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Note: This article was originally published on OPEN Forum.Some people are born wealthy enough to take the massive risk which funding a new business entails. Others get seed money from brilliant pitches, luck or connections.
And then, there’s the rest of us.
Funding a business, or more precisely, risking losing money when starting a business, is the single largest obstacle for most entrepreneurs. Even good ideas can take time to fine-tune or pan out.
That’s why I have the most respect for the ‘street-stall entrepreneur’ one finds in developing countries. This is the individual who starts out with absolutely nothing, and shamelessly sells any product they can from the street to make his living.
Every day people pass this individual on their way to work, seeing them as nothing more than a poor and desperate punter.
But, there are many cases where the street-stall entrepreneur doesn’t let it end here. Over time, this individual rigorously ramps up their business, with no resources but motivation and determination, into a larger, more successful enterprise.
These kinds of people conduct the most raw, basic form of entrepreneurship – struggling to make money while their finances hang by a thread. And I think a lot can be learned from them.
Don't even think you're 'in business' until you're cash flow positive, even if you have some savings.
So, whatever the revolutionary product or service you one day wish to sell, in the beginning it's alright to make extra money by going out and doing something else.
This could include taking a part-time job that some might find insulting, or selling products for a third-party marketing firm.
... if it's going to prevent you from devoting your all to your business.
This one is tricky: you need cash flow, but you also need freedom and spare time to invest in your own project. The street-stall entrepreneur knows he could go and find financial security as someone's driver , janitor, or security guard. But he doesn't do it unless it's just a short-term stint; he'll do anything before he signs away his freedom.
This restriction should, in fact, make you work harder and succeed faster, by forcing you to hone your sales skills and make you think extremely hard about how to create near-term cash flow for your business.
Remember: you can always look for short-term opportunities based on output of cash, rather than full-time employment.
Or just sell the exact same thing as other established companies, and do it better.
When you're starting out, one of the largest unknowns is whether a product or service will even sell.
Answer this question by pitching your product or service to people from day one, even if it seems commonplace, or 'isn't in stock'.
The worst that can occur is that people say yes, and then you get to rush to make it all happen.
It's rare that you would ever want to hire someone expensive or buy an expensive service early on.
Either find a way to agree to a revenue-share model of payment, bring them in as a business partner, or learn to do without them until you have sufficient cash flow coming in the door to cover the cost.
Remember: cash flow negative means 'out of business' for you. That's the mind set you need in order to survive when you don't have deep pockets.
Bootstrapping is a way of life for these individuals, and we could stand to learn a lot from them. Most importantly, of course: they teach us that, with the right focus and determination, you're never too poor to start a business.
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