to begin their venture. If you’re startup does not require a large office building, proprietary technology, or a massive R&D team to start, then you might not need to sink an exorbitant  amount of cash into its first stages. In which case, your own personal funds can launch a new company.

2. The Crowdfunded Startup
If you need a large sum of money, but are still looking to bootstrap your startup, crowdfunding may be a great option for you. Mind you, the projects with the best funding have a great deal of digital marketing and advertising dollars pouring into their crowdfunding campaigns -- so you may need to still make a sizeable personal investment.

3. The Angel-Funded Startup
Perhaps the most alluring of all startup funding strategies. Angel investors truly are miracles. They give you the funds you need to start your business. What do they want in exchange? If they’re a true angel, then very little involvement past the initial investment. Angel investors of this kind usually take the form of family and close friends. Usually, however, the cash investment is low, typically no more than $10,000 to $50,000.

Angel investors outside of family and friends can invest quite a bit more into your business. But, that being said, their terms will be very different. Their involvement with your business could be rather extensive.

4. The Venture Capital Startup
The most impressive funding usually comes from venture capital firms. Attracting these large deals is difficult, and often, you must give up a portion of your company to secure them. By the same token, it is more likely that you’ll receive business coaching and mentorship.

If you’re company needs a large budget for R&D, this may be the only startup funding strategy that works for you. On the other hand, if you wish to have complete control of your startup from start to finish, this funding strategy will absolutely not work for you.

5. The Combination Startup
Often, startups don’t simply go to one funding strategy. Entrepreneurs will fund their projects with personal funds, money from family and friends, and acquired funding. You aren’t limited to just one strategy. In the very early stages of your company, you may use only personal funds. As things get further along, you may utilize crowdfunding platforms like Kickstarter and Fundable to reach new goals. Strategies change as your business grows.

Arriving at the right startup funding strategy can seem impossible. Weighing your options will greatly alleviate the stress of securing funding. Whether you chose funding your project yourself, crowdfunding your project, or turning to angel investors or venture capitalists, you should stick to what you feel comfortable with.

While there’s no way of knowing how interested others will be investing in your business, it’s important to retain your enthusiasm for your idea -- and you can retain that enthusiasm only if you proceed with what you believe is right for your startup. Examine your funding options, choose the best fit for you, and secure your funding in the way you see as best.