Dear Start Up Therapy,
I know I have a good idea (with good research to back it up), but I have forty dollars in my savings and payments due on the car. In order to survive, I need to find some capital. What would you advise I do?
Sincerely,
Cant Doitalone
Dear Cant,
Unfortunately just having a good idea doesn’t result in a successful business. The landscape is littered with examples of individuals who have a great idea but never even get out of the starting gate. But getting out of the starting gate isn’t necessarily all about capital either.
Though access to capital is often a critical component to getting a business started, it’s not always about other people’s capital. Many entry-level entrepreneurs think that the fastest and easiest way to start a business is with other people’s money. I would suggest to you that starting a business based upon debt is never the best way to start a business. Every effort should be made to start a business at the grassroots, in its simplest and cheapest form in order to first prove the concept of the business idea. Many new entrepreneurs have the impression that in order to succeed you need to over-think the concept and over-spend in preparation to start the business.
Starting small with whatever capital you are able to raise from yourself, from your family, or from your friends is the surest way to determine whether there’s in fact an audience or market for your product or service. Unless you are planning a technology business that requires a huge amount of capital infrastructure, start your business organically. This means just start with your preliminary product or service and see what the market tells you backabout it. More times than not, no matter how great you think your idea is, what the market tells you back is much different and if you are to be successful you will often need to be flexible and adjust to the demands of the market. This way, you have little invested in your original idea and can make the necessary changes.
Once you have some success with the market under your belt, even with very little investment, you will be better prepared to then go about the task of securing other people’s money for growth. Getting through the proof of concept phase as quickly as possible is the surest way to access other avenues of capital and to turn your good business idea into a successful business.
Mike
Kathy Bosin says
Mike – I’ve always read that starting a business on a credit card is a bad idea, but we did that once and survived it. I’ve read that a huge percentage of entrepreneurs use this method. It’s certainly accessible capital. Your thoughts?
Shalagh Hogan says
Mike, now my husband has proven himself, where is the capital?