Fast forward two months from now. You are wet already, sweat dripping profusely through your shirt on a summer noon. And the scorching sun soaking up the water from your head via the invisible drinking straw - just like you watched in the popular television commercial. Is it possible a lightning strikes you right now, on this scorcher? Some say this is the probability of your idea being funded with huge investment at a baby stage. "They may be too optimistic!" - says Guy Kawasaki, former chief evangelist of Apple, an investor, and writer of the book The Art of Bootstrapping.
"But why?" you are wondering, "Then, whom do the investors love?" Let me share with you a finding by Venture Economics Inc. About 7% of their investments account for more than 60% of the profit, while a full one-third result in a partial or total loss. You understand, considering the high risks involved, the investors here and abroad are exacting with their criteria. Harvard Business Review observes - "Start-ups, however, typically lack all or most of the criteria investors use to identify big winners: scale, proprietary advantages, well-defined plans, and well-regarded founders."
Yes, pocketing hefty amount of cash for your idea even before you start does win you awe-struck glance of your friend, previously skeptical of your idea. But the harsh reality is that the seasoned investors can be more skeptical than your friend was. And here is a catch. It is actually a blessing in disguise. No, I am not consoling you because "grape is sour", let me reveal the underlying yet overlooked issues here.
Getting funded externally typically requires herculean effort. I recall one of my favorite verses -
"I've drunk to your health in taverns, I've drunk to your health in my home,
I've drunk to your health so damn many times, that I've almost ruined my own!"
Draining away hectic energy, you may indeed be able to extract some money from an investor, but beware! Aren't you ending up selling a portion of your ownership cheaply, or compromising your freedom and vision, owing to the repeated 'inputs' by your investor, if not the requirement of his formal approval at every step you take? Here are the secret techniques, mostly open secrets, to kick off the business by your own, for your own.
Think Big, Start Small. Robert Ball, CEO if OfficeArrow.com advises, "Take your big idea and pare it down into a series of ideas, then execute on the very best portion and activate other parts later." While spending your own hard-earned pocket money on the most prioritised tasks of your entrepreneurship, you typically squeeze the money harder than you would do spending investors' money.
What can be more advantageous for a venture than most of the required skills in the co-founders? Even if you are not so fortunate, you will be surprised to discover how much money you can save by learning a new skill on your own, rather than paying loosely to outsiders. Rather than hiring employees, hiring dedicated interns can be a cost-curtailer.
Obtaining payment from your customers in advance and deferring payments to suppliers, definitely upon negotiation can raise you robust working capital to run the business. Inc. magazine lists deferring legal fees as the number one extreme bootstrapping ideas -"Negotiate with your lawyers so that you don't have to pay them until you raise seed or first series of funding."
Intelligently interesting marketing moves can make you stand out from the overpowering hue and cry of mushrooming startups in the social media. An insightful suggestion from The Art of Bootstrapping shares -
"Don't have the money to explain your story starting from scratch? Then don't try. Instead position against the leader. Toyota introduced Lexus as good as a Mercedes but at half the price-Toyota didn't have to explain what "good as a Mercedes" meant."
If you have spent hours of accounting classes like me, calculating lofty figures of others' profit, without letting a single cash in your pocket, here is a fact for you -"Cash is not only the real king in startup, it is the queen, the prince, everything in early stage startup ." Minimise your spending by sharing office spaces, rather than hiring all alone or by using your old laptop instead of buying a sleek MacBook Air. If you spend lavishly by justifying yourself with "longer run brand equity", the longer term may not come at all!
Tonmoy Ananda Paul is a Finance Major, GIST Transformer, and co-founder of CRAVEEE, paul.tonmoy@gmail.com
Best techniques of business funding
Tonmoy Ananda Paul | Published: April 02, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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