Depend where you’re coming from, there are usually 2 schools of thoughts on what you need to have before starting a business:
- You need a lot of money (capital)
- You need to know a lot of people (the right people)
The choice is usually driven by the culture you grew up with, people you hang around and if you’re in an environment (country) where business start-ups are encouraged or not. I found a lot of people with great business ideas were put down by the lack of one or the other. For me, this is similar to asking the questions that you’re all too familiar with:
Which one comes first? The chicken or the egg?
Having a lot of capital can be of huge benefits. That is if they are used wisely. Too many businesses I’ve noticed have the mentality of “To get big, you have to spend big”. This is not always true. I can give you examples after examples where businesses with big capitals disappear. The lack of strategy and planning can really make a big impact what become of those investments. To me, this is almost the same as gambling. You are betting your business on the odds of the money you invested will give you the return you expected.
Many gamblers often find themselves get some big wins only to lose it again from expectation of getting bigger win. If you are in this category, good for you! But don’t let the amount of available resources fools you. What separate a businessman and a seasoned gambler is that a businessman has realistic goals and strategy how to achieve those goals. Investing your money in the right place coupled with the right strategy can have a massive impact. But gone are the days where you can only get big when you spend big.
There are many alternatives to get capital if you don’t have a lot of money yourself. One thing I would say though is that you need to at least figure out how you can survive. If you don’t have enough money in the bank just to survive, don’t quit your job yet. Keep saving money until you have enough to support you for at least a full year.
After that, anything you need to start your business can be obtained with outside help. Here’s some idea on how to get your start up capital:
- Investors (Venture Capitalist, Angel Investors)
- Crowd Funding
- Government Grants
- Bank Loan
Your start up capital should only go to the essentials, for example: websites, business cards, business registrations, etc. Depend on your type of business, most of the time you don’t even need an office space. But don’t let the availability of these financial facilities fools you. The majority of your start up activities should be focused around planning, researching and crafting your products.
I personally have always been fond of networking. I could never grow tired of meeting people and network with the right crowds. I have personally benefitted and grow my business more through this approach more than others. However, I too will say that going crazy with meetings and networking without purpose and understanding of your target market can be mentally draining. This has been my personal experience as well.
Back when I started my business, I attended every networking event I can find on a daily basis. Although those periods have been a great learning experience (and I do get a few clients), it is not without consequence to myself and my family. More important than working hard is working smart. Be smart who you network with. There are a lot of people who would like to know you, but there’s only a handful that make good business clients or partners. Always evaluate the quality of networking and meeting you attended.
Why am I so fond of networking? Simply said:
Profit follows relationship
I found the more people trust you, the more they are willing to invest in your business. The more they trust you, the more they will send you new business. This will eventually equals more profit for you. So you see if you focus on developing relationship with your market you will find that overtime, your profit will increase. Now, there’s no magic pills here, you still need the right target market, the right product and the right delivery mechanism.
This is what I call “The Core” of your business with clients. If you don’t know your target market (or you targeted the wrong market), your networking won’t be effective. If you don’t have a good product, I don’t have to say it twice that you won’t have a good business. Likewise, how you deliver your value to your target market also matters (you’re not likely to run a good pizza business if your delivery takes 2 hours to get to customers).
Use what’s in your hand
The reason I write this post is I don’t want you to let the lack of one of money or network stops you from creating your dream business. In this modern age, there are many ways to get your business up and running. The most important is to form your business core before deciding on spending money or growing your network.
If you have an existing business that’s currently leaking financially or maybe you feel drained by excessive networking activities, don’t lose heart, all is not lost. Take a closer look to your business core and make the necessary adjustment. Feel free to drop me an email if you have questions.
Which school of thoughts are you from? Share your experience below.