Lesson 2. Easy money — killer startup

Most people feel a lack of money the main and almost the only obstacle to success. Is this true? I am sure it is not. Moreover, I believe that the initial investment is easily obtained (grants, subsidies, loans from close friends, etc.) might kill the business.

Understanding the nuances
Lack of funds forces necessary to gain invaluable experience. If you get enough money to pay for all necessary staff, it is unlikely you are going to do the “dirty” work. Well, well, you might say, more time can be spent on “highly skilled” labor in the creation of your dreams. Maybe, but you will feel more difficult to customer needs, the nuances of communication with suppliers, streamline processes, without losing valuable information. During the formation of business partner we drove ourselves to the customers for the goods to the bank, were the drivers and storekeepers and vendors involved in coloring (our business began with a selection of automotive paints), published “bills”, looking for suppliers and so n. Now, as the company’s turnover in the tens of millions of dollars on these issues, of course, handled by experts who are much better than I handle all these functions. But we have an understanding of how and what is happening in the company.

Almost any businessman if he did not because of luck to them in the form of, for example, rich dad or privatization of the assets held similar way. I’m sure my esteemed Arkady Novikov — the best in my opinion, a restaurateur, not only in Russia — would not such if it had not delved into all the nuances and has gone from chef to owner of a large network. I remember very well his first restaurant “Sirena”, in which Arcady has put a lot of energy. In 1993 he went there as an excursion to see the glass floor with fish swimming under it (by the way, he appeared not once, but already earned money). I still meet Arcadia in his restaurants — and now they have it, it seems, only in Moscow for more than two dozen — he tries to satisfy himself as cooked food and service and always asks objective criticism from his friends.

Motivation
If the novice entrepreneur “hungry”, he will ‘bite’ in all the opportunities to work 24 hours a day and work miracles. If, again, you are provided with the first day of normal financing, salary, you’ll want to strain it too big? Most of us do not want to, so is the way this world.

In addition, the lack of money stimulates creativity. If you can not pay all that is needed, willy—nilly start to look for creative ways to solve the problem. But in the end, and the essence of this competitive business — do better at the same cost or with the same quality, but cheaper.

If you got the money (loans, investments), you’ll be more afraid and less risk. When there is nothing to lose, you can afford bold, reckless decisions that may make you a billionaire. And if not, then you will eventually lose nothing but gain additional experience.

One more thing. Lack of money will make before selling a product, because it will give much—needed cash flow. But very often the desire to bring the product to some “ideal” results in loss of benefits over time. In this respect I really like the approach of programmers. They initially aware that upon completion of work on any program it will be a lot of errors. But they do it, brings to market, and only then remove all the bugs. Absolutely ‘raw’ product to market, you probably should not, but wait for “perfection” is also often makes no sense.

Whose trick?
Recently, I often encounter a situation where all efforts are focused on startups seeking investment. This leads to the fact that product development does not have the time and effort. Moreover, these startups trying to “satisfy” the investor, not the client. What does it lead? In the best case — the loss of time, at worst — the focus.

So, in conclusion, there is a very good chance that any money you originally just one will not. Guy Kawasaki says that the chances of getting venture capital is much lower than the probability of being struck by lightning while standing at the bottom of the pool on a sunny day. And then, without receiving the expected investment, you do not start a business. Or maybe your business is not attractive to angels and venture capitalists, but that does not mean that you need to give it up. By the way, Apple, Microsoft, eBay and many others started with bootstrapping (development without external funding).

Advice to those who start completely from scratch
If I even managed to convince anyone that the money at an early stage may be evil, it is still the question remains: how could a company without them? I wrote that started his business with $ 100. Rental managed to negotiate a postponement, equipment and consumables as well. Of course, it was not a Class A office in central Moscow, a modest room in a dilapidated Research Institute on the outskirts, and the equipment was badly b / y. But the work can be. Salary just to pay the first there was nothing, and I had to do everything myself.

Many businesses started from scratch, their starting capital was less than your current salary. Check out Richard Branson, candid story of Oleg Tinkoff (“I like everything”) or a history of Chichvarkin. They were able to start from scratch and really began to superuspeshnymi (sorry, that Eugene is now such a situation, but I hope that his “finest hour” is yet to come).

I will try to formulate a few tips that may be, someone can help:

1. Do it yourself. Believe me, initially, it is possible. I often send business plans are people who have worked for several years in large companies and trying to copy a business model that met there. Often these plans I see something like: “the marketing department — 5 people, planning and finance department — 3 persons, the purchasing department — 2 persons,” etc. And despite the fact that it is a very small project. It does not happen. Rather, it happens in big companies that decide to open a new direction and allocate all necessary resources. But this is not business, that’s another story.

2. Of course, sometimes without specialized expertise is necessary. Find the young enthusiasts who do not have a name, but full of energy. Do you have a chance to convince them to take part in the project for future share. And if you can not inspire anyone your idea, if you can inspire her to your customers? How to find them? Walk for various startaperskie event. For example, Harvest — make it superaktivnye, positive and competent guys. I’ve seen already a lot of projects that came to Harvest with a “bare” idea, for two days they found experts convinced them in the bright prospects and are now successfully developing. By the way, and the first orders, and some money first found there.

3. Try to negotiate a postponement of payment with all of your suppliers. Believe me, it is possible. It is difficult, but possible.

4. Think about how to make money on the stage where your product is not yet ready, such as offer consulting, training, something else.

5. Do not rent office ahead of time — you can use the house, garage, cafe, business incubators.

6. Do not buy anything that can be rented. For the profit and loss account is likely to be worse, but the initial cash flow path is much more important profit.

7. Use any of the alternatives — a lot can change, to take, to share. I know a young team that is now doing an internet project for a relatively large company “for free” — in exchange for the ability to use office computers and Internet access to their own startup.

8. Break your plans for Napoleon’s conquest of the market in small steps, start small. The other day talked with Eugene Demin (toothpaste, “Splat”), so he told how, unable to get to the big chains, who personally went around a small pharmacy, and where able to agree, he got up from the shelves with their pastas and attract customers . After a while it became much easier to talk to the larger players.

9. Put intangible goals. It works. If you do everything in order to improve the lives of your customers, then money will appear. I can not prove it, but trust me — it works.

Lack of money — it’s an excuse. Just get busy! And believe in yourself!

Author — head of the “Business Incubator ANE” CEO “Automotive systems».