Reboot

Appendix CFundraising

Define your strategy

When deciding whether to raise capital, the first question we asked ourselves was, ‘What kind of business are we building? Lifestyle or behemoth?'

Lifestyle businesses are great. When I say ‘lifestyle', I mean building a company that will allow you to work for yourself and make some great money to allow you to live comfortably both financially and in terms of the hours you do. Lifestyle businesses can change over time into behemoths.

Generally speaking, if you're building a lifestyle business you'll probably need some initial capital that you pay back (maybe a bank loan, or perhaps a loan from friends and family) but then once you've paid that off, you focus on being profitable and don't need to continually top up the cash reserves with loans or other types of funding.

Behemoths are more about building something large, quickly. If you can show that:

• you want to build a behemoth
• you can acquire a customer for much less than their lifetime value (lifetime value is the number you get when you count how much the customer spends in their total number of purchases from you after you acquired them)
• you have a great team with a solid plan on how to do this

then you can probably build a big business with some investment up front.

If you're considering venture capital as the way you'd like to get investment, this is only going to be interesting to them if you are planning to grow the business into something large (let's say a business worth ...