So you want to start your own business but don’t have much money to put up as a down payment. You’re well aware that start-up finance alternatives are severely limited; you may even have heard that just approximately 3% of persons seeking significant outside funding to launch a new firm succeed in raising the sums they require. So, how do you go about it?
Starting a firm with low funds necessitates a mental adjustment. We’ve been trained to start the search for new business prospects by asking, “Where is there a need in the market, and how can I fill that gap?” A gap could be an unmet customer requirement or a new product that has yet to reach the market.
Then we set a goal to create a business that will fill that void. We think about the resources we’ll need to make our vision a reality, and then we go out and find them. We create a business strategy and pitch it to potential investors with the promise of a profit.
If the financiers like us and our plan, they will give us the money we need to establish the company. Otherwise, we’ll be stranded.
Most of the time, people struggle to raise the funds they need, causing the entire initiative to collapse. There is a different way to start a new business.
Instead of asking, “Where is there a gap in the market and how can I fill it?” start by asking, “Where is there a gap in the market and how can I fill it?” “What do I have and who do I know?” you might wonder.
Examine the resources and relationships over which you have control, and think about how you might put them to work swiftly and effectively to generate a product that the market requires or desires. You can experiment with different resource combinations to see how the market reacts to various offerings and, over time, develop an offering that is truly valuable to others.
With this approach, an entrepreneur’s goals emerge over time, taking resources, connections, and contingencies into account.
Developing the alternative entrepreneurial mindset
Flexibility and adaptability are a competitive advantage with this approach. You succeed by being responsive to changes in the environment rather than being too concentrated on a single objective or conclusion.
Existing businesses adapt more slowly than new businesses because they have a stronger motivation to keep things the same and have established routines and practices that promote the status quo.
The entrepreneur with the alternative mindset, “in contrast, has to stand ready to make do with what comes her way and learn to transform both positive and negative contingencies into useful components of new opportunities.”
Start with what you have
At the outset of looking to start a new business take stock of what you have at your disposal. Consider your:
Skills – what can you do?
Experience – what have you done in the past?
Knowledge – what do you know?
Tangible resources – what do you own and what do you have access to?
It is suggested that you consider your responses to these questions carefully. Think about what you have at your disposal a little more profoundly than what comes to mind right away. Make a note of your answers to these questions as you go through this procedure.
Your written comments will form a collection of artifacts that can be merged to create something unique, fascinating, and useful in starting a new business.
Take into account who you know
To be truly powerful, what you have must be paired with people you know. Take inventory of your interpersonal ties, map out your network of connections, and examine how your connections might help you make better use of what you have.
Sarasvathy points out that “weaving together alliances to build new markets” is one of the different methods of venture formation advocated by Sarasvathy. The design and destiny of a new enterprise are determined by relationships, particularly equity partnerships.
Invest what you can afford to lose
If you start with the idea of “I am investing this money and expecting a 30% return” versus “I can afford to lose this much, so I will put it into the business and see if I can make it work,” your mindset will be drastically different.
You keep flexibility in the firm and reduce stress in management if you only put in what you can afford to lose. If you’re only willing to invest until you know you’ll get a precise return, there’s a good chance you’ll never take the plunge and start the business you’ve always wanted.
An example of this is the entrepreneur who refuses to leave a well-paying job until he finds an opportunity that he predicts will pay more, versus one who decides to invest a small portion of her savings and two years of her life in a project that she believes is worth that amount of time and money – irrespective of whether it will pay more than what she currently earns.
She is living out the alternative entrepreneurial mindset.
Types of new businesses to start with limited capital
When entrepreneurs have limited cash and adopt an alternative attitude for new venture creation, the businesses that emerge usually have particular features. They typically fit into one of the following main categories: Service, Events, Performance, Brokerage, or Education are some of the options.
depend on the skill and time of the person starting the business. Such a person can make their skill available to others with relatively little upfront investment. To start a service business you merely need the tools of your trade.
A computer, some tools, and a sewing machine for a dressmaker are all possible requirements. With these resources in hand, you may begin selling your service to your contacts. Even if event-based enterprises are more complicated, they can still be established with a small amount of money (see the March edition of Entrepreneur for a feature on events-based businesses). Sports events, expos, and concerts are examples of event-based enterprises. The benefit of such businesses is that excellent marketing allows you to sell tickets before incurring large costs, reducing the amount of capital required to keep the venture afloat.
businesses depend on the ability of entrepreneurs to perform and to pull together other people who can enhance the performance.