The backbone of any startup is the Business Model to be implemented for its sustenance and growth. What is this business model and why do we the need it. Well, Startups come to existence to fulfill a need that is seen and realized in the real world. So the search is the right way to make the idea a reality such that it can be repeated and can gain the foothold in the industry with the satisfied customer base.
The business model explains who are the customers, how do you intend to scale up your business? What kind of the problems can come into the picture, if so what needs to be done? How to increase your customer base, revenue strategy, and pricing analysis?
To encourage the people to become entrepreneurs, Government of India has come up with Startup India Initiative under which they are provided with credit incentives and tax benefits too. But the question is when actually should one even think and take the initial steps to get external funding?
Well, initially it would be a good idea to have a lean startup where in you do not need to take external funding at all. Once you get the satisfied customer base who come back to you repeatedly would be the time to expand your wings to establish a strong foothold in the industry.
External funding always comes with preconditions. They look what stage the startup is in:
- Early budding stages
- Is Company generating revenue by itself?
- Has a Sustaining business model
- Business Metrics of the Company
- Exit Strategy in place
- Team behind the Startup
You need to be quite cautious while getting investment as there might be conditions to have their directors in the company as well as to have a say in matters concerned with the company also. Your time will be divided giving updates to your investors and to your own company. So before venturing to fundraise one needs to take a hard look at ‘What Is’ of the company and oneself at the moment. The funds come with a lot of responsibility and also will have legal implications too.