When it comes to money, most start ups are brave enough to secure funding from the stage when they are struck with the idea of creating a startup.
Where does money come from ?
The money mostly comes from the founders, if they have initially. And then later on, the start ups if they are good enough to pitch well and convince others that they can make money, would be pumped in with money, and in some cases, a lot !
Why do they get money / investment ?
There are big companies/individuals who have cash surplus, or are looking into venturing into a new field. Some think of investing money in start ups, which in future, can be of huge value.
How to use money ?
In business terms, if you don’t have cash in hand, the game is over. This means, you should always have a minimum cash in hand left so as to sustain your operations.
Start ups will have to rent space. Most start ups look into higher rent bigger areas at the heart of city so as to project a descent image. Well, this seems OK to do so. But from a financial point of view, start ups usually have to minimize their recurring expenses. The space rent, would be higher in cities. This expense is to be borne by the company every month, which increases the expenses. This would mean that the company has to have a higher sales, to become profitable. A cheaper, but well placed offices in semi-urban or well connected villages, are good to start with, or even for later as well. This would lower down the expenses as well as give you nearly same facilities as the ones at the heart of the city.
Hiring talent is costly. I have seen people who are willing to hire highly skilled people at any cost. For start ups with less cash in hand, this would be highly risky. Every hiring decision has to come from ‘necessity’. In smaller companies, one person tend to fill a lot of positions. For instance, an engineer can also work for procurement when the company is small. These multi talents will save you a lot of money. Also, hire people with passion, just because, they tend to pump in a lot of suggestions and ideas, which would come handy, unlike people who are much confined to a post. Freelancing of work is also suggested so as to reduce the recurring costs.
“Reducing Expenses Is A Key To Early Profits”
How did RegalDream take these into account ?
RegalDream Technologies is a tiny start up. Though we could seek funds, we wanted to take the hard way of not securing a funding initially. We invested our hard earned money into the start up company. Isn’t that the better way to start a business ?
We took a small office room in a village, but well connected to the city. The office is just a few kilometers away from major tech park in the state. When co-working spaces in cities were priced at about 6-8K INR, the 100 sq ft office was rented at 2.5K a month. We would be expanding to a bigger office once the start up becomes fully operational.
Hiring talents is of great importance as well as of greater difficulty. We, instead of hiring talent, became a jack of all trades. We learnt to acquire the minimal talents to run a business, from creating contents to mechanical and electronic designs. We consult people when required, but mostly do on our own. We also confined our initial projects to smaller designs, to consume less resources, and would step into bigger ones, once we feel good at what we have accomplished from our smaller products.
We have kept aside the funding and major hiring part for the future 😉