If you want to be a successful entrepreneur, you may be better off funding your business yourself. That’s the advice University of Liverpool online MBA graduate Aaditya Raman would give aspiring small business owners.
Aaditya came to this conclusion as a result of research from his MBA dissertation into funding sources for startups and small and medium enterprises (SMEs) in Canada
“Entrepreneurs should use their own money as far as possible when starting their own enterprise,” said Aaditya, who specialised in finance with his MBA.
“Outside financiers often want to make quick or unrealistic returns in the early stages of new business development which can end a business before it even has time to establish itself.”
Access to funding is a major concern for startups and SMEs. According to the World Bank more than half of SMEs lack access to finance which limits their ability to grow. Despite this Aaditya still believes startups are better off going solo.
Outside sources of funding
Angel investors are the next best option for emerging businesses, according to Aaditya. His research found that generally they were willing to take an eight- to ten-year view of their investment, allowing the company time to grow and stabilise before investors started to ask for their money back.
Venture capitalists, in contrast, had a much shorter time frame and higher expectations and generally preferred the technology sector rather than retail or consumer goods. Typically, Aaditya’s research found, they hoped for a quick exit with a lucrative return after just two or three years.
Banks, he concluded, may also not be a good match for entrepreneurs as they are often not willing to take risks with small startups and SMEs, preferring to only lend to more established businesses.
Through his research, Aaditya met with bank employees, venture capitalists and angel investors to ask them how they viewed investment opportunities in startups and SMEs. “Because I was a student they were more willing to answer questions that they typically might not have answered,” he said.
The best support
It was the opportunity to conduct research – as well as the University’s global reputation, the flexibility of the online format and the focus on developing technical skills in a multicultural interactive environment – that attracted Aaditya to the Liverpool Online MBA.
Many online students pick a dissertation topic related to their employer or current business area, but he chose to focus on a subject linked to his personal interest in finance.
Aaditya completed his dissertation in just three months, while holding down a full time job as a management consultant. He says he was able to achieve this thanks to the help and support of his dissertation advisor. “He was willing to put in the amount of hours that I was, suggesting ideas and different ways I could approach the problem.”
This regular contact has continued outside of Aaditya’s study with his advisor now becoming a mentor. “We talk regularly and enjoy a strong relationship, discussing the latest trends in business management and strategy.”
Aaditya has put his research findings to good use and has started his own business in the renewable energy sector, choosing to fund his startup on his own without outside investment.Liverpool Online MBA.