The short and simple answer to this question is a big ‘NO’! Because money, in one way or another, has to figure in somehow within the launching phase of your business. How else are you supposed to produce the product that you need to sell? Or offer the service that you want to promote in exchange for some cash? And you need to trust me on these things. Because unlike many people, I actually had to face these issues firsthand – when I started my company over 10 years ago. But I had a slight advantage in the form of the extensive reading that I’d done on the subject. Thanks in large part to the guidance offered by a college professor, and my internet plan attained through some affordable Spectrum Internet Prices.
On My Personal Journey as an Entrepreneur
After graduating from business school, I had to deal with some grand ideas and wild ambitions. I dreamed of blazing a path of my own in the corporate world. I wanted to start my own clothing brand – with outlets in New York, California and Texas. But unlike most of my peers, I didn’t have any real money of my own to put into the project. And it was when I was juggling with a whirlpool of thoughts concerned with raising some capital that my ‘savior’ arrived.
My longtime friend, professor and college guidance counselor had a lot of hands-on experience with launching new businesses from the ground up. Without naming any names, let’s just say that he is a highly recognized person in the business world. And in addition to managing his own commercial affairs, he regularly engages in lengthy advisory sessions as a business consultant. And, of course, he has his academic interests to see to – in teaching budding generations of new business leaders.
Talk about having a busy working schedule!
Which is an overstatement – really – in his case.
Making Use of Some Venture Capitalist Help
So long story short, this professional mentor-of-mine had the grace to point to a few venture capitalists for helping me with my money troubles. Venture capitalists, if you didn’t already know this, help startups to raise funds for their operations. And in return for their support, they request some portion of the company share (ownership) in their name. So when the business becomes prosperous, they also have some cash of their own to take home.
Like the good lifelong student that I am, I signed-up for a venture capitalist account straight away with a reputable firm. And before I knew it, I had thousands of dollars flowing in from out of nowhere into my business account.
At this stage, I thought that I had already made it – and that my newly raised wealth was sufficient for keeping me afloat. But it wasn’t long before I discovered that I was dead wrong with regard to this assessment! Because I was only a month into the launching phase of my brand, when more than 50% of this capital amount literally disappeared.
Business Costs that You Need to See To…and Quickly!
If you haven’t already guessed it, government taxation, marketing costs, and of course, the inevitable production costs, took the greatest chunk. The remaining expenses, which caused my bank account to completely shrivel up, were made up of employee salary charges. And it was only one week later that I was again asking the firm for help in raising another $2500.
By this point, any illusions that I had ever held about starting a business for free had flown out the window. And if I was certain about anything, it was the looming debt that I knew had to pay off – in the event that the business didn’t make any profits.
But on this front, I got lucky.
Because not only did the clothes sell like wildfire, customer demand actually started to outgrow product supply by the second month in. And as you can well imagine, I was ecstatic!
Not only because I was generating cash like a Vegas money-spinning machine – but I had actually managed to buy out the venture capitalist’s share. Which meant that now I was fully in charge of my company – like I had always meant it to be.
Low-Cost ‘Bootstrap’ Budgets Don’t Get You Far
Nowadays, the term ‘bootstrap budget’ is regularly touted in some business circles. And I find it highly misleading – because it gets young entrepreneurs thinking things in the wrong way!
From the story of my own startup experience (recounted above), you’ll have understood that you cannot effectively launch your business without some solid cash. And especially if you hope to make it quickly profitable.
So my own journey is totally at odds with this concept – which suggests that you can become a business leader with little to zero starting capital.
And if I were to be perfectly honest about it – I find the whole idea offensive!
Just last month, I was at a Spectrum Internet Customer Service convention – where some misguided business ‘mentors’ were literally singing the praises of bootstrapping.
My advice to any young business graduates out there: Don’t get sucked-in into all this false messaging.
Because real-life, along with its complex and unpredictable concerns, is very different from what some business idealists might state.