Finding startup money is essential if you are to move forward with a new business. However, you might not need as much as you think.
On The BIGG Success Show, we were joined by Maria Aspan, Editor-at-Large of Inc. Magazine. We talked about her wonderful new book, Startup Money Made Easy*. Maria combines her award-winning journalism skills with lessons gleaned from successful celebrity entrepreneurs like Mark Cuban, Bobbi Brown, Jack Ma, and Daymond John. Here’s a summary of our discussion…
Why write a book about finding startup money?
Over the past five years at Inc., Maria has covered every single money question you might have. Money is at the root of every question you may face when starting and running a business.
Unfortunately, though, the money side of business is kind of like broccoli, according to Maria. It’s really good for you, but it’s often boring or unappealing. You have to find a way to appreciate it, to make it part of your diet.
What are some practical ways to find startup money?
When you hear talk about funding a new business, venture capital often gets the majority of the headlines. But Maria cites Inc.’s own research: they polled the CEOs of the Inc. 5000 – the 5000 fastest growing private companies in the U.S. – and found only 3% got venture capital backing to start their business. They are much more likely to get startup money from savings, credit cards, or loans from friends and family.
Take the lowly credit card. If you pay it in full every month, it’s an interest-free loan. Many people never stop to think about this. Don’t focus on the annual rate. Focus on how this tool can give you a financial advantage, if used wisely.
Don’t neglect looking to your friendly, neighborhood community bank for a loan. You’ll have to fill out a lot of paperwork. And you probably won’t get all the money you want. But the money you do get will likely be the cheapest money you can get to start your business.
Also, the availability and variety of online lenders is increasing, including some who specialize in small business. While these loans can carry a hefty interest rate, many entrepreneurs use them because they can get cash quickly. If you’re in a cash crunch, they may be able to rescue you.
It was obvious to us that Maria is passionate about this subject. Get her book for more highly helpful directions on where to find money for your startup.
How is technology affecting how much startup money you need?
Maria says technology has drastically lowered the cost of starting a business tremendously today. She cites a study done in 2008. It found that, it took $31,000 to start a business, on average. In a 2018 study of the Inc. 5000, 42% of the CEOs said they started with less than $5,000. Technology is making money less important.
How do you know when you can leave your job and start a business?
Maria made an important side note about side hustles: Technology has made it easier to start part-time and to test your concept without investing a ton of capital. You can set up a website, a Twitter or Instagram feed, launch a podcast, set up PapPal or Stripe. You can do all this in your spare time – after hours and on the weekends.
Starting part-time takes pressure off your business. Only 20% of Inc. 5000 CEOs drew a salary when they started their business. Even once they did take a salary, most of them took less than $50,000 for the year.
Test your concept while you’re still getting paid by an employer. Build your business and reinvest the profits. Even then, it will probably take a couple of years until your business can sustain you.
What can we learn from famous entrepreneurs?
Maria says her biggest takeaway from all the celebrity entrepreneurs she has talked with is…
There’s no one right way to start a business.
For example, Daymond John’s advice is to save everything you can and keep spending to a minimum. On the other hand, when Bobbi Brown moved to New York, her dad told her to spend money at good restaurants and make sure to enjoy yourself.
Maria adds: There’s no one right way to be a founder. You have have to figure out the financial discipline that works for you.
This is a summary, but there’s a lot more in the podcast. Take a listen!
We highly recommend you get a copy Maria’s book, Startup Money Made Easy*
Now, we’re off to eat some broccoli.
Here’s to your BIGG success!
George “The Professor” & Mary-Lynn
Co-Founders, BIGG Success
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