No Capital? No Problem. What You Get For Free Is Priceless

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No Capital? No Problem. What You Get For Free Is Priceless

 

The following is a guest post by John Williams.  He created Logo Garden to give everyone starting their own business access to professional looking logos. John is a long time member of the advertising industry and has written about branding on leading websites. His experience with branding led him to make an easy to use logo maker available to startups and DIYers.

No Capital?  No Problem.  What You Get For Nothing Is Priceless

You have an idea for a business.

But you've got obstacles.

You weren't born with a silver spoon. You sold your silver spoon last year to pay your mortgage. You've got no connection to deep pockets. Your idea is so far-out no one listens long enough to grasp its brilliance. Whatever the reason you can't secure capital for your start-up, or whatever your excuse for not moving forward with your idea, forget about the opportunity your non-existent investors are missing out on and think about the opportunity you're missing out on.

Starting a business without any capital can be a hugely rewarding experience.

Here's what you can expect to get in return for starting a business with no outside funding:

Organic Growth

A large infusion of cash might instigate growth your business isn't ready for. Using only your own money means you can grow at your own pace as your business has the resources to handle it. Investors, on the other hand, are all about the bottom line and the deadlines for getting there. Who could blame them? But sometimes a business needs to flesh out its problems and work out the bugs in fits and starts without the pressure or forced reckoning of goals imposed by someone on the outside. Being small and independent means you can be flexible and adjust your business as needed. Being beholden to investors means you may have to adjust according to their say or their expectations rather than taking your business the direction you see fit.no cash

As you grow your business organically you benefit from constant reality checks at every turn - whether it's unexpected expenses or a sudden change in market conditions. No one is pushing you forward or filling your head with dreams of newsworthy buy-outs or what you should name your super-yacht. No one is letting you feel as if you have a cushion where you don't and then comes calling for a pay-out.

Recession-Hero Status

During economic times like these the hedge-fund-manager manner of excess is downright tacky. Instead, what's in style is the image of a frugal and innovative operator who thrives in the face of daunting conditions using only his or her wits, sweat, and discipline. Steve Wozniack and Steve Jobs quite famously started Apple in a garage. Barbie got her humble start in a garage as well when Ruth and Elliot Handler began a business making picture frames. Being resourceful they made dollhouses from the wood scraps and before they knew it the doll-houses were outselling the frames. That dollhouse business became Mattel. Clients, customers, and potential future investors love these stories. They're hugely inspirational. And while Apple and Mattel grew to bounds their founders could never have imagined, think how many highly successful smaller businesses are out there quietly growing and earning profits after starting from nothing? Entrepreneurs sporting frugal style and practices all the way to the bank and inspiring people along the way.

Efficiency and Operations Boot Camp

With financial backing not of your own making, you may get a false sense of where things stand. In a recent Harvard Business School newsletter, HBS Senior Lecturer Shikhar Ghosh warns that one of the reasons start-ups fail is too much up-front funding: "It covers up all the mistakes, it enables the company and management to focus on things that aren't important to the company's success and ignore the things that are important." But when it's your own seed money you must depend on, you are all too aware of the implications of each expense. You are constantly reevaluating operations to make them more cost-efficient and productive so that your hard-earned money isn't wasted but is smartly invested in the growth of your business.

From the initial budget to managing overhead, creating a business from slim funds is a hands-on sink-or-swim crash course in keeping a business afloat. When it's your money, your whole livelihood is depending on every choice you make so choices are made carefully and thoughtfully. You'll quickly dismiss fancy office space with high rent and fashionable interiors and think about working from home for the time being. You may even have to keep your day job to pay your bills at first. You'll want to work hard because you won't be able to pay anyone else to help you. You'll want to start with an idea that costs more in sweat equity and time than expensive materials or manufacturing. You'll want to bend over backwards to provide superior customer service because it costs you nothing and it just may separate you from your more established competitors.

The Fruits of Your Labor

The credit, the satisfaction of single-handedly guiding your creation from conception to execution, the experience, and the profits are all yours when you're on your own. The fruit of your labor could even be a character-building exercise in failure, but at least you can own and learn from that experience instead of having to navigate it via someone else's terms. Independence can be scary, but that scary reality is all yours.

Whether you succeed or fail, you will emerge as a business-person with experience in every aspect of owning and managing a business. That experience will serve you well in future ventures, and you will know that you've done what others said was impossible. That's the kind of confidence that breeds more confidence and more success. The story of how you did it is something you will carry with you from the garage to the corner office or to somewhere you haven't even thought of yet. The journey is yours and where it will take you is up to no one but yourself.

Posted by Dharmesh Shah on Fri, Jun 10, 2011

COMMENTS

Without doubt the smartest piece of advice I've read about Start up mentality for some time. Funding is the gasoline to pour on the fire of your idea, but be careful, it goes faster than you think, you can get burnt if the fire gets out of control, and, the guy who sold you the gas is often the Fire Engine driver who will charge you to clean up the mess. Get rich slowly unless your idea has a half life of about 6 months. Your objective is to survive the first two years, then your chances of making it go up big time, by which time you'll know how to run a balance sheet and money will be cheaper when you have recurring revenue and costs under control. Been there, done that the T shirt is now a duster!

posted on Friday, June 10, 2011 at 11:09 AM by SalesArmyKnife


Excellent post. It's weirdly comforting to only answer to a spouse or partner when you realize you need to change course quickly.

posted on Friday, June 10, 2011 at 12:00 PM by Wendy Darland


Excellent article! Encouraging and a great reminder that having financial backing from an outside source is no guarantee of success.

posted on Friday, June 10, 2011 at 12:47 PM by Sue


Excellent article! Boot-strapping a start-up company is the fastest way to validate your idea has traction in the real world. There are no excuses in boot-straps, you execute or you close up shop. Your ability to win is determined on how smart and determined you are, not the size of your first or second round of funding. It's much tougher, but far more rewarding. 
 
 
 
The best part of a start-up business that NO VC backed company can compete with? You get to run the company exactly how you want. Trust me, that's priceless!

posted on Friday, June 10, 2011 at 3:45 PM by Mike


Interesting perspective. While I love your ideals and overall perspective, ultimately the scale in which any start-up wants to achieve determines most, if not all of their 'financial' decisions. If your goal is to churn and burn off a unique idea/service by all means go out and gather as much VC as possible. It's not that hard, feels like 1999. To each their own. Great read!

posted on Friday, June 10, 2011 at 6:00 PM by Zach


Great article. And as a start-up looking for funding it was strangely comforting! We turned down some early investment offers - and did not regret it. 
Another party's need for their own R.O.I can entirely undermine the integrity inherent in the business you started. 
Entrepreneurs are largely driven by passion and often, by their own choice and nature are unemployable - VC's can sometimes result in a boss you never wanted! 

posted on Saturday, June 11, 2011 at 9:52 AM by Maxine Horn


This is a great article. I really enjoyed it. I am in the process of bootstrapping a business right now. At times we wish we could get more funding to expand but we love the flexibility of being able to run the business how we want to run it. 
 
We love what we do so if we have to get through a few years of barely getting by it will be worth it in the end.

posted on Saturday, June 11, 2011 at 12:15 PM by Don Tarinelli


Great Article and Nice Learning. 
And one more thing i would suggest for every start up is to charge for your products. 
"If you believe you startup has real world value,  
let people pay you. Don’t chicken out by giving it away for free."  
-Joel Gascoigne 
As a startup entrepreneur it has helped me lot. 
IAmJayesh

posted on Sunday, June 12, 2011 at 6:39 AM by Jayesh


What an inspirational read! The situation is exactly the same as mine.  
 
I was actually doubting myself before reading the article whether if I am capable or made a right choice funding my own project (MyColorscreen.com). After reading it, I am glad that I started it as I have learned so much in the pass few months. More than my master degree can ever taught. 
 
Thanks for such a great insight.

posted on Monday, June 13, 2011 at 3:43 AM by Peach


Hi John,  
 
Thanks for your article and I wonder if you could share more practical tips such as how did you get your first customers?  
 
Thanks. 
Avin

posted on Monday, June 13, 2011 at 4:30 AM by Software_Index


Hi, 
Thanks a lot for your article. I cherished reading it. 
 
Thanks. 
Joseph

posted on Sunday, June 19, 2011 at 3:07 PM by eAM Developers


John 
 
Great article, interesting insight. Too many times the quest for funding takes your eye off the business and the value proposition you are trying to deliver

posted on Wednesday, June 22, 2011 at 8:40 PM by David Capano


Enjoyed reading the post! I read the premise as 'you need capital but don't feel too bad if you don't have access to it, because here's what else you have...'  
 
 
 
Maybe I am reading it wrong, but if not (i.e.; the startup needs an infusion of cash for valid reasons), then an entrepreneur doing the opposite may be in for worse surprises than giving up control. Since nobody has monopoly over good ideas, executing when you need to, is very often everything.

posted on Thursday, June 23, 2011 at 9:25 AM by Ambrish Kochikar


Very interesting article and somewhat inspiring to that you can be successful starting your own business only with what you got.

posted on Thursday, June 23, 2011 at 10:59 AM by Reginald Jackson


Great article. It's so comforting to be reminded that I'm not the only weirdo out there determined to do it "my way." Thanks so much for sharing these worthy insights.

posted on Friday, June 24, 2011 at 4:05 PM by Rachael Wilkins


Excellent article - thanks very much. It's nice to have some validation, particularly when the path seems precarious and scary. 
It's articles like this that I keep and pull out every so often to remind myself to keep going and not give up! 
Thanks

posted on Thursday, June 30, 2011 at 9:37 AM by Trish


Excellent article! Encouraging and a great reminder that even if you do don't have the financial backings from top places one can be successful.

posted on Sunday, July 03, 2011 at 4:42 AM by Eddie Gear


I wish to join this but all work in Hindi (Indian Hindi) language, if i could...please advise.

posted on Monday, July 04, 2011 at 3:20 PM by Meenu Bansal


I agree with this article. While this is the less sexy road taken let alone can be tougher to succeed, it is very rewarding in the end. As was said many times before.... ideas are a dime a dozen, execution is everything. This is something that I have been keen to make sure of when releasing <a href="www.jobmuncher.com>JobMuncher..

posted on Friday, July 08, 2011 at 1:02 AM by John D


It's great to read about organic growth when there's much talk about raising capital since investing a lot won't necessarily make a company profitable. It seems the companies who succeed to grow organically also have the best chances of getting profitable. A friend of mine said that the later you raise capital, the better. Do you agree? I for one will prefer organic growth since that appears more sustainable.

posted on Thursday, July 21, 2011 at 11:15 PM by Niklas Rosencrantz


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