How much money do you *really* need to start your company?

Scott Kveton

Image by Laughing Squid via Flickr

I keep hearing startup entrepreneurs tell me “We need funding. If we just had $XXXk of investment, we’d be killing it right now.” I press them with one question: what would you do with the money if you had it? Inevitably the question is met with a blank stare. Most of the time people haven’t thought about it. The answers that do come feel a little half-baked:

“Buy a bunch of ad words to get people to our site – that’s all we need”

“Build the product”

“Finish the product”

“Hire a bunch of sales guys”

Sure you have an idea and investment is flowing right now. Unfortunately, your idea is totally worthless. I repeat: your idea is totally worthless. If you can turn your idea into a product that people want to pay for, that’s a different story.

via How much money do you *really* need to start your company? « Scott Kveton.

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One thought on “How much money do you *really* need to start your company?

  1. Hi there

    I wonder when entrepreneurship became about ‘having the money’ to start or develop a business, rather than the ability and ambition to work around the problem.

    Granted, having $xxxx to create a new product, start manufacturing, market it, or just to simply hire the skills the entrepreneur might lack is a big help. Certainly the business will grow much faster.

    However, it is entirely possible to build a really successful enterprise in a reasonable space of time. No, it is not easy; one may have to do without the frills and fripperies of ones peers, the fancy motor vehicles, big spacious homes, designer clothes, eating out…. There will always be things that will be needed; sometimes these will even be essential. Solving the problems and working against the odds is ENTREPRENUERSHIP. Just as much as recognising business opportunities and taking advantage of these possibilities.

    I live in a country where venture capital is almost impossible to find, at least without having to bow to unacceptable terms, e.g. handing effective control of ones venture over to investors who may have little or no concept about the business or the product, and are only interested in the bottom line, al la corporate business.

    That has not stopped me from trying! Yes, I have started businesses which have not proven to be viable, and have on occasion come to accept that without a large injection of external capital the business will remain small for longer than I considered worthwhile.

    Then I have also started a number of highly successful business ventures, some of which were sold and incorporated into other companies, a few of which still exist today, and have developed over the years.

    In every instance, these businesses were begun with the barest minimum of ready money (operating capital), if any at all apart from the remains of the previous months salary. I am doing it again! My current project, Graphicline was a small DTP service initially, started about 2 years ago, but in recent months I have switched to building it into a web management concern. To all intents and purposes this is a new venture retaining only a trading name. There are many things I would like to have, even need. But that does not stop me from continuing. The new computers, latest software, new motor vehicles will all come in time. For now I will work with the bare essentials.

    Yes, I have a very clear business plan, which is flexible enough to adapt to changing circumstances as well as a very clear idea where the venture is heading (and such things I would never be prepared to disclose to the ‘investment sharks’ – been there, been bitten)

    The business is not even trading yet in the direction I am taking, with the exception that significant potential customers have seen early concepts, and either committed to become clients, or to give the products/services serious consideration once launched .

    There is a lot of work to be done before I am ready to offer my businesses products to the world at large in return for my customers money. A significant proportion of this work is acquiring new knowledge about the technologies that will be used. Even if I had $x million to throw around, the background work would still need to be put in place, and the product launch date would still remain in the 2nd quarter of 2012.

    It may seem strange to many readers to consider such long term plans without the benefit of substantial investment; but then that is what I am, a Start-Up Entrepreneur. The challenge of creating success from nothing is what motivates me to spend 14 hours or more, 7 days a week, to enable my concepts.

    Regards, Mike

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