There seems to be a prevalent belief in the business community that to advance and expand your business, it is essential to have external investment.

Raising money, whether through venture capital, seed funding, or angel investment, is taken by many founders to be the default route for growing their companies, but it is certainly not the only path to scaling your business.

Entering into an agreement with external investors is not something to be taken lightly, especially combined with the pressures of launching and growing a new start-up. While raising money through venture capital may seem like the obvious solution to cash-flow woes in the early stages of your launch, it can often raise problems further down the line.

So, what are the downsides of external financial backing, and what are the alternatives?

The drawbacks of venture capital

One of the lesser-discussed aspects of fund-raising from external sources is the sheer time and effort it takes. It may sound counter-intuitive, but raising money from external investors can come at a severe cost. Energy that would otherwise be spent on running and advancing a business is instead diverted towards searching for and securing venture capital.

With such funding rounds being lengthy, time-consuming processes, time that could be invested directly into a bourgeoning start-up is instead spent on acquiring outside capital.

Additionally, raising money in this way will almost certainly require a long-term agreement and therefore a long-term relationship with your investors. While this is not automatically a negative, if those investors are not fully aligned with your vision and your business values, it could open the door to a multitude of problems.

As an entrepreneur, you want control over the direction your business is moving in, but with external investors also possessing a stake in the business, they too will want a say in shaping that direction. If these interests are not aligned, this could result in a loss of control over your company.

Benefits of bootstrapping

Bootstrapping your start-up, where you start a company with little capital and rely on money other than from outside investments and have to self-finance your business through organic growth, may seem like a daunting option, but it can be one of the most financially rewarding ways to fund your growing enterprise.

Ultimately, every business, whether bootstrapped or venture-backed, must have the business basics in place to succeed and to sustain growth in the long-term. This means a solid grasp of the numbers, the right systems and processes in place as you grow, and the right team to achieve your vision. While these factors are not an exhaustive list, and the specifics will of course depend on your business and the market you are operating within, bootstrapping your start-up means addressing these factors early on, essentially giving you a head start.

Dispensing with the need to raise external investment through funding rounds allows you to completely focus on your business, on generating revenue, and then reinvesting that revenue in line with your vision for the company. This early focus on making money rather than raising money means you will inevitably be forced to structure your business in a sustainable and cost-effective way, while giving you a far greater degree of control over the direction of both the business, and your long-term vision for it.

Putting your money where your mouth is

Having a clear vision for your start-up, while undoubtedly necessary, will only take you so far if you lack the working capital to get your enterprise off the ground. While you may not need millions injected into your company from an external investor, the early stages of development will still require funding, and if you intend to bootstrap, this is likely to come in the form of personal assets.

Whether this is in the form of personal savings, cashing in a bond, or selling off other assets, it is important to maximise how far this form of funding can take you and your business. This means getting comfortable early on with taking a lean approach to your start-up, and knowing where to cut costs, so you can get revenue flowing into your business as quickly as possible. Investing time into organic lead generation, outsourcing certain processes, or working remotely if your business allows this, are all ways of cutting costs early on.

Investing time into making connections and building out your support network is also invaluable. Developing strategic partnerships that can provide mutual benefits such as cutting costs or providing services can make all the difference when operating on a tighter budget, as can networking to find potential mentors, customers or simply advocates for your business.

Conclusion

There are a multitude of funding options open to start-ups, and it is important to really consider what will work best for your business needs. Bootstrapping, though posing its own unique challenges, ensures you nail those vital business basics early on, with a focus on generating revenue as quickly as possible. This is not to say it does not come with risk, but by being aware of what those risks are, you can take steps to mitigate and alleviate these sooner rather than later, leaving you in a strong financial position, without giving up equity in your company.

Read more:
Making money vs. raising money: Funding your business without venture capital

Launching a new business is fraught with possible pitfalls, and as an entrepreneur it can often feel like one false move can bring the entire process crashing down.

The reality is that business is full of inherent risks, and most business owners have encountered their fair share of failures and setbacks along the way.

Billionaire and the mastermind behind the Virgin empire, Richard Branson, though considered one of the most successful people in the world, has had a career marked by multiple failed ventures. Steve Jobs, ousted from Apple, went on to found NeXT, a venture which failed to take-off but laid the way for Jobs to return to Apple and create MAC OS X

No entrepreneur, no matter how successful, is immune from roadblocks. These household names did not let failure stop them, but instead used it as a springboard to propel them on to bigger and better things.

The greatest teacher

“It’s fine to celebrate success but it is more important to heed the lessons of failure.” – Bill Gates

Ultimately there are two responses to failure – you can give up and allow it to halt your professional and personal growth, or you can embrace it and grow from it. The latter is what distinguishes an exceptional entrepreneur.

Those that have failed multiple times have also had the opportunity to learn from those failures and the decisions and thought processes that led up to them. Learning these lessons, especially early in the life cycle of your business, ensures you do not go on to repeat the same mistakes later on, enabling you to avoid far more costly errors.

As a business owner you can never afford to stop listening or learning, and encountering a stumbling block can be especially helpful for highlighting the gaps and weaknesses in your knowledge. Learning where your own limitations are, and what you need to change or improve for next time can only make you stronger.

Pause for thought

“Failure is simply the opportunity to begin again, this time more intelligently” – Henry Ford

Running a business is relentless, and it is easy to become so bogged down in keeping everything moving forward that you may not have the time to stop and analyse whether you are in fact moving in the right direction. Hitting a stumbling block is often the perfect excuse to reflect on where you are heading, and if your time, energy and resources are being spent it the best possible way.

Moments of failure are an excellent opportunity to pause and take stock of what you are doing and where you are going. Obstacles force you to stop and reflect on a specific approach or strategy, and consider whether it is truly worth pursuing, or whether a change or pivot may be more beneficial.

Redefining failure

“Success is walking from failure to failure with no loss of enthusiasm.” – Winston Churchill

One of the key elements of building the resilience needed to overcome setbacks is how you chose to frame it to yourself, and the mindset you develop around it. Failure is a part of life, and in business where there are so many factors outside of your control, it can happen despite your best efforts.

Redefining obstacles as opportunities and challenges to overcome is key to eliminating the fear that is often associated with them. Fear is incredibly limiting, and can hold you back from taking the risks and chances that can enable you to scale and grow your business – and become a truly great entrepreneur in the process.

Conclusion

Failure is often an unavoidable reality of being an entrepreneur – but the most successful people do not let it define them or their journey. As long as you continue to learn from the setbacks you encounter, and develop the endurance and perseverance to see them through, you will never truly fail.

Read more:
Why failure makes you a better entrepreneur

For your business to truly thrive, it must be built on strong foundations. This does not only mean having a well thought out business plan, but ensuring that you are able to bring your best self to your business every day.

The path of an entrepreneur is not easy, and long, demanding hours can lead to becoming overwhelmed and burnt-out if you lack the mechanisms to deal with the often relentless stresses of running a growing business.

Your own personal wellbeing is inextricably linked to the wellbeing and longevity of your business, so it is vital to ensure you are equipped to handle those demands. Taking time to prioritise your own needs means not only avoiding the dreaded burn-out, but making sure you are at the top of your game when it comes to steering your ship in the right direction.

Set clear boundaries

Especially in the early stages of your business, you can feel like your time and attention is being pulled in a whole slew of directions all at once, leaving you frazzled and running from one task to the next with no clear direction of where you are going.

Setting and sticking to strict boundaries for yourself is instrumental in achieving balance in your work and personal life, and being able to clearly communicate these boundaries to those around you ensures both you and your time are being respected.

One of the most effective ways to do this is by establishing office hours for yourself. Working to this schedule will motivate you to make the best use of this time, and work with increased purpose and focus. Similarly, having a cut-off time when it comes to answering calls and emails can keep those feelings of overwhelm at bay, while giving you valuable time to decompress at the end of your workday.

Learn to say “no”

For many entrepreneurs, the idea of turning down a potential opportunity may sound counter intuitive. However, building a successful business means making the right decisions at the right time, and this means knowing when to say “no”.

Before automatically accepting every opportunity that comes along, take a minute to consider whether it is aligned with your current goals, will help move your business forward, or whether it will simply be a drain on your valuable time and resources.

Delegate and automate

It is not necessary to take on every single task yourself, and doing so can quickly result in overloading yourself with responsibility.

Small, repetitive jobs can become a real drain on time and should be automated, whether it’s marketing emails or staff payroll. This will lighten your own workload, and free up time to work on things that move your business forward.

Likewise, effectively delegating those tasks which are not your speciality will save you additional effort and stress, while increasing your productivity by freeing you up so you can laser-focus in on more important tasks.

Celebrate your achievements

It is easy to be so entrenched in your work that you neglect to celebrate the important milestones you and your business reach along the way.

Each of these achievements – whether it is making your first hire, or completing your first profitable year – took countless hours of hard work and dedication so it is valuable to acknowledge your efforts. This is particularly important in keeping you motivated during hard times, and using this momentum to drive you towards bigger and better things.

Take time to think about what lesson you learned from these successes, and how they can be applied to your next big plans.

Access support

Being a business owner can be a lonely experience that can slowly sap at your motivation, energy and quite often, your health. Having well-developed networks that you can access in times of increased stress is therefore vital in not becoming cut-off from those around you.

Whether you choose to join a business network, or just take time out with your friends and family, it can go a long way in combatting those feelings of isolation. Talking through the challenges you and your business may be facing can help you gain more perspective on them, while allowing you to unload some of the stresses that can result in burn-out.

Support can also be in the form of self-improvement. There are a wealth of resources for growing entrepreneurs to improve and develop skills, and can help you feel more prepared in taking on the challenges of a growing business. Books, podcasts, workshops and especially coaches and mentors can all assist you on your business journey, so take full advantage of the resources that are available to you.

Conclusion

Given the demands of running a business, it is unsurprising so many entrepreneurs succumb to burnout, or simply develop a lack of passion and motivation for their work, which means business inevitably suffers. However you choose to do it, taking the time to invest in yourself and your own long-term wellbeing is also an essential investment in your business.

Read more:
How taking care of yourself will help you take care of your business

We are social creatures by nature, and this is no different within the business world, where the ability to connect and collaborate, or foster positive professional relationships is directly linked to success and longevity.

However, the life of an entrepreneur, particularly in the initial stages of founding and growing their company, is often marked by long, gruelling hours spent working and making critical decisions alone. While being your own boss is one of the primary attractions to becoming an entrepreneur, it is also an inherently risky endeavour that can leave you shouldering a lot of responsibility.

As John Donne famously said, “No man is an island”, and we tend to do worse when we isolate ourselves from others. In a business context, surrounding yourself with the right people and influences as you grow your business and develop as an entrepreneur, can help mitigate this isolation and keep you focused and motivated, which in turn can speed you up on your own journey to success.

Mentoring and coaching

Being an entrepreneur requires an incredible amount of drive and dedication, especially in the early stages when much of your time is taken up by the operational aspects of running your business. Finding a mentor who has experienced and overcome similar challenges can therefore be an invaluable source of support.

The Department for Business, Innovation and Skills found that 94% of SMEs using external support saw benefits including increased ambition and higher turnover rates, while 71% of Fortune 500 companies use a mentoring program.

A mentor can offer insight into the strategic aspects of your business, being more readily placed to identify weaknesses you yourself may overlook, as well as allowing you to benefit from their own circles of influence. Most importantly, having a mentor can help alleviate the isolation that many entrepreneurs face, navigating you through tough times with the benefit of their own experience.

Similarly, investing in a coach to improve certain skills can help reduce the pressure of feeling that as a business owner you must be an expert in all areas. Developing your skills both personally and professionally with coaching can leave you better placed to steer your growing business in the right direction, and avoid becoming overwhelmed and burnt out.

Mastermind groups and accountability partners

A mastermind group is essentially a group of like-minded business owners and entrepreneurs that gather regularly to share and discuss problems, challenges and successes, with the intention of supporting one another’s professional development through practical ideas and solutions.

Though being an entrepreneur is ultimately a solo endeavour, being part of such a group can restore that feeling of being a part of a team. Surrounding yourself with those on a similar trajectory to your own can help keep your motivation and enthusiasm from stalling, which can lead to slowing down your personal growth along with the growth of your company.

Connecting with other entrepreneurs benefits your personal development, your business, and is an invaluable way to learn from others and forge meaningful business connections along the way.

On a smaller scale, having an accountability partner, where you both work to hold each other accountable to your projects and goals is another great way to ensure you stay on track and continue to make progress. Having the input of someone who is prepared to tell you the things you may not want to hear, while challenging you to continue improving and moving forwards can act as an additional motivating push from both a personal and business perspective.

The importance of family

A 2016 report from Bank of America on small business owners found that 57% of 1000 respondents said they relied on family members for emotional support, while 35% said family and friends help them the most with running their business.

Families can provide financial help in the critical initial stages of starting your business when capital is often severely limited, and it is hard to secure funding from financial institutions that may be reluctant to invest in a new venture with no proven track record.

However, it tends to be the emotional support that families provide that truly makes all the difference to entrepreneurs. It is important to have a support system not only at work but also at home. During times of pressure, families can provide a much-needed respite from the daily stresses of running a growing business, whether that is through lending a sympathetic ear, or simply providing the encouragement and understanding you need to keep going when you otherwise might feel like throwing in the towel and giving up.

Read more:
With a little help from my friends: Support networks growing entrepreneurs need for success

In getting a new business off the ground, founders often find themselves frantically juggling tasks in no particular order as they become urgent, with no system in place to do so.

While this may work at the start-up level, this approach can quickly become unsustainable as the business starts to expand and grow.

Given the time-consuming nature of starting a business, it comes as no surprise that so many new companies are established without working systems and processes in place, but as an owner, you can only “wing it” for so long. Having the right procedures as your company grows in size and complexity is vital for ensuring that not only is your business operating efficiently at its present size but is also well placed for future expansion.

What are systems and processes?

A business process is a sequence of actions that lead to your chosen aim or goals. This usually involves a documented series of interconnected steps that can be followed to achieve your desired result, such as onboarding clients or branding guidelines.

Systems refer to the entire structure for delivering those results, rather than the individual steps that make up each process. They are the framework through which ideas, plans and raw materials pass to become your final service or product.

Implementing systems

Systems should be established at the earliest opportunity, ideally while your business is still in the start-up phase, as they require an initial investment of time. As a business grows in size and complexity, implementing these procedures becomes more time-consuming and costly.

Once established, having a codified way of doing things that can be adjusted and honed as required, allows you to optimise your available resources and reduce running costs. Without this, you risk limiting how quickly and effectively your business can begin to scale.

Building effective procedures and processes

Though the types of procedures in place might differ between businesses, there are certain core systems that every business will require. Broadly speaking, all businesses need a marketing system to generate a flow of leads, a sales system that converts these leads into customers, a fulfilment system to generate revenue, and a robust administrative system that supports these functions.

Building these involves establishing a process for a specific task. This means defining a method for that task, as well as which person or department is responsible for each action. This is then documented, implemented, and adjusted as required. The key is to keep these processes as simple as possible, avoiding unnecessary complication to ensure they work well within the business.

How your business benefits

One of the major benefits of implementing systems early on is how they improve efficiency. This documented way of doing things means staff are more productive, and as you optimise your systems and refine your processes, your team can concentrate their efforts on actions that yield the largest return on investment.

Systems that free up time from mundane or repetitive tasks means more time can be spent on forward planning, creating new products or services, and increasing profit margins, allowing your business to scale more rapidly. As your business expands and your team grows, having procedures in place also means new recruits have a clear idea of how your business operates, improving both the quality and consistency of work.

Using systems and processes that deliver a consistent, high-quality experience to your customers is vital for gaining loyalty and increasing retention rates, which in turn takes your business from a start-up to an asset that can attract additional investment and opportunities.

Most importantly, putting these systems in place benefits you directly as the owner, as they provide a framework for the business to operate independently of you, with less of your time taken up working in the business instead of on it. This means you can focus on leading your business.

Conclusion

Though building effective systems and procedures is often seen as a low priority for start-up businesses, failure to do so can quickly lead to unsustainable growth or an inability to effectively scale. It will cause unnecessary stress for both your staff and your management. Robust systems that are regularly evaluated and adjusted, are key to delivering the consistent results needed to grow your revenue and profit margins, ultimately expanding and scaling your business.

Read more:
Prioritising procedures: Why your start-up needs systems and processes

The goal for most businesses is to grow, so the concept of bad growth may seem counterintuitive to a lot of business owners.

However, if that growth is not sustainable in the long-term it can become little more than a drain on your resources.

The focus, therefore, should not simply be on growing the business, but on sustainably scaling it. This means having strategies and systems in place to manage this growth and prevent stagnation due to poor planning.

Without this, you may quickly find yourself in a position where the growing demand from customers begins to exceed what your business can actually handle, which can lead to losing custom, compromising on the quality of your service, or overspending on new hires, all in an effort to keep up.

Knowing when to scale

There is no hard and fast rule for when it is appropriate to begin scaling, and different types of businesses will inevitably scale at different rates.

As a business owner, your job is to recognise when your company is starting to operate at its maximum capacity, and to do so before the business becomes overwhelmed. This will enable you to develop a strategy to continue delivering your product or service without overspending or compromising on quality.

Key signals might include increased waiting times for your customers, or your normally great team making mistakes or simply being unable to get things done as they otherwise might.

Learning to spot these signs isn’t an exact science but if you keep your eyes open for these changes within your business, there’s usually a strong reason behind it.

Thinking big

Successfully scaling your business means you must have a clear vision of where you want to be, and this involves thinking big. It’s crucial to set up your business with an end goal in mind, taking stock of where your company currently is, and exactly what you need to do to reach the next milestone. This will allow you to develop a strategy that anticipates expansion.

Having the right team and connections as you begin to implement your big ideas, as well as investing in products and systems that will grow with you as you start to expand, will save you the headache (and expense) of constantly having to upgrade as your business starts to scale.

Don’t do it alone

Starting a business requires a huge amount of self-determination and an independent streak, but this can often lead owners into thinking they need to handle everything in their business by themselves.

As your business begins to scale, it becomes unfeasible to handle every operation yourself, and trying to do so can result in expansion stalling or stagnating completely. It’s worth identifying areas of your business that can be outsourced, operations that can be automated, and responsibilities that can be delegated, so you can focus on steering your ship with conviction.

It is your vision that will drive your business forward, so it’s essential to focus in on key activities that will allow for strategic expansion in the long-term.

Use your data

Scaling a business can be expensive, but that doesn’t mean it should be a case of simply throwing money at it without a firm grasp of where that extra spending is best placed.

To scale your business sustainably, your decisions around growth should be based on your data, which will provide the insights and metrics you need to plan ahead. It gives you a clear idea of the costs involved with delivering your product, generating a sales lead, or hiring a new person, and allows you to account for this as you begin to implement your plans for expansion.

Having a solid comprehension of your data will help you avoid unnecessary expense and wasteful spending, which is key to keeping your business stable and improving cashflow as you scale. Ignore what your numbers are telling you, and it’s likely your profits will start to stagnate or even decline.

Conclusion

Every business has to start somewhere but starting small doesn’t mean staying small. Laying your foundation for scaling early on by implementing the right systems and processes and investing in a strong team, will help you avoid unsustainable growth and strategically scale your business step by step.

Read more:
Scale before you fail: How to scale your business to avoid bad growth