Most of us often think a revolutionary idea is all you need to set up a business. Yes, a great idea is definitely the heart of your business, but funds are its backbone. Most startups fail within months after their inception due to lack of proper funds. Raising capital to build your business is a huge challenge, especially if you are a first timer. We are here to help you with just that. Keep reading to find out some ways in which you can fund your business.
How to raise capital for your startup
1) Self funding
This is the most obvious way to fund your business. If you are a first time entrepreneur, you may have a tough time trying to find potential investors. Therefore, you can consider funding your business from your own savings or ask your friends and family to contribute. This process of funding your own business is called bootstrapping. Bootstrapping should always be considered as the first option for funding your business. However, this is suitable only if the initial requirement is small.
Crowdfunding is a millennial way to fund your startup. How does crowdfunding work? An aspiring entrepreneur puts up a complete description of his/her business, like the business plan, the vision, what he aims to achieve and how much funding he needs, on a crowdfunding platform. Users of this platform will read about the business and pledge an amount of their choice, if they like the idea. Here, anyone can contribute to your business. Apart from providing financial help, a crowdfunding platform can also help in marketing your products or services. Kickstarter, Patreon, GoFundMe, RocketHub and CircleUp are some of the most popular crowdfunding platforms in the world. In India, Faircent, Ketto and Wishberry are some of the most famous ones.
3) Venture capitalists
Venture capitalists (VCs) are professionals who invest in startups and companies which have huge potential. VCs usually invest in a business against equity, which is the difference between the value of assets and the value of liabilities. They exit the business when there is an acquisition or an IPO (Initial Public Offering.) Venture capitalists are not easy to impress, especially if you are new to entrepreneurship. They even come with their fair share of disadvantages. Though a VC invests in your business, they often expect a recovery within 3 to 5 years. This is suitable for businesses which have crossed the startup stage and are already bringing in revenue. Some popular venture capitalists in India are Blume Ventures and Nexus Venture Partners. Index Ventures and Accel Ventures are venture capitalists which made their mark across the globe.
4) Angel investors
Angel investors are people who have a huge amount of cash and a keen interest to invest in a potential business. Sometimes, a group of investors come together to scrutinize and invest in a potential business. Apart from finance, angel investors can also provide advice as mentors. They are even willing to take higher risks for better returns. Angel investors are the people responsible for the establishment of several big names in the world, including Google and Alibaba. One drawback of angel investors is, they give far less capital compared to venture capitalists.
5) Participate in competitions
In recent times, several competitions are being held, where the winner gets capital for his/her business. All you have to do is present your business idea or module to a jury and if you win, you get the required capital to start your business. This, however, is not easy as the competition is going to be very high and your idea has to really stand out from the rest to be able to attract investors.
6) Get help from business incubators and accelerators
Business incubators and accelerators have become immensely popular recently and they are found in almost every major city across the globe. Business incubators produce several successful entrepreneurs every year. They usually have a program for 4-12 months, during which, they nurture, train, evaluate and fund your business idea. Accelerators, on the other hand, help an already established business grow or take a huge leap. StartupVillage, T-Hub, TechnoPark TBI and GSF Accelerator are some examples of business incubators and accelerators.
7) Bank loans
A bank is probably the most convenient place to get funds for your business. Almost every bank in India provides business loans against some sort of security. Bank loans for businesses are of two types—working capital loans and funding. Working capital loans are designed to traverse one full cycle of revenue generation. Funding, on the other hand, is the process of sharing your business plan and your business valuation to get the required funds.
An added advantage with bank loans is, you will not have the pressure of an investor depending on your business.
8) Government schemes
Governments these days are keen on encouraging entrepreneurs. There are several plans and schemes which are made available by the Government to fund your business. In India, the Pradhan Mantri Mudra Yojana and the Startup India Scheme are some initiatives. The Startup India Scheme, which was started in 2016, is known to have created thousands of entrepreneurs in India.
These are some of the several ways in which you can fund your business. Before approaching any investor, it is suggested you do full fledged research about each of these options and also get an idea about various market scenarios. After that, choose a plan which is suitable for you and your business type. If you have a professional network, which we recommend you do, discuss the various options with them and then take a decision.
Do you know of any other ways to fund a startup? Comment below and let us know.
How Does WhatsApp Generate Revenue
If you own a smartphone, there is a very high chance that you are a WhatsApp user. The simple and lightweight online messaging application has embedded itself into our lives and has become indispensable. Family groups, friend groups, office groups, play groups and many other groups like these see millions of conversations happening on a daily basis. But have you ever wondered how this leading online messaging application makes its money? There are no ads on WhatsApp and if that is the case from where does Whatsapp generate its revenue?
The answer to the question goes back to the beginning of WhatsApp which was founded by Brain Acton and Jan Koum, both of whom were ex- Yahoo employees. When Whatsapp was first developed and deployed for public use it became an instant hit with users but the founders quickly realised they required data centers to handle the huge volumes of data from the user conversations to keep WhatsApp running. So, they set a price of $1 for some countries and for some other countries it was free for the first year but charged $1 for renewal from the second year onwards. In short this was a subscription model and Whatsapp had 700 million users at the peak of this model which meant it was generating 700 million dollars in revenue.
Facebook ended up purchasing WhatsApp in 2014 for $ 19 billion but one of the founders Jan Koum decided to leave WhatsApp because of a disagreement with Facebook over its use of user data and its desire to allow advertisements on WhatsApp. Both the founders were vocal supporters of user data privacy. As of 2020, WhatsApp has over 2 billion users, the second largest user database after Facebook.
But How is Whatsapp generating its revenue now since there are still no ads on display in the mobile app. In a 2016 blogpost WhatsApp said “Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from. The goal is to have people communicate directly with their banks, airlines, etc. over the app, while the businesses pick up the bill previously paid through subscriptions.” Facebook also uses the data from the user messages in WhatsApp to increase the reach of its ads on Facebook. However, a user has the ability to turn off the settings which allow Whatsapp to share the data with Facebook. According to a Forbes estimate, WhatsApp is generating a revenue of $ 5 billion at an average revenue of $4 per user.
Facebook is benefiting from Whatsapp by generating a huge wealth of consumer behavior data which inturn is being used to improve the ads on Facebook. WhatsApp has a growing revenue stream because of the new users it keeps adding to its database and still has a lot of room to grow.
How To Identify Your Target Audience
Startups are created when there is an existing problem which needs to be solved. Startups often spend years in moulding and creating a product or a service which aims to address a need or a problem. However, it can be easy to lose track of the end goal if the product or the service is not in the hands of the actual target audience. Target audience is a group of people you want to reach with your publication, advertisement (ads) or a message. For example ads related to non vegetarian food would not do any good if they are placed in areas with a high vegetarian population. Ads related to high end cutting edge computers would not do any good if they are not placed in areas which have a high density of industries. Simply put identifying a target audience will translate into sales for your product or service.
Target audiences can be identified by following three simple steps
1. Creating a customer profile:
The first step in identifying a target audience is to assign certain characteristic attributes to the audience which include
- Age: What is the age demographic that is most likely to use your product or service. This is important because customers across different age groups think differently, which would mean the marketing campaign needs to be tweaked accordingly.
- Gender: This is an important metric to be established because a product needs to be able to address these differences. For example, it does not make sense for a male grooming product to be advertised to the female gender.
- Spending Capability: The ability of a target audience to spend greatly affects marketing strategies. People who are able to afford spending luxuriously respond well to marketing campaigns which stress luxury and exclusivity. For example, OnePlus the mobile phone developer positioned itself as a flagship killer with the features of a flagship. It was able to appeal to the middle class spectrum which in turn translated into a huge volume of sales.
Other key characteristics can include marital status, geographic location, hobbies, interests and many more.
2. Conduct market research
A lot can be gleaned from conducting primary and secondary market research. Primary research involves learning about customer buying habits through direct contact like surveys, interviews and focus groups. This is why a lot of startups and businesses usually ask customers to answer survey questionnaires when they make a purchase. Secondary market research is a kind of a market research method that involves collecting information or data from secondary sources. This means a business collects and uses information that has previously been collected by some other person or entity. A simple example would be food delivery platforms like Swiggy and Zomato asking feedback about a recent food order. The purpose of this is to curate a better restaurant selection experience for you when placing a new order.
3. Observing competition
It is safe to say that no product or a service would be a monopoly as new players will keep on emerging in the market. It is always a good idea to know what your competitors are doing with their businesses. This would offer fresh insights related to your marketing strategy like what other offerings could be added to your portfolio, or how a marketing campaign can be changed to tailor the ever changing customer demands. Analysing a competitor can lead to valuable modifications to your offering and yield new business. An example here would be how Zomato acquired UberEats thereby making them the market leader in the food delivery industry in India. Previously Swiggy used to rule the market by holding a majority share in the market. Zomato realised that instead of putting in resources to penetrate the market, acquiring UberEats would give them the advantage. Zomato now holds around 50% of the market in the food delivery business in India.
Target audiences will need to be reassessed periodically on a regular basis. The customer profile needs to be refined regularly and the marketing campaign changed accordingly. As the market trends keep constantly evolving, one can stay ahead of the curve by doing their due diligence in gathering market research data. Start defining and understanding your target audience so that you can make the most of your precious time.
How To Ensure Team Meetings Are Productive During Work From Home Due To Lockdown
The entire world is currently battling its biggest threat so far, the Novel Coronavirus or COVID-19 virus. Businesses and corporate organizations were totally unprepared for the lockdown of entire countries across the globe, which is a consequence of the COVID-19 virus. The lockdowns were enforced as a desperate measure to curb the spread of the virus and give the healthcare infrastructure some amount of leeway to combat the virus.
However, companies and businesses adapted to the lockdown by enforcing a mandatory work from home option to ensure work stays on track. Working from home means having to balance both personal and professional lives at the same place and this can often lead to frustrating situations. Physical team meetings have now moved to virtual spaces where teams can catch up on targets and establish new targets. But virtual team meetings can sometimes drag onto a long time which leads to the decrease in the productivity of the meetings and also a waste of time.
There are however ways to ensure the virtual meetings and conference calls to stay productive and also to finish them efficiently in minimal times.
Equip the team with the right technology and tools
More often than not team meetings see a wastage of time during the beginning of the meets when everyone is joining the meet. Time is lost while checking for the quality of the video and audio and can often look disorganized. It is important to use the right tools or apps which are light and easy to use. Examples include Zoom, Google Meets and Hangouts or Microsoft Teams. Equipping the team with the right tools means the managers and the team stay on the right page.
It is important to spend some time before the meeting to prepare a list of questions and tasks that need to be addressed during the online meeting. This simple task will not only ensure that you stay on track during the meeting but also lets you get into the right frame of mind for the meeting. Any follow up questions can be compiled and can be asked in an email or in a one on one call.
Keep the time/time zones in mind
While scheduling a meeting, the time should be taken into consideration. No one likes to have a meeting early in the morning because it is a normal time in a different timezone. A meeting should be fixed so that everyone attending is comfortable which would in turn mean everyone would be able to participate efficiently.
Speaking over each other
While working remotely, one may not be able to see each other clearly either due to slow internet or bad hardware. There can be video and audio lags as well which would mean you might not be able to know when someone is speaking which would mean two people are speaking at the same time making the situation a little awkward. Therefore it is important to take a pause before speaking to check if someone else on the team is speaking.
Make the team meetings a regular part of the schedule
It is advisable to avoid ad hoc and impromptu meetings during remote working hours as it might disrupt an employee’s work flow. Agreeing on a time and schedule for a team meeting will also send an important message that other people’s time is valuable. Preparing for the meeting in advance also allows you to avoid potential connection issues.
As the large majority of the world is currently working from home, it would be safe to assume that a lot of roles would see the transition to remote work once lockdowns are lifted. However for the moment, it is important to remember that time is valuable and following the above mentioned points will help in improving the productivity of virtual team meetings.
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