Starting a company has many aspects to it and selecting the perfect investment for your business is a crucial step. Business owners need to make the decision of the type of funding that will back the business. This raises the question of whether to fund your own business or secure an Investor.
Entrepreneurs that use their personal savings and finances to expand their business, it is called Bootstrapping. The other way to secure finances is equity funding like, Angel Investors, Venture Capital Firms, etc.
Let us look at the various Pros and Cons of each option to help you determine which would be the best option for your company.
Equity financing is the process of raising capital through the sale of shares. Companies raise money because they might have a short-term need to pay bills or they might have a long-term goal and require funds to invest in their growth.
Kevin Hale says, “Successful Bootstrapping is all about discipline and stamina.” Bootstrapping is building a company from the ground up with nothing but personal savings, the cash coming in from the first sales. The entrepreneur retains total control of the business and makes all the decisions and there is no pressure from investors.
Every company is different and will have various visions. Some companies would work well with bootstrapping, but others may not. If your company is going to get an investor, make sure to find the right investor that will prove to be a great asset to the company.
It boils down to one thing, weight out your strengths and weaknesses and assess which option would be best suited towards your functioning, capability and goals