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Bootstrapping your Business vs Seeking Outside Investment

What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Before you walk down the road of approaching an outside investor, why not consider the possibility of self-funding – also known as “bootstrapping” – your company? If you decide to bootstrap, you may be surprised at how differently you approach your business, as well as the funding process. Bootstrapping can create a healthy foundation from which to begin your business, and can provide invaluable lessons to entrepreneurs. Lessons learned from bootstrapping can include:

  • Tests your business plan – A bootstrapped business that can bring a product or service to market, develop a customer base, and create a revenue flow will help you identify the strengths and weaknesses in your plan. You now have the solid proof you need to affirm your ideas and build on them. You will have determined if the market needs or wants your product, what the market is willing to pay for your product or service, and what will be required to put the business on a path to profitability. In addition, you will have a better sense of true costs, not just cost of goods, but hidden costs that are usually not considered or may not be known when a plan is developed. Bootstrapping will also force you to consider how the product or service is being developed, and it may cause you to re-consider aspects of product development as being unnecessary for product or service launch.
  • Provides incentive for a low burn rate – Limited financial resources will greatly influence the decisions required to operate your business, while at the same time maximizing efficiencies. This may include hiring employees that can function in more than one role, outsourcing certain roles until you can afford to bring them in-house, minimizing overhead like office space (know anyone with a spare garage?), as well as using a creative approach to marketing.
  • Skills and values development – Self-funding can be a useful mechanism in helping you gauge your true passion and commitment to your business. It will help you develop a higher level of accountability as well as resourcefulness, resilience and courage. It will most certainly test your risk aversion.

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How to Prepare for Investors

What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Ask a BAM Mentor: Evaluating a Business Opportunity

Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

 

Dear BAM Mentors,

What are the most important questions to ask myself when evaluating a business opportunity?

~ Business as Mission Newbie

 

 

Dear BAM Newbie

First and foremost, set your goals according to the principle, “Seek ye first His kingdom and His righteousness and all these things shall be added to you.” (Matthew 6:33). Then, ask God for guidance into a business ministry of His choice for you, wait for His answer with a listening heart and mind. Third, allow God to choose life and business partners who identify with your God-given vision and mission objectives by asking everyone who wants to be an investor or active partner in the business whether they understand, agree and fully embrace the vision God has given you. – Joseph Read more

Questions for Business Building

What are the most important questions to ask myself when evaluating a business opportunity?

When I first heard this question my reflex response from 30 years experience of running a business was… When will I get my investment back, what is the percentage return on investment and what is the risk?!

My more considered response is to ask three initial questions. There are obviously many other issues but these are those I consider the most significant:

First Question – What is the purpose of this business and what is my real motivation for taking on this opportunity to build a business?

I would ask myself, what am I really focused on – my vision, mission and strategy to bless the nations. I would consider the eternal rather than short-term goals for the business and would seek to discover how the business could sustain itself having once outgrown me and my start up team. Read more

Considering the Business Opportunity

What are the most important questions to ask myself when evaluating a business opportunity?

Probably the most important aspect of pursuing a business opportunity is to first determine whether you are the right person for the job. I would recommend you do a personal assessment (be honest with yourself, there’s a lot at stake here), and ask yourself if you have the skills and passions necessary to build this specific type of business. Beyond that, do you have what it takes to live through the highs and eventual lows that you know will occur through the normal course of operations? Evaluating your readiness, and determining if your unique skill set maps to those required by the business should be at the top of your checklist, as you prayerfully and thoughtfully determine the worthiness of the project ahead of you.

As a potential entrepreneur, it is easy to get excited about any new business opportunity. So much in fact, that an entrepreneur can quickly lose his objectivity and become blinded to the potential pitfalls associated with the business. Many of us foolishly consider that if an opportunity exists, it must be the open door God wants us to walk through. Keep in mind that just because a door is open, doesn’t mean its the right door for you. While venturing into any new business can be daunting and filled with uncertainty, it can also be a time of exhilaration, not to mention a lot of fun. But do yourself a favor before you journey into the unknown; check your motivations. Know why you are doing this, and know the risks before you take the jump. Read more

Franchising and Business as Mission: Expert Panel

We asked a panel of three experts with firsthand experience to give us their perspective on business as mission and franchising. Read panel bios below.

1. What are some of the opportunities you see in using a franchising approach in a business as mission context?

John: Franchising thrives by tapping into local knowledge and connections, combining them with the franchise operations system to achieve success.  Compared to setting up a wholly-owned business, franchising offers a faster rate of expansion, with a lower business risk, whilst maintaining a good amount of control from the franchisor’s (the brand/concept owner’s) point of view.

As a ‘BAM’ tool, franchising taps the knowledge and connections of the locals in the field.  This means the ‘locals’ can be blessed by being gainfully employed, whether self-employed or company employed, and earning a livelihood from the labour of their hands.  A franchise that does not require a large amount of capital investment, or does not have a complex and huge scale of operation, can be easily replicated across the mission field, penetrating even small towns or large villages.  Where the franchisee is a believer, the business can be used as forum for discipling that goes beyond preaching and teaching, but into modeling a transformed lifestyle in the workplace.  I can visualise food businesses such as kiosks or small stores and small retail outlets as possible franchise concepts in a BAM context.

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