Capital is like what fuel is to a motor vehicle. It is the lifeblood of any business. But raising capital for your business is not enough. It is possible to raise capital for your business and fail to see its impact. Having sufficient capital is one, and knowing how to invest it in the right direction is another.
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There have been cases where seed capital disappears into the thing air not because the startup founder or entrepreneur didn’t invest it into his business, but because he had no blueprint and strategies that would ensure that the capital was well used. In this article, I discuss the three factors startup founders and entrepreneurs must consider before raising capital.
Before raising that capital the first question to answer is how it will benefit your startup. You must have a strong reason why you need capital and what expectations it will fulfill. For example, infusing capital into your business can lead to the following outcomes such as business sustainability, increased profit, increased market dominance, and business stability.
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Market Opportunity And Ambition
The next factor to consider before raising that capital is the ready opportunities that the capital will help to take hold of. Before raising that capital, you must have an ambition in mind.
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And this ambition must be opportunity-driven and profitable in the long run. For example, if your company product is in constant demand, you aren’t meeting up due to a shortage of manufacturing equipment, getting more funds to buy more equipment and increase manpower to meet the needs of the ever-increasing customers is a good way to go. Also, expansion into untapped potential markets requires capital, hence getting more money to venture into potential areas is very ideal. There is a need that money needs to fulfill.
Capital increases business acceleration. However, this acceleration is caused by existing business tools and techniques. This is why before raising that capital you must answer the question of what potential impact it will have on your business.
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For example, with capital, your business can have the following impacts such as additional equipment or facilities, expansion to more states outside your domicile location, additional staff, and so on.
Capital is life, but if you don’t have the right motive and vision with a strategy to back them up, you might find yourself struggling to see the impact of your capital. In this article, we argued that startup founders must consider three things before raising capital. First, they must define the desired outcome they want the capital to achieve. Second, raising capital must be driven by the need to seize an opportunity. Third, they must be able to envision the impact they want the capital to have on their business.
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This article was first published on 4th July 2022
nnaemeka-emmanuel
Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.
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