By Daniel Murray

Great marketing is one thing, but if it’s not hooked up to a finance strategy your business will suffer. CEO and Co-Founder Ronak Shah, opens his marketing and finance playbook.

Daniel and Ronak, Co-Founder of Obvi, open the conversation discussing why Ronak put accounting on hold to get into the startup space, how to become numb to success and failure, and why, if marketing is a company’s engine, finance is the wheels.

You’ll also hear Ronak’s take on why building sustainably is crucial, and why Facebook is still his go-to platform for customer acquisition.

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LinkedIn: linkedin.com/in/ronak06/

Twitter: twitter.com/michelinshah

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Timestamps

0:00: Intro

05:02: What’s the Finance/Marketing Conversation?

07:32: How Attribution is Never a Perfect Science

10:10: Becoming Numb to the Ups and Downs

12:45: Sustainable Business Over Top Line Profit

15:55: Marketing Dynamism

17:17: Facebook – the Hill Ronak Would Die On

23:58: Experience as Nostalgia

26:25: And Relaaaax

27:34: The One Thing Ronak Would Tell You

The Basics of Financing a Business

How do you finance a business? You’ve come up with a brilliant idea for a business. You’ve researched the market and you know there’s an opportunity there. You might even have some initial capital to get things started.

So what now? There’s the small matter of funding your business before you can get going. How are you going to source the money needed to launch your new venture? That might sound like an intimidating prospect, but it doesn’t need to be.

Converting Assets

Funding the start-up of a business is the process of converting one’s assets into cash. A company that finances its operations by the sale of securities is said to be “financed by the issuance of stocks and bonds.” The process by which a company raises money for its operations is known as “financing.” In short, financing a business is the process of sourcing the money needed to launch your new venture.

How to Finance Your Company

There are two ways to finance a business, equity and debt. There are also a wide variety of sources available to you.

• Equity financing – Using a combination of your own money, funds borrowed from family and friends, grants and investors. If you choose to raise capital by offering equity, you’re selling shares in your company.
• Debt financing – Taking out a loan from a bank or other financial institution. Debt is when you borrow money and agree to pay it back with interest. Getting a loan can seem like a daunting process, but many business owners recommend it because it’s quick and easy to set up.

Equity Financing

Equity financing is when you use a percentage of your own money, funds borrowed from friends, family and/or investors to fund a percentage of the business. You can also raise capital by offering shares in your company.

It’s important to note that equity financing is a form of funding that should only be used as a last resort. It’s important to weigh the pros and cons of this method. Pros: It’s cost effective, quick and easy to set up. You’re using your own money so there’s no risk of default. Cons: If your company is successful, you might not be able to cash out. You might also have to give up a large chunk of your company to investors.

Debt Financing

Debt financing is when you borrow money from a lender, such as a bank or private investor, to fund your business. Debt financing has a higher risk of default than equity financing, which can make it harder to get approved for a loan. However, the amount and type of debt you have can have a big impact on the likelihood that you’ll be approved for a loan.

Partnerships and Acquisitions

Another option for financing your business is to look into partnerships and acquisitions. This is where you find another business that’s either for sale or is looking to merge with you.

Alternatively, you can also buy out another company’s stake in your company. If you’re searching for a business to acquire, you’ll want to find one that has strong growth potential, is cash-flow positive and has a low risk of default. If you’re on the other side, you’ll want to find a company that has a clean balance sheet, a profitable track record and is easily integrated into your current operations.

Summary

Financing a business is the process of sourcing the money needed to launch your new venture. There are two ways to finance a business, equity and debt. Equity financing is when you use a percentage of your own money, funds borrowed from friends, family and/or investors to fund a percentage of the business. Debt financing is when you borrow money from a lender, such as a bank or private investor, to fund your business. Partnerships and acquisitions are another option for financing your business.