Offering a unique take on the funding question is Vusi Thembekwayo, a global keynote speaker, venture capitalist and CEO of MyGrowthFund. His message is stop chasing money and start chasing business.
This is an excerpt of an article originally published on vusithembekwayo.com. It is republished here with permission.
Here are 3 Reasons why real entrepreneurs don’t need funding to start:
Money doesn’t make money. People do
The thing about starting a business with no money is it forces you to think, eat and breathe a singular problem: how to make more than you spend at the end of each business day. Frankly that’s all a business is. Money in > Money Out. So you learn how to productise quickly. Sell fast. Collect even faster. All this while delighting customers so they can buy again.
A lack of wanting drives a lack of innovation
Ever heard the expression, “necessity is the mother of invention”?
I am glad I had no money to start my first business. It was a strategy business and so I set-off to find work then I got the clients to pay upfront using a securitised instrument. Sounds complex but really it isn’t. Today, we start all our businesses like this. We finance off balance sheet until we can prove the business case. Today large companies don’t even ask for the security. They just want to partner with us and change the world because of our track record and results.
Our motto is simple: No capital? No problem.
Start small. Start badly. Just start!
Recently a young lady approached me looking to fund her piggery. All she needed was R6 million to start her piggery business. Six bar! Imihlolo!
She has no experience in piggery or agriculture in general. She has no savings of her own. She has no off-take agreements with potential customers, no experience of running a business (not even a spaza shop) and most importantly, no actionable steps to monetize this business. Basically, she was smoking weed, got high and sent me an email.
More recently I funded a wanna-be tech entrepreneur. He wanted money to take his consignment business online and open up his goods to a larger customer base. No business plan. Just a set of well thought-through projections. A clear business case. And the WILL to make it work.
He wanted R129k. I gave him R259k after we had remodeled his plans and determined he needed more working capital to get critical mass faster.
Your business idea doesn’t need money. It needs you to get off your butt and figure out how you are going to get it to make R1 more today than yesterday. How you are going to collect that cash. And how you get your customers to pay you for being in business.
This is why I like boot-strappers: They have learnt the most important skill of working capital cycles and working capital management.
Here’s to the boot-strapper!