You don’t have to raise funds. There, I’ve said it (try not to gasp).
This post has been formulating in my mind for a long time.
Over the past few years, when I’ve read about the success of a business, the detail would focus on the fact that they had secured a large amount of dollars in funding. The news never seemed to be about the turnover or profits.
I’d be at a local networking event and big cheers would go up when a fellow business announced that (often after a few long hard tortuous months of blood, sweat and tears) they’d raised funds.
Can a business generate piles of this stuff without funding?
OK, so, without funding you may not create the next Facebook, Stripe or WhatsApp but is that a problem? What are you trying to achieve? International super-stardom or a good living, with a good work-life balance, whilst running a worthwhile and healthy business.
Joseph Flaherty, TechCrunch (a bootstrapped business btw), said -
Entrepreneurs can prove out quite a bit with little to no capital. Capital won’t make your company insightful. If you can’t creatively turn $1 into $10, why do you expect to be able to turn $1 million into $10 million?
It seems to me that raising VC (or any) funding is like a badge of honour. To many, a startup is, well, not really a serious business without it.
Countless times I have been asked “How much money have you raised?”
“None.” - comes my meek reply.
“Oh. OK.” – followed by a sympathetic look, some small talk and a hasty departure, whilst I stay rooted, looking down glumly at my feet.
I founded my first startup, ClinicAppointments.com, with no funding. I ran it with no funding. I sold it without every obtaining funding. The story of ClinicAppointments.com and how I did that is here. I’m not a multi-millionaire as a result but I did OK, had fun and built a well established business that has continued to grow.
Raising funding is a huge undertaking. A fellow entrepreneur I knew spent nearly all of his time trying to raise funds. That was months and months of time. That’s exhausting. That’s also months of time and energy he could have spent building his product and brand and generating income.
Incubators & Accelerators
I have mainly only amazing things to say about the 2 business incubators/accelerators I have been involved with i.e. eSpark and SetSquared. The advice and support has been incredible. However, quite early on, I began to realise that the overall goal is to help you get funding.
I’d do a pitch and then a mentor would say, “OK loved the pitch - now you need to get funding. VC’s will love this. You’ll need someone to run your business whilst you do the funding rounds.”
“Ahhhhhh” - my inner-voice screamed, I couldn’t think of anything worse!
I have a family and make a concerted attempt to have healthy work-life balance (sometimes falling short). Also EvantoDesk, although early days, was already going well. We were gaining traction slowly and building a solid reputation. I was enjoying the business side of things.
Even if I did secure funding, which might take months, I’d then have to deal with my investors. Manage them, report to them, be owned by them.
I was an entrepreneur primarily because I didn’t like being owned - I wanted the freedom that comes with being an entrepreneur.
I’m in the driving seat!
Is funding ever essential though?
Yes of course it is for many businesses. For many, funding becomes essential once they’ve established some growth and need to scale. Without it the business may fail. I understand that. But, just make sure you’ve kept your initial costs down and then you may be able to avoid that situation. Don’t hire someone until you need them for example. This sounds obvious but time and time again I see fellow start-ups hiring way to early - usually sales staff – before they’ve established their product and market.
Hold off hiring
It was common on the business accelerator programmes I attended to focus on building your team as well as raise funds. Like raising funding, it was considered a sign of a successful startup. With ClinicAppointments.com, we knew when we had to employ staff. It was simple, when the number of calls we took on behalf of our customers was too great for myself and my wife to handle. And, at that point, we could afford to pay people to work for us as we had established a big enough revenue.
So, the story of ClinicAppointments.com isn’t is as exciting as Facebook or Stripe or hundreds of other businesses (e.g. my wife and I taking calls before we hired etc makes us sound small-time). But so what? I refer back to:
What are you trying to achieve? International super-stardom or a good living, with a good work-life balance, whilst running a worthwhile and healthy business.
Many startups I knew, employed too early. For example sales staff. And this was prior to establishing many sales as founders. The risk is high. Some of those businesses failed as the need to raise more and more funds became pressing. I am sure, had they waited to hire, they’d still be successful operating businesses today
Ambition and thinking big
They’ll be some reading this post who consider that my way of doing business lacks ambition. Categorically – no, it does not.
My approach minimises risk, makes the experience more enjoyable and, arguably, increases the chances of the business becoming established and profitable. If the focus is all about funding there is the danger of reducing the business to a pyramid scheme (keep pumping in funding to stay alive).
We do not lack ambition with EvantoDesk at all. We are thinking big. We want to build the best go-to simple help desk for SMEs the globe over. But – we’re going to do it our way.
Ultimately it comes down to preference. It really does. You decide. Boot-strap your start-up or funding.
I just wanted you to know that there is another way.
Some invaluable further reading on this subject: