Securing Funding is Just the Start: Smart Resource Strategy for Your Business’s Next Phase
We all know the amount of time, energy, and commitment that goes into securing business funding. But in many ways, the true “hard work” is still ahead of you. After all, you have to figure out how to intelligently allocate your new financial resources and chart the next chapter in your business’s journey.
Securing funding is an exhilarating milestone, often marking the start of a new and exciting phase for your business. However, this phase can also be daunting. To help reduce some of the stress and confusion, here are the 20 most common mistakes people make following a round of funding that you should be aware of:
- Spending the Money All at Once: You received the funding largely through a well-crafted business or strategic plan. It’s crucial to adhere to that plan rather than going rogue. The plan was carefully written and thoughtfully designed to guide your financial decisions.
- Neglecting Infrastructure: Efficient operations and growth hinge on robust infrastructure. Managing growth means investing in people, equipment, and physical space, not just focusing on the bottom line.
- Over-Hiring: Hiring too many people too soon can be a significant mistake. Ensure each new hire has a clear role in helping grow your business.
- Unnecessary Expenditures: It’s easy to splurge after receiving funding, but only invest in essentials. If a purchase isn’t crucial for your business, save your money for something that is.
- Ignoring Financial Reviews: Regularly reviewing financial statements is critical, even if you have a bookkeeper or CFO. Monitor profit and loss statements, cash flow statements, balance sheets, and aging reports diligently.
- Overlooking Taxes: Understand your tax obligations to avoid hefty penalties and legal issues.
- Changing the Business Model: Stick to the business model that secured your funding unless there’s a compelling reason to change. Focus on scaling what already works.
- Lack of a Contingency Plan: Business is unpredictable. Always have a contingency plan for handling unexpected events.
- Poor Communication with Investors: Keep investors updated on your progress. Regular communication builds trust and could facilitate future funding.
- Missing Milestones: Failing to meet milestones can erode investor confidence. Have a clear plan to achieve your goals and track your progress.
- Ignoring Investor Insight: Listen to your investors’ advice. They have valuable experience and their suggestions can be crucial for your business.
- Disregarding Team Input: Your team is your biggest asset. Ignoring their input can lead to poor decisions and low morale.
- Neglecting Customer Feedback: Customer feedback is vital for understanding your business’s strengths and weaknesses. Ignoring it can result in losing valuable customers.
- Not Celebrating Successes: Celebrate all successes, no matter how small. It helps maintain motivation and forward momentum.
- Not Asking for Help: Every successful entrepreneur has needed help. Consulting firms like ours can provide invaluable support and expertise.
- Fear of Failure: Failure is part of the entrepreneurial journey. Learn from mistakes and keep moving forward.
- Forgetting Your Why: Always remember why you started your business. Staying true to your goals is crucial for long-term success.
- Compromising Values: Funding shouldn’t lead you to compromise your values. Stick to your ethics, even in tough times.
- Short-Term Focus: Don’t neglect long-term goals and sustainability by focusing solely on short-term gains.
- Resistance to Change: Stay adaptable. Failing to adjust to changing circumstances can hinder your growth potential.
Receiving funding is just the beginning. It’s what you do with the funding that will ultimately determine the success of your business. Avoid common pitfalls, allocate resources wisely, and focus on strategic planning to navigate this exciting phase successfully. Our years of experience in helping companies grow, scale, and become profitable have shown that with the right approach, you can turn funding into long-term success.
Remember, we’re here to help you at every step. Your journey is just beginning, and with smart planning and resource allocation, the future is bright.