Startups are broadly categorized into – Self-funded (bootstrapped) and Investor-funded (angel investors or venture capitalists) companies. And while it is a good idea to get funding if you can, startups today can easily get going without investors.
In fact, self-funded startups are usually a better idea for entrepreneurs who prefer working autonomously. But both have their pros and cons and it is up to you to decide on the type of funding that best suits you. The following are the advantages and limitations of self-funded startups.
Self-Funded Startups Enjoy Total Control
A self-funded approach gives you the freedom to make your own decisions, exercise total control, and be your own boss. You’re not answerable to anyone, and neither owe explanations for your decisions. You can follow your heart and take risks which you probably wouldn’t be able to otherwise.
In the case of investor-funded startups, things are quite the opposite. You need to keep the investors informed and updated about every action you take along with an explanation for it. It does not end there as they would expect you to consider their advice, arising from spending a long time in the industry.
Financial Arrangements are Usually Challenging
Self-funded startups face a lot of pressure in terms of financial arrangements, which might hamper the thought process and hinder clear and calculated decision-making.
On the contrary, investor-funded startups have this area covered and need not bother with it. All they need to focus on is planning the strategy, executing it, and figuring out the path to take so that the business blooms.
Finding Referrals is Difficult
Having said that, self-funded startups may face a certain level of difficulty in marketing and promoting their brand due to a lack of funds and referrals from industry stalwarts, which would not be the case for investor-funded startups.
Investors spend a considerable amount of time in the industry and know the top influencers, journalists and the like, which makes it easier for an investor-funded startup to gain foothold in the field as well.
That said, there are a few ways in which self-funded startups can get press coverage and the much-needed mentions to stay ahead of competition.
1. Start with a Strong Pre-Launch
Build a pre-launch page, make an awesome video, or organize an event that discusses your unique selling proposition. But, remember to make a relevant targeting list. It makes sense to focus on filling a gap by inventing a product that is sure to satisfy specific audiences, rather than creating something for everyone.
Even though your product is already developed, you can still add your perspective to it and make it a creative stand-alone brand. If you think that only products that are cheap and cost-effective are easy to sell, you may want to know that there are people who make quality their first priority. Remember, custom-made products can help you leave your mark in the market and establish a loyal customer base.
2. Outreach Efficiently
Build relationships with journalists and maximize your referrals via social platforms. Journalists are always looking for interesting stories and it could work well to get in touch with the ones who dabble in your niche and cover stories like yours. That way, it is will be mutually beneficial.
You should certainly take advantage of the Internet and social media to spread the word about your brand and products. Always be up for discussions and share your story. It helps to create a certain level of interest among your target audience. Let there be a little buzz before the actual launch.
You could go for a soft launch, for that matter. It helps test the waters and enables you to make the desired changes and come back with a better version of the product.
3. Tap the Love for Freebies
Run a contest, pull a stunt, or build a free plugin. We all love receiving freebies with the original purchase, without stopping to think that the cost of the freebie has been covered in the original bill. So, it makes sense to offer something more than what your customers are expecting to get into their good books.
This will help you build a bond with them, which in turn, will leave no room for hesitation on their part when spending money to buy from you.
4. Launch When You are Ready
Don’t make the mistake of launching too early. Make sure you take sufficient time to talk about your product first. Your product needs to get a good amount of visibility and make a name for itself before hitting the market shelves. An early launch can hamper your efforts to create the kind of image you are trying to build.
5. Get Subscriptions
When sending out emails, talk about interesting things related to your brand, so that your target audience is keen on keeping in touch and staying updated about it. This will help you get sign-ups and newsletter subscriptions, which is the first step to becoming a loved and a followed brand.
6. Use Crowd-funding and Beta Users
Run a crowd-funding campaign and get a few beta users who would be willing to try your product, rate it, provide honest feedback, and advice on improving it. This is the best way to save yourself and your brand from an after-launch mess.
Once your target audience and influencers get to know about you, crowd-funding the campaign will drive enthusiasm and create a wave of interest among others as well.
7. Hire the Right Talent
Hire talented people to speed up the planning process, but be careful about the marketing strategy and work on your idea with the rest of your team. There are always going to be experienced people who find the idea of working with startups fascinating. They could be advisers who can guide you with the help of their business experience and get you the desired referrals from well-established industry contacts.
8. Charge at the Right Time
Take charge early and leverage your network. Taking charge in the initial stages helps generate revenue, which validates your business and inspires trust among your customers. You could give a certain loyalty offer to a few of your initial customers. This way you will have a customer base that is loyal to your brand since its inception.
9. Be You
Being small and nimble can be a huge advantage for startups. There is no need to imitate the already existing and established brands. Be authentic and, in time, your customers will appreciate your brand and your products.
Go with your gut, and you are sure to shine. If things do not turn out as planned, then look at the bright side. You will get to learn important lessons which will help you succeed eventually. Self-funded startup entrepreneurs need to weigh the possibilities well before making a move. One wrong move can rupture the brand altogether and cause irreparable damage. Have faith in yourself, be confident and have the ability to deal with the consequences of your decisions. Right or wrong, experience will help you learn a great deal.