Entrepreneurship involves initiative, creativity, confidence, and independence. It’s about having an idea and believing that with the right approach, it can be turned into a profitable venture. Not everyone is cut out for this path as it often entails long hours, financial challenges, stressful moments, and uncertain outcomes. While some ideas are brilliant and innovative, not all translate into revenue growth, profitability, or sustainable business models.
During the pandemic, companies dubbed as “disruptive innovators” in Cathie Wood’s ARK ETF, a series of exchange-traded funds led by the investment manager, thrived. Zoom and Teladoc expanded their businesses as the lockdown forced people to continue their virtual lives. Wood’s fund saw a remarkable 125% growth rate in 2020, the first year of the pandemic.
However, with the economy reopening, people started shifting their focus. Major tech companies aggressively entered the video conferencing market, with Microsoft’s TEAMS challenging Zoom’s dominance. Some felt the virtual care from Teladoc lacked the personal touch they needed and began scheduling in-person doctor visits again. Today, ARK’s market prices reflect the evaporation of those pandemic-era gains.
The first step in starting a business is crafting a plan. What will the venture do? What products or services will it offer? Will it be physical or online? What resources, including funding, are needed to kickstart operations? What are the existing competitive threats? Why would there be a demand for the products you’re selling? Pricing, costs, profitability, and quantity need to be carefully considered through detailed analysis.
Financial forecasting is crucial within this plan. It could be an ongoing budget you’ve been managing or a template for your new business. Financial projections are essential information for those funding your venture, whether it’s a bank, Small Business Administration (SBA) loan, or even relatives who want assurance that the project will generate enough profit to repay the interest and loan within a reasonable timeframe.
When raising capital for a small business, understanding the pros and cons of all available avenues is crucial.
Identifying angel investors and venture capital firms is one option. These individuals or groups invest in startups in exchange for equity or profit sharing. While they may offer guidance, they might have high expectations, not only seeking repayment with interest but also claiming a stake in your business.
Choosing this path means working tirelessly, blurring the lines between personal and professional life. Success could lead to substantial financial gains, but failure also brings invaluable lessons that shape your future endeavors and life. Best of luck!
The original article, “How to Raise Capital for Your New Business,” was published on the English version of the Epoch Times website.