How To Finance a Business
I recently had the opportunity to interview Stephen Key, the author of One Simple Idea: Turn Your Dreams into a Licensing Goldmine While Letting Others Do the Work and also One Simple Idea for Startups and Entrepreneurs: Live Your Dreams and Create Your Own Profitable Company.
In this segment of the interview, Stephen goes over the How To Finance a Business.
Transcription for How To Finance a Business
CHRIS HAMILTON: You also talk in the book about something that always creates fear in entrepreneurs—financing. I realize we could talk for hours about this. If you have to fund a company, what do you do?
STEPHEN KEY: I’m all about keeping it small. First of all, when you keep it small it hopefully takes less money. And no matter what anybody else tells you; it’s always going to take two or three times more money than you originally thought.
How do you fund it? I funded part of my company with my own money. I saved the money. I found the money. My partner had a little money. Some people can’t do that. But having your own skin in the game keeps it front and center.
There are some new ways out there, like Kickstarter. That’s an extremely interesting way to raise money. Just be careful when you do borrow money from people—especially family. That rarely ever works out well. And if you don’t have the money, it may be time to reevaluate your situation. You might need to scale back, but you need to assess what’s going on.
That’s why the business plan is really important—to determine whether you have the money to correctly launch a successful business. The book talks about launching a product, but it also talks about how to stay in business. It’s one thing to launch a company and start selling a product. But how do you keep innovating? How do you keep ahead of everybody else? How do you stay in business for a long time? That’s the key to innovation—keeping your eyes on your cash flow. We talk a lot about that in the book.
It’s a balancing act. You have to wear a lot of hats and have people help you along the way. And fundraising is tough for everybody. As I’ve said, I try to reduce the risk by finding ideas that are very simple—ideas that can be manufactured very cheaply, very easily, and that don’t require huge amounts of money to get started.
Keywords: How To Finance a Business