Yes, you absolutely should raise extra funds for your startup. Generally, when people decide that they want to start a business, they think in terms of the best case scenario…and that’s what they raise money for.
Murphy’s Law: everything that can go wrong will go wrong. So, if you’re launching a start-up it is always a good idea to raise more funds than you think that you need. In addition to ensuring that you have the funds to cover any issues that you did not necessarily foresee, you have to keep in mind that most startups don’t make a profit for the first few years. If you’d like to make sure that all of the expenses are covered and that you get even a little bit of a paycheck, you need to raise additional funds.
You certainly don’t want to end up with more debt that you can handle, but you also want to make sure that you have the right number in mind. To help you determine how much you should raise, ask yourself the following question:
1. What resources do I need? Resources can include people, services, equipment, inventory, and monthly expenses associated with your business. Also consider items like the cost of an attorney and a tax expert. Do not neglect those two items. They are worth it.
2. What is the total cost of those expenses? You’ll have to do a little research to come up with some numbers. Then, as suggested by others, you should add around 20 – 30% to cover any additional problems that come up.
3. How long will it take for you to deliver on your end of the bargain?Consider what your investors are getting. How long will it take for you to give them what they want? Are you sure that you can meet that deadline? You don’t want to ask for more than you can reasonably provide.
Finally, make sure that you’re using the right fundraising methods for your needs. If you need help with fundraising, check out. The lawyers on our legal marketplace helped thousands of startups with their fundraising questions. Stop by for a free consult!