Do you not have a massive arsenal of funds but want to change the world with your business idea? No problem. In this article, I will take a look at why a lack of funds doesn’t need to blockade your route to success in the business world.
There are numerous reasons for why businesses fail. Lack of capital is one, but more often than not it comes down to things like a lack of planning, lack of focus, lack of proper research, the wrong location, no determination to succeed, poor management and more.
If lack of money was always the reason, bootstrapped businesses like Plenty of Fish and Form Spring would never have made it. In the case of the dating site Plenty of Fish, sole founder Marcus Frind was short on cash, took no money from outside investors and yet still scaled his business from scratch to raking in $10 million per year.
FormSpring also took no cash from outsiders for the first few years, with the founders pooling their own resources, and eventually it grossed a whopping $45 million in revenue.
Does a lack of money mean you might need to work harder and find other ways to start and scale a business? Perhaps, but it definitely doesn’t mean the dream needs to die. Like with anything in life, those who dream big tend to succeed more than those who barely dream at all.
Here is how you can start a business despite being low on cash.
1. Don’t quit your job
Tim Ferriss sold the ultimate dream to anyone frustrated with their current situation with his mega-selling book The 4-Hour Work Week which, as its title suggests, dangles the carrot of a 4-hour work week in front of us if only we were brave enough to quit our jobs and start our own business.
However, let’s put our sensible hats on for a second and be a bit practical: 8 out of 10 businesses fail, which means that, although you need to take a risk at some point, you shouldn’t get so brave so soon and quit your job.
True, quitting your job will give you more time to focus on your business efforts. But unless you have cash in reserve and can afford to tough it out until your business starts making money, you should keep working the day job.
It’s very easy to underestimate how long it will take before our business starts bringing in the kind of cash our salary is currently providing. In his book The Ten X Rule, Grant Cardone writes how he expected to be making as much cash from his new business as he had been from his old job after just three months.
The reality? He didn’t start making that kind of cash again until after three years.
Don’t make the mistake of getting giddy and quitting your job just yet. You will still need that steady stream of income. Instead, be prepared to work even harder. When you come home from work, work on your business. Dedicate time during the weekend to your business. This will mean sacrifices will need to be made and you might not get to spend as much time with your friends and family, and you might have to miss a few sports games, but the sacrifice is necessary at this point.
Can you start a business while still employed? Absolutely! Here are some tips:
- Work with a co-founder (share the burden)
- Download a time management app
- Schedule so that you don’t burn yourself out (work some mini-breaks into your schedule, as well as downtime)
- Go part-time if necessary — and possible
- Don’t work on your business at work
- Be open about your intentions and expectations with your family and partner
2. Refine your business idea
If you want to get investors on board and get your idea off the ground, it’s essential that you’ve got a convincing and compelling business idea in the first place.
This is always the first step on your journey — and it’s a tricky one. How do you come up with an original idea that has the potential to dominate the market?
The most important things to identify first are:
- Areas of opportunity
- Problems that need solving
Once you’ve got these identified, you can then work out what grabs you the most (what are you really passionate about?) before finding the solutions.
Coming up with areas of opportunity isn’t easy, but if you can come up with at least one idea each day for a whole month, you can train your mind to spot these areas of opportunity.
It’s the same where problem solving is concerned. If you’re new to the world of business, learning how to identify problems will take some time. The best thing to do is to think in terms of innovation. How can you make an existing product better? No one would have anticipated that Apple would begin to dominate after Microsoft had enjoyed so much success in the early nineties, but by innovating so fantastically, Apple took the mantle.
3. Ask around for cash
If you yourself don’t have much money right now — and certainly not enough to get a business off the ground, — don’t be afraid to ask around for cash. Most of the time, family members and friends who believe in your idea will be more than happy to pool their resources and give you extra funding.
Of course, to convince your family and friends to part with their money, you will need to sell them a strong vision, and you might need to offer them something in exchange, such as equity in your business.
Nick Woodman, the founder of GoPro, only had $10,000 to invest in his own business back in the early 00’s, but he asked his family and friends if they’d be willing to help out, and together they all managed to raise $65,000, which was enough for him to create the first prototype.
Once you’ve got the cash, think about how you can make it last. What do you need to invest it in? How can you make your initial profits as soon as possible to help sustain the company?
It’s all about getting that initial bundle of cash to get you off the ground.
4. Use crowdfunding platforms
If you haven’t used a crowdfunding platform to secure funding for your business yet, guess what? Already you’re a million miles behind your competitors who have.
Each day, entrepreneurs turn to crowdfunding platforms to secure capital for their business, and it’s changed the way small, cash-strapped businesses just like yours can grow in their early stages.
Not sure if it works? Check these success stories out:
- The Pebble E-Paper Watch — took 37 days to raise $10,266,845
- Ouya — took 29 days to raise $8,500,000
- Pono Music — took 30 days to raise $6,000,000
- Oculus Rift — took 30 days to raise $2,347,429
The most popular crowdfunding sites include:
The key is to tell your story, sell your vision, and offer reward/equity to potential investors. However, we’re not all the best at telling our stories in written form, and since it’s critical you get this right, I suggest using some of your budgets to work with a professional crowdfunding writer.
All in all, a lack of money needn’t be the one thing that stops you. Time, lack of focus and determination? Maybe. But there are always ways to make money, especially in 2018. Ask around for help, keep working your day job for now, take on a part-time freelancing/consulting project if necessary, and refine your business idea so that it appeals to serious investors.
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