In many business ventures you can start extremely small and gradually grow.
Other endeavors will require significant amounts of startup capital. Unfortunately, I meet too many people in the business world that want to raise millions of dollars for their software, apps, websites, or other businesses. They want a big business, and they want it within the next year or two. It’s as if starting small isn’t even an option.
Of course, there are plenty of situations and opportunities that require you to take immediate action with a significant amount of loans and risks. However, test marketing your idea before taking these kinds of risks is becoming so much easier. You can start your business out as a 1 – 2 person operation (microbusiness) and start offering your services this month once you have everything sorted out legally.
“Microbusinesses aren’t new; they’ve been around since the beginning of commerce. What’s changed, however, is the ability to test, launch, and scale your project quickly and on the cheap.” – Chris Guillebeu
Another thing to keep in mind are the intentions of the people or businesses loaning you large sums of money. Even Mark Cuban, who is a venture capitalist himself, advises to avoid taking on debt – especially from venture capitalists. It’s pretty funny that he believes this, considering his role as a venture capitalist on the popular TV show Shark Tank.
When he was first starting his life in the business world, I guarantee he would have avoided showing up on that show and taking money from anyone. If anything, he would have just went on the show for publicity.
“There are only two reasonable sources of capital for startup entrepreneurs: your own pocket and your customers’ pockets.” – Mark Cuban
Cuban also says that he founded his first business, MicroSolutions, with an advance of $500 from his first customer. Further, he said the business had under five employees and didn’t grow quickly in the first couple years. The consensus? “It’s okay to start slow. It’s okay to grow slow.”
“The reality is that for most businesses, they don’t need more cash, they need more brains.” -Cuban
If billionaire Mark Cuban believes this, I’m sure testing this approach won’t hurt. And hey, if your business doesn’t work, you won’t owe anyone much money. If it does, you can slowly grow, and take on small amounts of debt in relation to what you’re making.
Another possible solution for raising money may be using a crowdsourcing website for your idea. The only problem? Many of them want you to whore yourself out with your Facebook and Twitter accounts, which is nothing but excellent publicity for them. Maybe you’re like me and you don’t want your entire family and all of your friends on Facebook and Twitter to know exactly what your business ideas are. I haven’t looked at every crowdsourcing website yet, but the five that I have looked into insist on using your social websites. If you have suggestions for better crowdsourcing sites, please let me know.
Get out there and start extremely small; it may give you an idea as to how interested people are in your products and services. Remember to test different locations and advertise for cheap on a variety of websites.
Guillebeau, Chris. The $100 Startup: reinvent the way you make a living, do what you love, and create a new future. New York: Random House, 2012. Print.
Cuban, Mark (2011-11-19). How to Win at the Sport of Business: If I Can Do It, You Can Do It (Kindle Locations 580-586). Diversion Books. Kindle Edition.