Q: Does starting a business always require a big pot of money?
No. While you will need a few core ingredients to launch a business and then make a success of it, a big pot of money is not one of them. In fact, having substantial financial backing can actually slow or stop you from identifying your business's problem areas and coming up with ways to fix them. In many cases, it can be better to start with very little money, since the skills you’ll develop as you overcome the challenges of growing your business will be invaluable -- you’ll notice your mistakes earlier and adjust more quickly, which will make for a healthier company.
Let's face it: Your first few attempts to start a business are not likely to go according to plan. I have launched my share of businesses that didn’t get off the ground, and looking back, these were useful experiences.
When I was a schoolboy I tried to launch a number of different schemes -- for example, when my friend Nik Powell and I tried to grow and sell Christmas trees, but we lost our crop to hungry rabbits. It was disheartening at the time, but had we more capital to begin with, we would probably have made the same mistakes on a bigger scale, and we’d have lost more money.
So money can only get you so far. If you’re a beginning entrepreneur launching your first startup, a big pot of money may only mask problems that will eventually catch up with you.
From my first experience of failure I began to understand just how much I didn’t know about starting a business, and that even ideas that I thought couldn't fail, wouldn't necessarily work out.
And gradually, by making mistakes over time and learning from them, I hit on what became my key guiding principles: That you must only launch businesses that will improve people's lives and that you are passionate about. You must try to create something different that will stand out. When things go wrong (as they often do), don't give up -- be tenacious. Try to be visible -- it’s important to get out there and sell your product. Many great ideas fail just because their potential customers don’t hear about them.
A perfect example of how far you can go without financial backing can be seen in the Tenner competition held by the business and enterprise education charity Young Enterprise, in which young school kids in Britain are given 10 pounds and challenged to use it to do something enterprising within a month. Children have used the money for everything from helping musicians and artists to promote their work to setting up a course on feeding and grooming horses. It is amazing to see how much some are able to do with their tenner.
With the creativity and spirit of those kids in mind, I am thankful that my team and I are in a position to help other entrepreneurs find funding these days. Through a public-private partnership including Virgin Money, Virgin Unite and Project North East, we are helping to manage a government program in the North East of England and in Cumbria that makes small loans available to emerging businesses -- up to 25,000 pounds at reasonable rates of interest. The program is only a few months old but we have already seen some wonderful people and ideas, in businesses ranging from pet shops and hardware stores to digital animation studios and dance schools.
The StartUp Loans program doesn't just provide sensible levels of funding, but also mentorship and advice for those who are given loans -- invaluable insights from people who have been there and done it. In business, the best way of learning is through doing, so I always encourage young people to start a business over going to business school -- it's cheaper and you’ll learn a lot more about what it takes to run a successful company.
Entrepreneurship is a great leveler, since having the benefit of a wealthy background or a generous investor isn’t always an advantage. The wonderful thing is that money is not the sole currency when it comes to starting a business; drive, determination, passion and hard work are all free and more valuable than a pot of cash.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.