Business Magazine

10 Reasons Why Capital Shouldn't Make Or Break Your Startup

Posted on the 02 June 2011 by Martin Zwilling @StartupPro

No-CapitalBy John Williams

Fast Company magazine recently reported that PayPal founder Paul Thiel is giving away $100,000 to twenty-four young men and women to finance startup businesses. The caveat is that these young entrepreneurs have to drop out of college to do it.

This move is indicative of the possibility that the traditional ways of going about making a living through a college education, an entry-level position at a firm, and steady promotion through the ranks is a dead model. Instead of following a proscribed course which may lead nowhere, entrepreneurial leaders such a Thiel are sparking a change in the way we think about success.

Thiel is providing his mentees with capital to make their startups a reality. For most of us, though, the idea of investors or even securing financing may as well go the way of the corporate ladder. For those of us without angel investors, there are still plenty of reasons to move ahead with new ventures, and we are not alone:

  1. It's all you. When you don't accept capital from someone else, you aren't beholden to anyone else's input. You get to call the shots. You get to keep and reinvest every bit of what you make. You get the personal satisfaction of making something out of almost nothing. People love the fact that Microsoft was started in a garage. Dick's Sporting Goods was started with $300. Become a compelling story yourself.

  2. Having no money can help you plan. With a bank account full of someone else's money, it's hard not to feel flush with cash and have a false sense of security. An inflated sense of financial well-being can result in sloppy budgeting and accounting as you write checks here and there without pause. But when your only capital is your hard-earned seed money, every penny that goes out will be scrutinized painfully. Your mortgage and grocery bill depend on it.

  3. You can keep overhead low. You may want office space outside of your home, but you may not need it to start. Print advertising is expensive, but social media is free. Fancy websites are expensive, but blogs and Facebook pages are free. New desks and computers are expensive, but second-hand stores and Craigslist are great sources for used equipment and supplies. A box of business cards and a card table in your spare bedroom may be all you need. The rest can come later. Or not. Frugal business practices can be rewarding.

  4. A lean image is appreciated. Who hasn't dreamed of a big fancy desk, over-the-top corporate parties, and glossy ads in national magazines? But in the current business climate conspicuous displays of wealth are frowned upon and summon images of Enron, oil companies, and big banks. The shoestring budget and image are in style. Take advantage.

  5. Starting small gives you flexibility. Starting small and nimble allows you to adjust and be flexible as you gain experience instead of being tied to a large concept by heavy investment in upfront costs. If you spend $50K on a website selling party supplies but you soon realize it's the sales of catering supplies you offer that have taken off, you will want to have a site that promotes your newfound focus. But if you've spent all your money on the website for party supplies, you may not have the funds to have the site redone.

  6. Businesses can be built on sweat equity. Startup businesses requiring the least amount of capital are those that require little more than your time and hard work. A landscaping service can be started with only a used lawnmower and effort. A freelance writer needs only a computer and her time. If you will be making a product to sell, be sure the cost of materials is minimal and beyond that it costs only your labor. Making cakes, making baby clothes, or making birdhouses, for example. As your services gain demand, your time becomes more valuable and you can charge more.

  7. Moonlighting can pay the bills. Some people say if you are serious about starting a business you must go all-in from the beginning, but for some that simply isn't a reality. You can pay your bills with another job so that profits from your startup can be invested back into your business. The only trick here is that you have to be willing to work around the clock between your day job and your startup.

  8. You will (MUST) love what you are doing. Don't equate "startup entrepreneur" with "future millionaire" or visions of a buy-out by a big-time corporation. Making something from nothing doesn't happen overnight. The struggles that come with reaching your business goals will be a lot easier to live through if you love what you are doing and are committed to your idea.

  9. People can help you if you help them. A local fishing guide might make friends with folks at the bed and breakfast, each referring clients to each other. You can network to give and get referrals for other businesses. Ask satisfied customers to spread the word on yelp, tripadvisor, Angieslist, etc., and to tell their friends.

  10. Customer service is free. Out-do the big-shots and other competitors when it comes to customer service. Being polite and doing diligent work costs you nothing. It's amazing how rare it is for professionals to return phone calls and emails promptly, show up on time, or finish a project for the price quoted. Do this and you will separate yourself from the crowd.

According to the nonprofit Kauffman Index of Entrepreneurial Activity, the 2010 startup rate is the highest in fifteen years, a great deal of which are sole proprietorships by necessity. But a sole proprietor startup is not a bad thing, and it does not require the investment capital that may be keeping you from moving forward with your business idea. If lack of capital is holding you back from initiating your startup, think again to convince yourself that this excuse won't fly.

You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • How To Style Your Shorts in 10 Unique Ways

    Style Your Shorts Unique Ways

    Summers are here and they are in full swing, all we want to do is chill by the beach side. While all of us can’t hit the beach, yet we can definitely bring beac... Read more

    11 hours, 20 minutes ago by   Dreamtechie
  • Monday Miscellany: Shoes, Shows And Friends

    Monday Miscellany: Shoes, Shows Friends

    The last several weeks have been such a whirlwind of activity, so this weekend I’ve been giving myself the gift of some “down time.” Playing a bit of catch-up... Read more

    11 hours, 24 minutes ago by   Unefemme
  • Nine Steps to Using a Paddling Pool

    Nine Steps Using Paddling Pool

    Sometimes, you just gotta cool down. These last few days it's been really quite warm, so we've had the paddling pool out for my son to play in. Read more

    11 hours, 34 minutes ago by   Ravenswingthog
  • Catrice Long-lasting Waterproof Eye Pencil Review

    Catrice Long-lasting Waterproof Pencil Review

    Hey everyone, what’s up? An eye-pencil is a must have in your vanity. That’s why I love trying out new brands every now and then. Today, I’m going to review... Read more

    12 hours, 1 minute ago by   Jhilmil D Saha
  • The Edge


    While vacationing at an Alaskan lodge during a photo shoot, a pragmatic, solitary billionaire (Anthony Hopkins)--with a steel trap mind when it comes to... Read more

    12 hours, 2 minutes ago by   Kaiser31083
  • Mike Philbin - Art - Twin Towers 1, 2 and 7

    Mike Philbin Twin Towers

    This most-recent tryptich has a title of "Twin Towers 1, 2 and 7", an obvious and unsubtle allusion to a) the twin towers or pillars of freemasonic egyptologica... Read more

    12 hours, 6 minutes ago by   Freeplanet
  • Find a Travel Buddy with Ease and Make Solo Traveling Even Better

    Find Travel Buddy with Ease Make Solo Traveling Even Better

    Traveling solo as a woman has so many advantages. You can go where you wish, keep to your own schedule and spend some times really getting to know yourself. Read more

    12 hours, 38 minutes ago by   Poundtravel