Entrepreneurs often find private funding or re-invest profits from other projects into new ventures. In some cases, they will take a personal loan from a financial institution to obtain the necessary funding. It is a good idea to have extra funding, that acts as a contingency fund, available as well. Extra funding to cover unforeseen issues is a must for industry survival and project completion.
Unexpected Prototype Building Costs
Building prototypes for a new venture may have big costs associated with it. The materials expected for use may not be as practical initially projected and alternate materials can be much more costly. These unexpected costs may eat into your total project budget and/or contingency fund. Your contingency for prototype building projects should be an additional 50-percent of the projected budget.
Unreliable Private Investors
There are times when an investor may seem eager to fund your new project and back out at the last minute. When this happens, you’re not likely to have a back-up option in-place. You can be left without funding and your new project may be dead in the water. Always have a “plan B” for instances where this may become an issue. An indicator of a flaky investor is one that does not respond to attempts for contact in a timely manner. If you phone or email a potential investor and receive no response in a period of 3-days, it is time to implement “plan B”.
Poor Personal Credit History
Entrepreneurs in startup mode have not established any business credit. This means that all financing must be based upon personal credit. You can view this website for options to apply for personal funding to carry a new project through to production phases. It is important to view your personal credit history and clear up any infractions that may be present prior to applying for any type of personal loan to fund your new venture.
Expansion of a Base Idea
Taking a base idea and expanding on it with multiple variations offering several feature packages requires a large amount of money. This is something you will need multiple avenues of funding for, including investors and profits from previous projects. Changes may also need to be made to existing products as additional features may change the exterior look of the product along with how it functions.
Along with manufacturing additional products, you need to market these projects. Additional invested funding for marketing is ideal to include in your proposal. Include how you will market, where you are marketing and what audiences you are planning to market too.
To be a successful entrepreneur, you must experience a few setbacks and learn how to bounce back from those setbacks. Failure opens up the door for creative problem solving tactics to come into play to make necessary changes for success the next time around. Learn from analytics, previous product success and general business mistakes. Building from mistakes to enhance products and/or services shows ability to adapt, innovate and evolve as an entrepreneur starting a new venture.