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Get In The Mindset of Being An Entrepreneur: As You Speak So Shall It Be
Being an entrepreneur requires determination, stamina, the courage to take risks, and the fortitude to withstand failure. Yet what's the good of having a dream if you don’t think like an entrepreneur?
Recently, the Kauffman Foundation, a non-profit that focuses on education and entrepreneurship, compiled incisive insights on this topic from top thought leaders, including a professor who teaches entrepreneurial thinking at the University of Virginia. Here are some key takeaways from the Kauffman Foundation article that can help any entrepreneur:
1. Ask questions
Curiosity is a great way to keep the entrepreneurial flame going while discovering new ways to achieve the next goal. When you stop asking questions, complacency and indifference can set in—both of which are the scourge of visionary thinking. Never stop asking questions, and remember that curiosity is the signature of a true entrepreneur.
Being able to think and do things off-the-cuff is a quality that all resourceful entrepreneurs share. And because business success can often be arbitrary and relative to factors beyond the entrepreneur's control (i.e. economy, market trends, etc.), it's imperative to master the art of improvisation. Getting locked into a restrictive mindset squashes imagination and spontaneity, both of which are necessary attributes of the successful entrepreneur.
3. Be open to risk
To launch a business, it's a given that you must be willing to take a risk. That tenet is Business 101. Without the willingness to take chances, an entrepreneur cannot push forward to pursue his or her dream. "Entrepreneurs are in constant motion, pushing forward despite the environment surrounding them," writes Kauffman Foundation author Alex Krause. "In an ongoing hectic environment, risk is part of the day-to-day, and thinking in such a way that expects risk and helps entrepreneurs respond better to risk."
4. Be ready to fail
To paraphrase an old business adage, failure is the precursor to success. This might sound like counterintuitive thinking, but it isn’t. Without making mistakes, you will never learn from them and be able to take the next step with the new knowledge you’ve acquired.
4 Popular Start-Up Financing Options
Thinking about starting a business? Recent studies and reports have shown that entrepreneurs are more optimistic than in recent years when it comes to the state of their businesses this year, and that’s great news! But always high on the list of concerns for starting a business – even in optimistic times – is financing. Here’s a roundup of some ways, aside from avenues such as SBA-backed loans, to finance your startup business or financing your start up.
According to expert Marco Carbajo, credit cards are a major source of financing for small business owners, with statistics even showing that more than 65% of small businesses using them on a frequent basis. It’s a popular approach, but you should be sure to do your research to determine if it’s the right one for you. Here are some tips from Entrepreneur.com to help:
- Unless your business is incorporated – so if yours is a sole proprietorship, for instance – you are guarantor of all debts. So if your sales are slow and you fall behind on payments, you risk your personal credit rating and ability to borrow.
- It varies by state, but your credit-card issuer might still require that shareholders with significant ownership guarantee the line of credit – even if your business is incorporated.
- Potentially bringing on partners? Make sure your agreement states that they’ll accept personal guarantees on all existing business debt. You need to address this specifically because in many states, new partners aren't automatically responsible for previous debts.
Friends and Family
Asking friends and family to borrow funds to help finance your business sounds like it could get awkward, but it doesn’t have to. Treat the process just as professionally as you would an engagement with a bank. If you done right, you can potentially gain quicker access to the cash you need and jump through fewer hoops – after all, your friends or family already know you. Read more about borrowing from friends and family in our article here, but think about these highlights as you consider this option:
- Think carefully about who you’ll approach and make sure they understand the risks (and rewards) of getting involved. Keep in mind if your business doesn’t work out and you can’t repay your obligations, relationships could suffer.
- Be realistic about how much money you need. Instead of asking for the maximum, consider what you need to get you to a certain point in your business plan. Once you show you can repay that initial investment, you’ll be in a better position to ask for more money if you need it.
- Write it down. You might think a verbal agreement with your friend or relative is sufficient given the personal relationship, but this is business. Consider this advice from Entrepreneur.com: "Any time you take money into a business, the law is very explicit: You must have all agreements written down and documented. If you don't, emotional and legal difficulties could result that end up in court. And if the loan isn't documented, you may find yourself with no legal recourse.”
- Communicate. Show your business progress and share updates along the way, even if it’s correcting mistakes you’ve made with your business strategy. Checking in and sharing information shows that you’re taking seriously the role others are playing in your venture and demonstrates professionalism.
Increasingly, crowdfunding is becoming a popular way for people to get startup financing for their businesses. You’ve probably heard of Kickstarter campaigns – that’s crowdfunding. It works through a collective cooperation of people who network and pool their money and resources together, usually online, to support efforts initiated by others. So it gathers multiple, smaller investments as opposed to a single source of funding. You can read more about the details here, but here are three other key considerations from Entrepreneur.com:
- You should begin working on your crowdfunding campaign six months before you want to launch your project. When your campaign starts, you should’ve already made a significant effort in letting people know about it collecting email addresses so you can really hit the ground running when you open the gates for your campaign.
- Set your funding goal as low as you can manage because some crowdfunding platforms, like Kickstarter, are “all or nothing.” For instance, if you set a goal of $1,000 and you meet it, then you get the money. If you raise only $500, you won’t get anything. Read the fine print about the platform you choose so you can be strategic about your funding request.
- Don’t forget to award your donors. You’re asking people to take a risk on your business venture – there are no guarantees. So thank them and show your appreciation by offering your product or service at a discount when the time comes.
You may walk through open doors of your local bank only to hit a brick wall. According to this Alternative Lending e-guide, traditional banks decline up to 80% of small business loan applications.
Enter the “alternative lenders,” aka non-bank lenders. With faster underwriting and shorter decision processes, alternative funders have grown increasingly popular. They lent approximately $3 billion in 2013, double the amount from 2012. Banks tend not to loan amounts less than $200,000, so alternative financing appeals to small business owners in need of smaller loans. Types of alternative funding include term loans, merchant cash advances, factoring and equipment loans, and you can apply for alternative financing online. Apple Capital Group, Inc.,based in Dallas Fort Worth area is an excellent source for financing.
You can also learn more from our online Learning Center course, “Introduction to Crowdfunding for Entrepreneurs.” Beyond a “traditional” track of securing a loan from a bank, there are quite a few avenues to consider for financing your business. And with passion, professionalism and planning, you’ll establish a good foundation for success down any of these paths.
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