So, you've got a great business idea and you happen to have saved some money. Not much, but enough to start executing on the idea. And let's assume that you've got enough money that your business will start making money before you run out of money. What should you do in this case? Should you start pitching your idea to potential investors or should you start executing the idea on your own?

It is a hard but very important question that gets neglected by many entrepreneurs. Especially because the decision to take someone else's money in exchange for equity is usually non-reversible! There is no right or wrong answer. I just want you to make a deliberate decision if you still have time.

First, you should ask yourself, why are you doing it? You've got a vague idea that you want to be an entrepreneur. But what exactly attracts you so much to it. Is it the complete autonomy? Flexibility (time and space)? A shot at making billions?

If you're in it for the autonomy, does it make sense to take investor's money in exchange for equity? What good are billions if investors appoint their own (supervisory) board members or even replace you as a CEO.

Even if you're in it for the money, you should know that finding a product-market fit is not enough for venture capital (VC) firms. They are above all concerned about your growth rates. So, even if you manage to demonstrate a product-market fit, investors might not be willing to give you their money. You simply don't meet their return-on-investment (ROI) criteria. Don't believe me? Sahil Lavingia, employee #2 at Pinterest left Pinterest to set up Gumroad. He attracted outside funding right from the start. He was growing right from the start. Surely, he had a great product. Hack, he even had a product-market fit. But he wasn't growing as fast as he should (north of 20% YoY!). Think about it. The business was growing 20% YoY but the VC's weren't satisfied and he failed to raise additional capital (Round B funding). You can read the whole story on his blog.

Second, let's assume that you're in it for the money or impact. You need to grow. Heck, your growth has to be 30+% YoY. Usually, such growth requires venture funding. Distributing your product all over the world requires large investment of time and money. You cannot do it alone. You need money to employ people, buy necessary means (computers, servers, warehouses etc.) etc. Let's assume you have a really great idea and that investors trust you with execution, product-market fit and growth rates. Let's say that you start pitching them your idea straight away - ie. without demonstrating a product-market fit, let alone growth rates. What will be your negotiation position? Even angel investors will require a large chunk of equity in exchange for their money. In later rounds your share will be dilluted even further.

So, do you really need investor's money straigt away? What prevents you from executing the idea and at least finding a product-market fit before you start pitching idea to investors? If your product or service requires large investment just to start executing it (e.g. bio-tech sector) then sure, accepting outside funding is the only option. In other cases, showing investors your numbers will let you keep larger chunk of your company in exchange for required capital.

What about growth rate? If you don't get outside money you cannot grow fast enought that it will prevent the well funded competition from stealing your idea. Sure, more capital enables faster growth. But usually the competition you're thinking about (the big established companies) won't notice you untill you start walking on their turf big time. Between the time you discover a product-market fit and time you step on their turf you'll have more then plenty opportunities to attract outside investor that will provide the means to attack the Goliath.