So you have the Big Idea. You have the passion. You have the business plan. You can see your future success. All you need now is money in the bank, right?
Probably nine out of 10 startups are where you are, in need of operating capital. There’s no question ample cash reserves make launching a new business considerably easier, yet it’s possible to bootstrap a product, even a company, without investors or a big credit line.
Focus, energy and determination are critical to entrepreneurial success—but so is knowledge. After starting multiple companies from scratch, here are four of the most important insights I’ve gained:
1. Iteration is your most critical resource. Of course you need a strong core concept in place but that’s just the beginning. You must iterate from your original idea to overcome roadblocks, recover from and failures and capitalize on opportunities.
Mark Zuckerberg’s first website was shut down by Harvard. Sir James Dyson developed over 5,000 vacuum cleaner prototypes before he got one right. Henry Ford didn’t succeed in the automobile business until his fourth time around. And we’ve all read that it took 1,000 (or was it 10,000?) attempts before Thomas Edison invented the light bulb.
Business models rarely survive in their original form. Stay fixed on your initial mission but flexible how you get there. Don’t be afraid to change directions or explore new avenues quickly. Let the market dictate your path, and iterate to success.
2. Establish a comfort level with your prospects. Just because you have a great idea doesn’t guarantee your prospective customers will embrace it, or you. Particularly in specialized fields, it’s important to develop a persona, image and business culture that puts your buyers at ease.
In the earliest stages, many startups find it necessary to “act as if” by creating the impression of a more substantial company. That’s great but it may be smart to do just the opposite, especially if your success depends on other small businesses. A scrappy reputation may be more appropriate.
Related: Steve Blank: Inside the Lean Startup
Remember that image isn’t just about your website or business card. Interact with practitioners in your target field whenever you can. Listen carefully, picking up on both the jargon and the business needs. “Become” your prospect and you’ll have the rapport necessary to land the sale.
3. Hustling is more valuable than cash. "Life hacking'' is a popular buzz phrase these days. One of the arguments in life hacking is that quality of work is more important than quantity. While that’s true to some extent, I’ve found that quality comes from quantity. Practice makes better.
It’s simply a fact of life that investors are attracted to success. They will invest in a startup, as long as the founder has a track record. If you don’t have that kind of entrepreneurial resume, your “seed capital” has to be personal drive.
That this is not necessarily bad. Hard work can prove, or disprove, the validity of an idea. Without putting serious capital at risk, hustling will demonstrate “progress,” which is more valuable than “promise.” Investors are always more attracted to progress over promise, so hustle.
4. Profits cure all. There’s no better way to create and maintain control of your destiny than to become profitable as early as possible. Profit creates leverage, and it’s leverage that leads to control.
Zynga, in the early days, accepted lower quality advertising that provided the company with the much-needed cash flow to become profitable nearly from Day One. Zynga has since backed off from its liberal advertising policies but that early proof-of-concept through profitability helped Zynga, now a billion-dollar enterprise, provided them with leverage to raise capital on their terms and retain control.
Not every business can begin operations with zero seed capital but in our digital age barriers to entry are reduced and playing fields leveled. It’s easier than ever to get an idea in front of potential customers. The business world today favors companies with imagination, ambition and the willingness to adapt. If you have the vision and a plan, go for it. Don’t wait for the money.