5 Building Blocks to Financing Beauty
There are several methods to finance a beauty business. Some are easily attainable and others require extensive preparation and resources. In the last four years we have met founders who are just getting started and are 100% self-funded and have seen founders go from self-funded to receiving million dollar investments from venture capital firms.
The questions we see more often than not, are how do you know what is right for your business and how do you prepare to acquire these resources? These aren’t necessarily questions that can be answered in a single blog post, so we will start with The Building Blocks to Financing a Beauty Business and continue to share more details on resources for financing your beauty start-up or growing your existing business. At the end we also provide a link to a simple template we created to help you structure your your thoughts and guide you through the beginning of the process.
First, investing in a business whether with your own capital or with investors is serious business. We designed these building blocks to ensure you take a serious look at the foundational factors that will influence future funding decisions. This requires thoughtful consideration and this exercise will let you know if this is something you are up for or if you will need help to get started.
5 factors to consider whEN determining
how to fund your business
This is perhaps the most important factor to consider when making any decisions for your business. It impacts how your run the business and how your customers perceive you and decide to participate in the products and value you offer.
This is intended to be a guide that you can always go back to when you are making any decisions.
WHAT DO YOU VALUE?
Goals are important roadmaps for your business. They help to keep you focused on your objectives and reduce time spent on activities that do not move the business forward. We intentionally start with long-term goals for two very important reasons. 1) long-term goals should inform your short-term strategies. 2) you should NEVER sacrifice long-term success for your short-term goals.
Your goals can be growth strategies, product development, team expansion, global expansion, improvements in processes, expanding social reach, etc.
Setting goals should truly be considered a first step. The most important factor in setting goals is coming up with a plan of action to achieve the goals you set forth. This is usually best executed by identifying small steps and milestones that help you to get closer to attaining your goal.
Long-term goals - what do you want to accomplish in the next 3, 5, or 7 years?
Short-term goals (0-12 months) - These goals are what you are focused on right now! What are the steps you need to take to overcome that next hurdle and make progress towards your long-term goals?
3. Company type and ownership
Does your company structure impact your financing options? Do you have a leadership team? Are they also owners of the company? How many people need to buy-in when making financing decisions?
The reality is that many businesses start with extremely informal partnerships. This might get things started quickly, but can create significant challenges as you grow. Use this as an opportunity to evaluate your business structure and to implement the necessary steps that clearly structure your business and articulate guidelines for decision-making.
It might seem strange that this is almost last, but stay with us. If you have significant resources, it simply does not matter if you don’t know how you want to use them.
When evaluating resources, start with where you are today. How were you funded and what are your current funding sources?
Many people think of funding as money to do what you need to do, but it is much more than that. Funding should support your values and long-term growth. For that reason, when we consider resources, we also consider people. They are the foundation of any organization.
Use this as a time to evaluate the existing strengths and weaknesses of you and your teams. Any funding, should support enhancing your weaknesses that will or can impact achieving your long-term growth strategies.
5. Get connected
Lastly, consider your industry and peripheral businesses. How are they funded? Also consider what resources and knowledge bases exist to start learning more about this side of the industry.
There is an abundance of free information available to start learning more, especially via social media. Find investors who you can follow and start listening to what they look for in businesses they invest in.
Here are some of our current favorites. We will share more about them as we dive further into this topic.
We know this sounds like a lot, but the reality is, running a business is thoughtful work. In order to make this easier, we created a simple template to structure your thoughts and guide you through the beginning of the process. Click here to access it and download a copy of your own.