Most, if not all, self-funded entrepreneurs understand the challenges that go hand in hand with starting a business in today’s competitive start-up environment. For those that choose the self-funding route, the stress factor can go through the roof if you’re unprepared. At the same time, the benefits of self-funding can far surpass the challenges – and I wouldn’t have it any other way.
When launching Abakus Apps – a smartphone app that streamlines the property tax management process – I became my own boss, but I also took on all the business risk myself. I made lots of mistakes, and some of these came with a financial cost.
What was my biggest oversight? Legal costs. While I knew this was important, copyright, intellectual property, and trademarking set me back tens of thousands of dollars – which I paid for out of my own back pocket. Finding the right attorney who was well versed in the complexities of online and copyright law was also a challenge.
One of the biggest lessons for any self-funded startup is learning to rely on their own resources, and this can mean making sacrifices along the way to keep the business and vision alive. To fund Abakus Apps, I had to work a full time job to ensure I had enough income coming in to pay for the business, and I would encourage any aspiring self-funded entrepreneur to be prepared to do the same. I’ve regularly worked late at night finalising products while constantly adjusting financial spending. I even sold one of my own properties to funnel a large sum of money into my business. But seeing your business develop in front of you is life changing and highly rewarding.
While the early days are challenging, it’s important to keep your eye on the long term goal. As your business grows, you will be in a better position to finance additional support.
Here are my top five tips for aspiring entrepreneurs considering self-funding:
Get a grip on budget
Sometimes the hardest thing to deal with as an entrepreneur is inconsistent income. This increases tenfold when you start a new venture out of your own pocket. Firstly, separate your business and personal bank accounts, then develop a twelve month budget, five year prediction, and an analysis of ambitious and worst case scenarios. Determine what money is available to be spent and hold yourself accountable for money coming in and going out. Spending money on a quality business financial advisor and accountant is also a wise investment every startup should consider.
Utilise government incentives and programs
As Australia places more of a much needed focus on the startup sector, a helping hand is being extended to entrepreneurs. The National Innovation & Science Agenda offers a range of support strategies to help startups raise more funding, attract new talent, and provide assistance for startups to grow. I would also encourage startups to research their eligibility for the Federal Government’s R&D Tax Incentive.
Trust in your idea and its contribution
Being able to have total trust in your concept requires a whole lot of self-reflection and critical thinking. Receiving negative feedback at some stage is to be expected, but don’t take it personally – use this feedback as an opportunity to make adjustments to your offering or service. In order to have faith in your idea entirely, you need to ask yourself the hard questions, identifying the strengths and weaknesses of your venture and adjusting them accordingly.
Take advantage of social media
If advertising and marketing are outside of your budget, get creative with social media and develop a simple content sharing strategy. Facebook and Instagram are great platforms to target consumers, whilst LinkedIn and Twitter are core platforms to target businesses. It’s best to choose one platform and build a solid, supportive presence on here before delving into other platforms. When in doubt, look to other brands’ social media channels to find inspiration on how to develop and position your business pages and the types of content to post.
Develop strategic partnerships
In recent years, successful startups have utilised strategic partnerships to overcome business challenges. Spend time researching, identifying and collaborating with businesses where mutual gains and exchange of services can be made. Team up with larger companies that share a similar market as your own and learn as much as you can… but, don’t be afraid to walk away if the benefits for you aren’t measurable in return.
My advice for entrepreneurs? If you’ve got a healthy balance in your savings account, self-funding might be a good way to bring your endeavours to life, while at the same time, offer you more control over the direction of your business – which can be constricted if you seek outside investment.
If you choose self-funding, be prepared to work a full-time job in the early days to pay the bills, as well as work long hours – I regularly work late at night finalising products and constantly adjusting financial spending. It’s a juggling act, but it’s worth it. I even sold one of my own properties to finance Abakus Apps, but seeing your vision and business develop in front of you is very rewarding and life changing.
About the author
Brenton Tidow is the Founder and Managing Director of Abakus Apps, a finance-based smartphone application making property tax management more convenient for Australian residential property investors.