But I Don’t Have Any #Startup Capital

But I Don’t Have Any #Startup Capital

How many times did you hear the expression I really want to start my own business but where on earth I will find the bloody startup capital? I bet it’s not a few. Yeah me neither.

Of course the conventional logic dictates that almost any startup will require a sizeable amount of startup capital… Isn’t it?

Due to my professional setting I hang around with plenty of young startup founders and as you can understand one of the first questions that I used to ask them is; “did you have any prior capital so as to kick-start this process, or you went bootstrapping (starting up without any capital)?

Please let me leave their exact answer for a while…

But allow me to go back to my initial question, why we hear so often the “but I don’t have any startup capital” phrase?

Is it just an excuse that some young individuals invented for not pursuing their ultimate goal of becoming their own boss, or there is any rational behind this fairly common expression?

Isn’t no money no honey or?

The answer to this question is clear and straightforward.

It depends… what? You might say is it that an answer Mr. Douche….

As matter of fact the exact answer should be something like that; it depends on you, do you want to play it safe or do you want to play it stupid?

Because I know that the 2nd option is not actual an option for you, let’s stick with the 1st choice and follow the path that was laid down by million youngsters everywhere and made the expression I don’t have startup capital entirely invalid and irrelevant.

In the same vein, I would say with more confidence than ever that behind this phrase is hidden on of the biggest startup myths ever. Not because all the startups don’t require a startup capital, but because if you play it smart you will select the safer option and opt for a certain type of startup that will not put you either in financial troubles, nor will make you discount your dream of becoming your own boss.

Thus, what I am saying is scr… the conventional logic and let’s dive in the solution to the problem of not having any startup capital.

What not to do

For a moment let’s go back in our university years (for those that are still in university good for you “guys”). In either let’s leave the categorization exercise and go back in university.

The 1st lesson in any finance 101 course most often than not start with the following question.

What do you believe is the best investment available?

And after some silly answers by most of us… they reply. There is no such thing as best investment and they introduce the risk and reward principle.

For those of you that skip a finance course (shame of you “guys”), I will elaborate that concept. Basically in simple words this fundamental principle say’s; the higher the risk the higher the reward and vice-versa.

You might ask, what this has to do with starting a business?

The answer relies to the fact that many young individuals they choose to take the road of the big risks and put all of their eggs into the same basket. Even in the case of having those eggs (have a capital) is not very wise to put all of them in the same place (as they economist preach, select a diversified portfolio otherwise don’t say you are unlucky).

Let’s go back to my initial point; many of those individuals play the all or nothing game (or as they say, play it big) and based on several variables they either crash or thrive. As you guess the crashed side far outweigh the other.

Don’t take me wrong, risk in any kind of business is more than welcome but as Seth Godin puts it; there is a difference between take any kind of risk and take calculated risk. What’s the distinction? Calculated risks- Don’t take a risk that can potentially kill you.

But I believe now is the right moment to introduce the hero…. What… the hero?

Yes there is a Hero

The whole purpose of this blog post was to answer the question how on earth I can build my startup without startup capital.

Here we are, now I will reveal you something that nobody knows!!!! What? Yes “guys” you are right, let’s alter my initial point; now I will reveal something that almost everybody knows!!!!

Yes the answer to my blog post title it’s well-known. It’s the art of bootstrapping (build and operate a business without funding). It happens all over the globe. I challenge you to see any good documentary (not fictional real..) about startups and 8 times out of 10 the youngsters that have the role of startup founder speak and share how they managed to startup without any capital.

Let’s leave aside the documentaries and let’s leave the numbers (researches) speak by themselves. As I reiterated often, we don’t attempt to reinvent the wheel, we are here just to share proven methods.

The fact of the matter is, 6 out of 10 startups begin this journey without any prior capital and a whole best-selling book ($1oo startup) by the noted young entrepreneur and writer Chris Guillebeau is devoted on how individuals with a startup capital range from 0 to some hundred dollars managed to establish a successful startup with peanuts in their pockets.

But how?

Let’s leave the bla-bla-bla and referred to what the experts had to say about how you can structure your startup so as to not need startup capital.

1st step: Start before you Startup Seth Godin (bootstrap bible)

“You need to start before you startup. Figuring out which startup business to be in one of the most important things you can do to ensure the success of your new venture, yet it’s often one of the most poorly thought of decision boostrapers make. Don’t rush it”.

What Seth Godin speaks about, is the fact that you have to select a startup type that can be structured in a way that will not require any prior startup capital invested in the startup development phase.

A good example of such startup type is web-based business. Due to the fact that nowadays you can practically develop such startups from scratch for nothing, make this option very appealing to youngsters (Nonetheless because to the compelling pros that are attached to this option many start a web-based business for the web-sake and as you can understand the fail miserably.

Why?

Customers don’t give a s… or let’s say they don’t care how you structure your business, what they care about is if the value that will receive from you meet their expectations. If the component of usefulness is missing, you don’t have a viable business, as simple as that.

2nd step: Why to lose your shirt for something that may or may not work

Chris Guillebeau ($100 Startup)

“Microbusinesses, typically run by only one person. This is the business model that I suggest to set up initially and afterwards sky is the limit. Since it’s easy to try things without losing your shirt, why seek investment and go into debt for something that may or may not work. Since it’s much easier to start a micro-business why do something different unless or until you know what you are doing”.

What Chris Guillebeau basically speaks about is that you have to start small, very small. Dream big but be pragmatic. You can’t have your pie and eat it too. In the very begging (development phase) your objective has to be, to develop a small-size startup. No matter how confident you are about your product/service Chris points out that you don’t have proven that your idea will have traction, is just your hypothesis. Thus start small and of course along the way (after you launch you startup) assess the situation and act accordingly.

3rd step: Start lean Leo Babauta (Zen-habits)

“I started my businesses with zero money, and just found free or cheap services to start with. Only after I started making some revenue did I pay for anything, or hire anyone. Make money as soon as possible by selling something valuable”.

Thus as I am sure you realized, bootstrapping require that any decision that you take, in terms of your startup development and even the first stage after your startup go live, has to take into account that you don’t have the luxury to spend almost for anything and you have to adjust all your actions based on that fact.

There are more than plenty of web-based businesses that offer some kind of freemium models and you have to search and find them in order to cover all your needs via them. Bear in mind that sometimes ingenuity is more valuable that cash (the limited cash force you to become creative).

Even if you have to buy some services that are impossible to be found for free they have: 1st to be cheap (obviously) and 2nd to have a variable cost nature (in other words don’t lock yourself in any long-term fixed contracts, find services that are either one-off or if they have a subscription fees nature select only those that allow you to cancel that subscription whenever you want; keep your flexibility and avoid financial hassles).

So I challenge you….

Make your homework (research)

Do what million others do (bootstrapping)

Play it safe

That’s all for now “guys”, as always I’d love to hear your answer on how do you think you can structure your startup cash-free? Feel free to drop a comment below, even a single sentence will add epic value to our community.

P.S. And please never forget….

[Contributed by Andreas Aravis, founder of No More Startup Myths. He is a 25-year old junior startup development specialist, blogger and aspiring entrepreneur.]
Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

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