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Startup: Getting a Financial Edge

Many startups begin with a fantastic idea and highly specialized talent. But, a distinct lack of knowledge regarding the financial side. Investors and lenders see hundreds of ideas that are a great idea but not a great business. This usually dissuades them from any type of investment. But for intelligent entrepreneurs, this actually represents a great way to get a competitive edge. By using available technology to create real-time, professional, and accurate financial statements, startups can successfully court investors while also building themselves a firm financial footing.

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The Advantages of New Cloud-Based Accounting Systems

Just a decade or two ago, most enterprise accounting systems required expensive licensing and specialized knowledge. Small business owners often found themselves doing the books on paper ledgers or using spreadsheets to organize their data. Today, cloud-based accounting systems are available to give startups enterprise-grade technology at small business prices. Therefore, cloud-based accounting systems have some major benefits for new entrepreneurs:

  • Intuitive and easy. Cloud-based systems are generally as easy to use as a website. Designed for user-friendliness and a positive user experience.
  • Accessible from anywhere. Business owners access their accounting information and financials from home, client sites, and other offices. This offers a distinct advantage for business owners who need to travel or who are always on the go.
  • Advanced real-time analysis. Cloud-based systems provide advanced data analysis, in the form of professional and polished financial statements. By importing bank data and making it easier to access data from anywhere, cloud-based systems can offer real-time information — allowing a company to make better decisions faster.
  • Affordable and scalable. For a low subscription fee, you can go cloud-based. Furthermore, most companies offer different tiers of service. As a result, you can upgrade your system as you increase in volume and the system will scale to the size of your organization.
  • Secure and stable. Cloud-based systems run with best-in-class security standards, ensuring that financial information is kept safe. Small businesses are now a primary target for cyber criminals, making security a paramount concern. Cloud-based systems also have large volumes of resources available, so they will remain stable and reliable throughout a company’s operations.
  • Integrated and automated. Cloud-based systems can often be integrated directly with point-of-sale solutions and can be synced with bank accounts and credit accounts, streamlining processes and also reducing the chances of inaccuracies and mistakes. 

The Importance of Fast and Reliable Financials

Prospective investors often need to see financial statements as quickly as possible to make educated and informed decisions. Also, current investors need to see how your business is currently doing to determine whether it was a good investment. Many startups find themselves falling behind in their financial statements and it can be very difficult to catch up. After all, they are concentrating on revenue-generating activities rather than administrative activities. Investors and lenders may become frustrated, as they may feel that they are not being kept up-to-date on the company’s current performance.

Internally, fast and reliable financials empower a business owner to make the best decisions regarding their business. Startups in particular need to be able to see trends quickly. They need to know whether their current business strategies are truly working. Fast, accurate financial statements means it’s easy to see how your business is performing. So, if a business isn’t able to do this, it may have no idea of trouble until it’s too late.

Financial statements are more than administrative work; they are the core of a solid business. Through better financial statements, a business can procure new investors and keep their current investors in the loop. Luckily, the technology is there for many startups to acquire solid financial statements with ease. Cloud-based accounting systems automate many of the involved processes and can streamline the entire process. Business owners who are interested in developing their competitive edge may want to look into these systems.

Cloud-based Accounting Software for Small Business

Is accounting for your small business taking up too much time? Are you finding your books inaccurate or difficult to track? If so, it’s possible that you need an upgrade in your accounting software. A next generation, cloud-based accounting system has many advantages for the modern business.

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Superior Tracking for Income and Expenses

Small businesses often need to operate with extremely lean profit margins. Especially during the first few years or during delicate periods such as expansion. Without extremely accurate income and expenses tracking, a business won’t know how much profit it is truly making. This leads to poor decisions and difficulty adapting. Advanced accounting suites are able to provide for better tracking, through automatic error detection, imported transactions, and real-time updates.

When relying upon a bookkeeper, it is more common that a business will need to wait until the end of the month to find out more about their current accounting. This can be too late to notice trends or take advantage of them, especially in fast-paced market such as brick-and-mortar sales. Human error also accounts for many mistakes, largely eliminated through an accounting solution.

Improved Administrative Costs

Small business owners know that bookkeeping takes time. In fact, payroll alone can cut into administrative time significantly, requiring either that the business owner prioritize their accounting over revenue generating activities or hire an administrator. Modern bookkeeping solutions can conduct many tasks automatically, such as calculating payroll taxes and automatically paying bills through wire transfers.

Even small mistakes associated with accounting can be quite costly. Late payments lead to penalties and unhappy vendors at best — they can lead to substantial consequences, such as tax issues, at worst. Besides the price, this will cost you time, as a business owner often needs to do additional work in order to correct the problem.

Better Security and Regulatory Compliance

Businesses often struggle in terms of both appropriately securing their data and achieving regulatory compliance for their accounting. Which, is necessary not only for general business operations but also to procure loans and investors. Accounting suites will follow generally accepted accounting principles and also have updated compliance for many industries. Top of the line encryption and authentication standards keep you secure.

The advantages of a standardized accounting system include the ability to better recognize profits and the ability to produce income and expense statements that are readable by anyone within the financial industry. Without a standardized system it can be difficult for an organization to identify pain points.

Reduced Accounting-Related Expenses

Finally, an investment in a comprehensive accounting suite will save a business money on their accounting services. A solid accounting solution will often preclude the need for a book keeper and will make it easier for a company to file its regular payroll and tax returns. Managing both income and expenses will be faster and easier, leading to fewer mistakes and a limited time cost. Overall, accuracy and real-time reporting will improved while reducing accounting services.

Accessibility and Scalability

One of the principle hallmarks of a new age accounting system is a cloud-based platform. These platforms can be accessed from anywhere, making it easier for small business owners to check and modify their data from anywhere in the world. These platforms are also extremely scalable, letting a business grow without constraints and without costly upgrade and licensing fees. Altogether this creates an agile and mobile infrastructure perfect for a business trying to grow.

Ultimately an accounting suite saves any business a significant amount of money. Improving upon their operations and giving them more information with which to make informed decisions. There is some cost associated with upgrading to a next generation suite, but, you will reduce reliance on both internal and external accounting staff.

Startup Management – Top Financial Insights

Startup management is a challenge. Keeping it open can be even more difficult. Business owners need to understand the finances of their business inside and out if they are to survive. Before getting started, look at these key insights.

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Always Keep Your Personal and Business Finances Separate

It is very easy for a small business owner to entangle their own finances with their business. Small business owners need to be conscientious about keeping everything separate or they could find themselves in a lot of danger. Though a business may be your livelihood, taking the appropriate steps to protect yourself and your company will prevent issues down the line. If you fall into financial trouble or your business does, the other entity will not be impacted.

Personally guaranteed loans are one way that owners may end up entangling their own funds with the business — as are unchecked draws taken by owners against the company’s profits. There are also some more subtle ways it can occur. Either way it becomes difficult to control the company’s success and ensure that it is able to stand on its own. If properly separated, a business can fail without substantial adverse impact to an individual. If not properly separated, it could bankrupt its owner.

Make Sure to Educate Yourself Appropriately

Most business owners understand their product or service very well. But that doesn’t necessarily mean that they understand the intricacies of owning and operating a business — this is an entirely separate topic. It’s important for business owners to invest in themselves, their business, and their future by taking seminars and classes and keeping up to date on the factors impacting small business owners in their area.

If you don’t know where to start, the Small Business Association often has local resources available. There are also classes at local universities and online training courses. At minimum, small business owners need to understand basic accounting and how to read their financial statements. This is what will tell them whether or not their business is truly a success.

It’s Easier to Reduce Costs than Increase Income

Cost management is one of the most important aspect of managing a business. 82% of small businesses that fail do so because they run out of cash. But many companies mistakenly try to manage their cash by improving their income, which may not always be possible to do in either a fast or stable way. Reducing expenses, on the other hand, has the same ultimate impact while also being far easier to do. Expenses are entirely under control of the business, whereas income can be difficult obtain and to predict.

In general, businesses have two costs: fixed and variable. Fixed costs are things such as rent — but “fixed” doesn’t mean that they cannot be negotiated or improved upon. Every time a contract comes up for consideration, a business should seek to improve cost or value.

There are additionally variable operating costs, such as travel. Carefully tracked and reduced — technology often helps. Technology can provide for optimization of an organization’s logistics, tracking of expenditures, and better collaboration.

Create and Analyze Your Leading Metrics for Success

How can you tell that your business is doing well? The best way is to define success based on a specific metric or set of metrics. It may not just be as simple as ROI; you might also measure success based on customer acquisition, cost per customer, or customer retention. All of these things can tell you whether your current strategy is working.

Accounting and customer relationship solutions are an excellent way for a business to track their strategies and to optimize their organization. These solutions make it easier for businesses to find the information they need without having to invest a lot of time.

Choose the Right Accounting Software

A business hinges upon the accuracy of its accounting — and a lot of the company’s accounting will rely upon the technology that it employs. Cloud-based accounting software is advantageous in a few ways: access your information from anywhere, have virtually unlimited resources, and scale upwards as the company grows. Further, these solutions are usually more affordable than other options, and they are intuitive and easy to use.

The more a business owner understands about the finances of their small business, the better their odds of success will be. By following the above principles, they should be able to reduce risk and manage their cash flow with greater predictability.

A Few Important Things to Consider Before Starting a Small Business

Have you decided that it is finally time to move forward with your business idea? Many people love the possibilities of self-employment, but they are worried about the potential risks that can occur from these efforts. Right now is a great time to start chasing your dreams and get the business off the ground. But, there are a few things that you need to consider before you undertake a business venture.

Here at Easier Accounting, we have worked with many small companies in every stage of business building. We have seen the successes and failures of startups and seasoned entrepreneurs, and we are working hard to pass this experience to our customers so that they can be ready to succeed. Regardless of the industry, the same business management and accounting principles apply. So, it makes sense that you should tap into our expertise instead of trying to re-invent the wheel by starting everything from scratch.

If you are getting ready to start a new company, then we suggest that you consider these factors before you launch your efforts:

Keep Your Eye on the Prize

Entrepreneurs usually start with big dreams, but then they become disillusioned because of problems or roadblocks that are encountered along the way. Maintaining clarity about the reason you wanted to start a business is an important factor to help you keep the motivation that is needed to push forward, even when things get hard.

Start by asking yourself one question: Why do I want to start a business? Consider your goals, the things that you want to accomplish, and the lifestyle that you are trying to create. Be specific about the details, and make sure that you write down these reasons. If you have a difficult day, then you can always refer to these notes to keep you going.

Whether you are starting a business to boost your income and gain more freedom, or you are tired of having a job and reporting to a boss, it is important that you keep this focus in the front and center of your mind. As a business owner, you can’t coast through the afternoon surfing the internet like many low-paid employees. Instead, you need to be willing to look at the issues and take action to support the needs of the company.

Identifying a clear “why” can also motivate the people that you hire. Many businesses have mission statements that are shared with their staff and customers, helping everyone to capture the vision of the owner.

Set Goals and Stay Accountable

Once you identify your reason “why,” the next step is to outline the short-term and long-term goals that you have for yourself and your business. These goals need to be in writing, and you should align your attitude and thought patterns with the goals on a daily basis.

Instead of beginning the day by browsing on your favorite social media website, dedicate the first hour of the day to things that will build your attitude, mindset, and determination. This time is a great opportunity to review your goals so that you can be sure that your actions are in alignment with the things that you are trying to accomplish.

Put together a list of things that are working, as well as the things that are getting in the way of reaching your goals. Then, look for solutions so that you can overcome the problems that are hindering your success. Evaluating your progress will help you avoid some of the day-to-day tasks that might distract you from bigger efforts.

Focus on Marketing Your Product and Asking for the Sale

Regardless of your industry, all businesses are focused on sales. If you want to grow a company, then you need to be willing to put in the effort to connect with new customers, showcase the benefits that you can offer, and ask for the opportunity to provide your product or services for a fee.

Yes, it is important to keep up with back-office work and product development. But, none of these efforts will be worthwhile if you don’t have new sales coming through the door. So, be careful to avoid the trap of spending too much time behind the desk when you should be out there connecting with your network.

For example, sometimes new business owners get so caught up in the tax deductions and financial projections, that the business is only based on theory instead of action. One of the best things that you can do is find an experienced outsourced accounting team to pass off these responsibilities. Then, your time will be freed up so that you can focus on the activities that will generate more revenue for your company.

Identify the methods that can be used to build relationships with your team. Then, focus time and resources on those efforts. You might consider the benefit of activities such as:

  • Building the right company culture with employees
  • Lead generation online or at events
  • Creating the right team to support your efforts
  • Reaching out to current and past customers to invite them to come back again
  • Writing procedures that improve productivity and efficiency
  • Developing customer service and other skills that are needed for customer outreach

Remember, you won’t be in business for very long if you don’t have a strong sales strategy. So, don’t overlook the importance of sales at all points in your business efforts.

Be Willing to Get Your Hands Dirty

Starting a new business is exciting and rewarding, but it isn’t right for everyone. Be prepared to put in a lot of work and effort to get things off the ground. You need to be willing to do the difficult things that other people don’t want to do. Many new business owners agree that their weekly time commitment goes up when they transition from being an employee to an entrepreneur. But, these initial efforts will set the right foundation for future success.

There are times when business owners need to “be in the trenches” with their employees. Whether it is a busy day and someone is home sick, or you are launching a new marketing campaign to previous customers, you might find yourself in the showroom or working alongside the customer service team.

Being willing to do all types of tasks will show your employees and customers that you are committed to the effort. Your example can show great work ethic and commitment to quality, helping to raise the results of everyone around you.

Tap Into the Experience of Other People

Building a business can be a lonely experience, but you don’t have to navigate the difficulties without learning from the experiences of other people. Yes, you will carry many responsibilities while you are overseeing the daily activities of the company. But, don’t be fooled into thinking that you have to do it all by yourself without the support of other people.

There are two ways that you can get the support that is needed in your company: hire people to take care of the busy work and look to industry experts who can offer professional advice.

If you feel like you have to do everything, then your business won’t get very far. Be willing to delegate and hire the help that you need. Building the right team is a valuable way to set yourself up for success. Having employees and contractors that you can lean on when you need assistance will reduce your stress and allow you to focus on other important aspects of running a business.

Bringing in employees means that you need to train your team and take on the overhead cost burdens. On the other hand, you might consider using professional contractors who can bring the experience that you need. Look for areas where you struggle, and don’t be afraid to pay for the services that will help you overcome these weak points. Recognizing that you need help is a valuable trait in a leader, and you will set your business up for success if you are willing to look to others for the education and resources that you need.

Learn More about Small Business Accounting Services

Here at Easier Accounting, we know that you are carrying a lot of responsibilities when building a new company. Our team is focused on the financial tasks that will help you succeed. We have worked with many other small business owners, allowing us to develop the experience necessary to implement a proven system.

There is no doubt that a solid accounting and bookkeeping system will be the foundation for your business success. Whether you need help with the busy work or you are looking for someone to assist with tax preparation, we are here to offer the assistance that you need.

One of the benefits of the services that we offer is that you have the opportunity to customize the plan to match your needs. Talk to us at Easier Accounting to see how we can help: (888) 620-0770

Delegate Tasks – How and Why

Business owners usually have the habit of wearing many hats; this can be helpful in the beginning stages of a company. However, as business takes off, wearing too many hats will start to work against you.

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The best leaders don’t just do all of the work in the company. A great business owner has a staff made of people will different skill sets. You need to use these people; delegate tasks to run a highly efficient business.

You will need to start identifying tasks that aren’t crucial for you to accomplish. Start looking for people in your company with the affinity to take on some of these duties.

Why Delegate Tasks?

Any great leader realizes that the ability to delegate tasks is essential. You have too much on your plate already that you don’t need to be doing. Some obligations require your attention, and this is where your mind should be.

Holding control of too many tasks also gets inefficient. It’s incredibly easy to spread yourself too thin. When this happens, the quality of your work is bound to go down. Focus on the work that truly no one else could do.

If you feel like your company couldn’t function if you took a day off, this is a sign it’s time to delegate tasks. You have staff that wants to work, use them!

How to Delegate Tasks

As your team performs their jobs, watch for performance. If someone expresses interest in taking on other assignments, try them out. You’re looking for who does what best and with the most efficiency.

As different talents begin to emerge, think of how you can apply these team members to new tasks. Look for the people who are really getting invested in their work and taking personal pride in what they’re doing.

A healthy combination of a hard worker who takes pride in their work and specialized skills will make a great resource for getting things off your plate. You need to be able to walk away for a day or two without worrying about your company grinding to a halt.

Start delegating tasks within your company, have someone keep you accountable. Choose someone you trust to watch what you’re doing. If you start to fall back into the old habit of doing everything yourself, be open to a call out. Then, find someone who can handle the menial tasks and get back to the work you need to be doing.

Startup Growth Management

Experiencing startup growth is an outstanding achievement for any entrepreneur. However, with startup growth comes new hurdles you will need to face head-on. Too much growth is what we call a “good problem” to have, but if your new challenges aren’t solved appropriately, you could end up dealing with some serious consequences.

Every new business will face challenges, but, not every business will know how to deal with them. When you start to experience startup growth, keep these things in mind.

Stick with What You Know Best

This phrase means a couple of things. First, as an owner, your time is very valuable. You should be spending your time in places where only you know the ropes. Don’t take on more than you can handle, and, if you have someone on staff who can take care of something more efficiently than you can – it’s time to delegate.

The other side of this is to keep your efforts on what you set out to do. If you have a great product or service that’s working, stick with it. It’s always very tempting to expand into new domains but, this can introduce some unnecessary risk. The CEO of Meetup said it best.

“startups die of indigestion not starvation.” – Scott Heiferman

Explore Your Biggest Hurdle

One of the biggest obstacles any business will face is finding and training the right people. Not having the best staff for your business will hurt your chances for growth and is horrible for managing startup growth.

High turnover rates drain a company of time and money. Spend a little more time finding the right person who will take their training and stay with your business. You’ll save a lot of time and avoid many headaches getting the right people for the job.

Find New Strategies

It’s natural to keep on with strategies that you know well. However, as the landscape evolves, new strategies will be required. One example could be not engaging your business in social media or starting a blog. In this case, don’t just continue with what you know, especially when it begins to fail or prevent startup growth.

Get into Bootstrapping

Just because you’re starting to see some startup growth, don’t succumb to the temptations of spending more. Buckle down and build up your company’s resilience. Growing spending is a common mistake many startups make. They start to see more income and immediately start spending it. It’s not difficult to comprehend why this is incredibly dangerous to do.

Stay Close to Sales

You know your product inside and out. In the early days, you probably made sure to oversee your sales department. But as startup growth begins accumulating and new hires start rolling in, it’s easy and natural to start distancing yourself from sales.

Always keep an eye on your sales department. Sales are what keep your business alive. You don’t need to “helicopter” your sales, but don’t let it get away from you.

Be Ready to Adapt

You need to be able to walk away. If you have a product or service that you think is awesome, but just isn’t working, let it go. Don’t get hung up on an idea and try forcing it to work. Modify and adapt to success.

Choose the Right People

Many business owners have a habit of dealing out titles to people that are close friends or family members. This is fine if they know what they’re doing. But, you don’t want your startup growth to suffer because your friend doesn’t have good managerial skills. As mentioned earlier, find the right person for the job, especially when we’re talking about management and other executive positions.

Cloud-Based Accounting Benefits

Is it time to investigate a cloud-based accounting solution? What is “the cloud” anyway? Why would you want to take your business accounting to the cloud?

First, understand exactly what cloud-based accounting is. Cloud-based accounting solutions utilize a subscription model in exchange for hosting your accounting. One advantage of this is you can access your books whenever and wherever you want.

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No matter what business you are running, chances are you’d rather be doing what you love instead of managing your books.

Desktop Application vs. Cloud-Based Accounting

When using a piece of software for desktop, you are responsible for that machine. You need to make sure you have your information secure from viruses and hackers. You will also need to keep backups of the system to be sure you don’t lose your valuable data.

When moving to a cloud-based accounting solution, you’re no longer responsible for everything in the system. You don’t need to worry about the condition of your computers or keeping them secure. A quality cloud-based accounting provider will be using state of the art security tools and have teams at their disposal to keep things running smoothly.

Get Your Information Fast

Every small business owner has been in this situation. It’s after hours, and you get a call from a vendor or distributor. They would like to know why a particular invoice hasn’t been paid or would like to verify some information with you.

If you’re still at the office, maybe you can access this information. What if you’re at home? What if it’s locked up in your accountant’s computer back at the office? You might not be able to get to it.

If you’re using cloud-based accounting, however, it’s incredibly easy to look up anything you’d need on your laptop or even your phone.

The Remote Workforce

The businesses of today usually have at least a couple team-members who don’t work from the office. With cloud-based accounting, you can give access to everyone that needs it.

If you have some employees that work remotely, this means they can get access to what they need when they need it.

Combine Other Apps

Your cloud-based accounting software is just one piece of software of which you’ll have access. Another significant advantage of cloud-based software is the ability to integrate with other programs.

Cloud-based solutions make it very easy to extract or use information for use in other tools.

Professional Accountants

There are several services (like Easier Accounting!) that combine cloud-based accounting programs with professional accountants.

This solution gives you the best of both worlds. Not only do you receive all the benefits of cloud-based software but now you can have real accountants in control of your books.

Hiring an in-house accountant can be incredibly expensive. Most services that include professional bookkeepers come in at a small fraction of the cost of going completely in-house. Cloud-based accounting is a great way to save your company a lot of money.

Outsourced Accounting – The Pros and Cons

Outsourced accounting has been an option used by businesses and start-ups for years. Unless you offer accounting services, a highly-qualified, in-house accountant can be incredibly expensive. If you’re bootstrapping for your start-up, it may be tempting to take on your accounting yourself; is this going to be efficient for you?

It’s not a new idea to outsource your accounting department. Chances are pretty good you’ve thought about it or are actively considering this option. Wherever your business stands with it’s accounting and payroll efforts, take a look at the following pros and cons before you pull the trigger.

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Advantages of Outsourced Accounting

In short, outsourced accounting means saving your company time, money and headaches. Outsourced accounting also means you’re gaining access to a fully qualified accountant, without paying a $40,000+ salary. You don’t need to supply an outsourced service with health insurance, vacation pay or any other benefits. An outsourced accounting service does it’s own hiring. No need to find that perfect fit for your business; the service you use has all of that covered. It can be daunting finding that perfect team player that understands your business.

Experts On-Call

It’s an outsourced accounting firm’s job (and in their best interest) to find qualified, high-quality accountants. As mentioned earlier, you won’t be spending your own time and resources finding the perfect accountant for your team.

An outsourced accounting firm is entirely made up of professional accountants that deal with accounting all day, every day. There’s also a lot of competition in the field of outsourced accounting. What this means for your business is the service you use will always be keeping up with the latest trends and techniques to keep your accounting on the cutting edge.

Save Time

If you’re the one currently taking on your accounting, outsourcing will clearly save you that time. Staying on top of your businesses accounting and payroll is a constant drain on your time and resources. There are probably different areas where you should be spending your time and energy in your company. If you’re not an accountant you may also be getting overwhelmed just by keeping track of these things. Chances are you won’t be spending extra time researching what’s new in the world of accounting.

Save Money

A professional accountant’s salary starts out right around $40,000 and climbs with greater experience and responsibilities; and, this isn’t including benefits like health insurance. Outsourced accounting services, in general, are a tiny fraction of this. Every business enjoys saving money and investing in parts of the business that isn’t an accounting department. You also will be saving the money you would be spending on equipment and new software for the department. You won’t be paying for the training of your new recruits or their vacation.

Outsourced Accounting Weaknesses

Even though outsourced accounting has many benefits, some companies decide to keep their departments under one roof. There are great services that address these following issues. But, for some lesser quality outsourced accounting services these issues persist.

Security

Every business should make a high priority of their security. Protecting your sensitive data is in the best interest of your company for obvious reasons. When considering different options, make sure the provider you choose respects the security of your data just as much as you do.

Location and Language

If you’re in the USA, you might want to make sure operations actually happen in the USA. Some accounting companies have offices all over the world. It’s must more efficient to talk to an accountant that natively speaks your language.

Less Control

A high-quality accounting service will place training of accountants at the top of their list of priorities. Sometimes companies do enjoy having very particular training, and the ability to oversee operations first hand.

Whatever course you decide to take for your business, go over the pros and cons. Do your research, and find the company that fits your operation best.

Bootstrap Funding vs. Crowdsourcing vs. Venture Capital

When you’re starting up, you have several options for funding your new company. The model of your business may be a deciding factor on what kind of funding you should pursue.

You may also want to look at your model, to see if it can be optimized in any way to make your need for funding lower. What type of financing is best for your company?

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Venture Capital

One of the most tempting forms of funding is venture capital funding. If you, your team and your fund sources extremely confident in your business model this may be the way to go. The main advantage of this is the possibility of getting a sizeable amount of money to fund your ideas. Investors can be aggressive, especially when they have faith in your business plan and the research behind it.

You also will most likely be getting your funding from people who have high experience and expertise in the business world. Your investors will probably be very willing to give you advice and direction, so they’re not losing money on you. You also have a high probability of making powerful connections by being in close proximity to successful business people.

These advantages come at a cost though. As investors pour money into your startup, chances are they will want to be more involved in the business. You might need to take the backseat in operations, especially if investors approach and pass the 50% stake threshold. You could potentially even be giving up actual ownership of the company.

Before pursuing venture capital funding, ask yourself some of these questions.

  • Are you OK with giving up some control of the company?
  • Would you be OK with losing ownership of your business?
  • Does your venture capital firm have good connections?
  • Can you take direction from people outside your team?

Crowdsourcing

Crowdsourcing business funding has gained a lot of popularity over the past decade. The model is simple, show the world your idea and ask for capital in exchange for benefits to people funding you once the ball is rolling.

There are several different platforms one can use when in pursuit of crowdsourcing your capital injection. Kickstarter and Indiegogo are two very popular platforms startups can look at. These are rewards-based crowdsourcing models, offering investors perks and benefits for investing in you.

Projects on these sites (and others) will also have two additional options. The first is, “all-or-nothing,” this sets a deadline for you to reach your goal. If you fail to reach your goal in time, you lose it all and your investors get refunded. The other option is to keep what you raise. In this case, you’ll keep the raised funds.

One of the advantages of crowdsourcing money for your startup is you won’t need to worry about giving up any control of your business. You also have the possibility of your message being spread by investor’s social media accounts. Comments sections on pages can be used to receive feedback that you can take or leave.

This model, however, does require a significant amount of time designing and managing your web page that’s hosting your call for funding. With crowdsourcing, you do also run a slightly higher chance of having your idea stolen. Idea theft comes with the territory of finding funding in general, but, with crowdsourcing, your idea has a dedicated web page with a video for the world to see.

Bootstrap Funding

The two previous options depend on finding other people to fund your idea. Bootstrap funding requires more time looking at your model and applying cost optimization. When using this, you will be seeking and receiving minimal outside sourcing of funds, if any at all.

Bootstrap funding is an inherently more grass-roots approach. When looking at your expenses, if it requires more money than what you have coming in, you need to trim that expense or remove it altogether.

The bootstrap model does mean you may have less money to work with in the beginning stages of your startup. Mistakes will also be more detrimental because your dollars need to be working at maximum efficiency.

However, when using the bootstrap funding model, you are in total control of your business. There will have no unwanted outside influence, no changes to your company that you don’t want. You also get to have far more control of money coming in; you don’t won’t be cashing out to investors.

Startup Horror Stories

For every great idea that manifests on the internet, there are a lot of failures. Below is a list of some of the most notable flops throughout the history of the internet. From the 1990s to now the companies listed below showcase the overly ambitious and the simply poorly planned.

Pets.com

There are several reasons this early dotcom failed. First (as many of the companies experienced in this list), they came to the scene before the creation of adequate infrastructure. Cloud computing didn’t exist, which translates to needing to own a server farm and hire a huge IT staff. Running an online store wasn’t nearly as easy as it is today. Today, we have a variety of options for managing inventory and taking orders. Best of all, today’s solutions scale very easily.

A bad sign is when your company loses $147million in the first nine months, as Pets.com did. Needless to say, their choice of running an ad in the Super Bowl did not help anything.

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After losing over $300million, Pets.com finally died for good in November 2000, letting go about 300 employees.

Geocities.com

Launched in 1994, Geocities was the company that defined the look of an awful “90s” website. These sites usually featured loud colors, repeating pattern backgrounds and an onslaught of animated gifs. The internet lost somewhere around 38 million user-built websites when the service officially shut down in 2009.

For reasons beyond the comprehension of most, this service is still alive in Japan.

Go.com

Disney is responsible for creating some of the most magical and amazing things around. This website was not one of these creations. Go.com launched in 1998 by Disney to compete with sites and services like Yahoo and AOL. It filtered out adult material while giving quick links to ABC, ESPN and used the Infoseek search engine.

Disney officially shut down the Go.com project in 2001. Evidence of its existence lives on though, the site itself still hosts Disney related links. You can also find go.com shoved into various URLs of Disney’s. After taking a $790million loss, it appears Disney still wants to get some mileage out of the name.

Blippy

The idea – automatically Tweet every purchase you make online. It’s hard to imagine anyone wanting their shopping habits broadcasted. Somehow, Blippy managed to raise nearly $13million but just couldn’t find mass adoption. After several attempts and a private beta launch, the idea died.

Blippy as a brand lives on while the company figures out it’s new (and hopefully more successful) direction.

Beenz

Beenz suffered from a combination of being far ahead of its time and being a bit half-baked. This company set out to be an online currency, only useable at online retailers. Even though they raised $100million, there just wasn’t much demand or use for this idea between 1998 and 2002.

Albeit nowhere near as sophisticated, on the surface, this early creation does look eerily similar to the (arguably) incredibly successful Bitcoin. At the time of this writing, one Bitcoin holds the worth of over $2800.

Washboard

Washboard is almost too easy to criticize. Yes, people are willing to pay a premium for convenience. No, most people do not want to pay $15 for $10 in quarters (or $26 for $20 in quarters). Even if those quarters are shipped straight to your door, ready for that trip to the laundromat.

It’s not hard to picture the reasons this company never got to a customer count in the triple digits. How it maintained a single digit customer base before it’s demise is equally difficult to imagine.

Pixelon

In 1998 a convicted white-collar criminal under an assumed name claimed to had built a system to deliver high-quality video online. After sinking $16million into getting exclusive performances from huge names in the entertainment industry, the creator was discovered to be a fraud.

The technology pitched was proven to be insufficient. Evidence also arose that it was nothing but an embezzlement machine built for the founder.

Webvan

Today, throw a rock and you’ll hit someone who buys at least some groceries online. This is possible because of the systems and infrastructure available to us here in 2017. The technological landscape, however, was very different in 1996 when Webvan launched. As you may have guessed, Webvan set out to deliver groceries purchased online, to your door.

Unfortunately, Webvan was never able to expand beyond ten market cities. The company lost a whopping $800million when it went bankrupt in 2001. In 2009 it would be resurrected via acquisition by Amazon.

CueCat

CueCat was a handheld, cat-shaped barcode scanner that connected to PCs. The idea was, a consumer could scan barcodes and automatically go to websites with related information. A strange and mostly useless precursor to modern day readers of QR codes.