Question: I have always wanted to be an entrepreneur but I don’t have the capital to start up a business. Should I delay my business plans until I have saved enough money to finance it? What should I do? – Dylan via email
Answer: The lack of money should not be the reason why you should not be in business. If you have the skills, the motivation to succeed and a promising business idea, you can always find ways to raise the capital you need and get the right people to support you.
We have heard many stories about successful businesses that started with nothing. Though they have taken different paths to growth, they all share similar early beginnings. What lessons can we learn from them? How did they succeed in business despite the lack of resources when they were starting? Here are the five ways every aspiring entrepreneur can leverage to build a business from scratch:
1. Improve other people’s ideas
When Jose Magsaysay founded Potato Corner in 1992, the idea of selling French fries was already being offered by the big fast food chains. There was no need to validate the business concept as there was already an existing market for French fries.
What Magsaysay did was to improve an existing business idea by coming up with flavored French fries. He converted a complementary fast food product into a core business offering and positioned it to the younger market.
Business ideas need not always be original. Sometimes it is less risky to borrow an existing business idea for as long as you can innovate and come up with changes that will add value to consumers through affordable pricing with better quality.
2. Improve other people’s system
When Serenitea founders Juliet Herrera and Peter Chen wanted to put up a business, they first thought of coming up with a cafe. But after realizing that there were too many coffee shops operating already, they decided to go for an alternative shop with a similar system and ambience but serving flavored tea and other Chinese street foods.
A business operating system consists of processes, structure and roles that enable you to expand your company. By following similar business models with different product offerings, you can scale up your business faster and carve out a unique market share within a shorter period.
3. Use other people’s expertise
Business ideas and systems are nothing without effective execution. When Injap Sia founded Mang Inasal in 2003, he had great ideas on how to make the business grow but he did not have skills to execute everything. His lack of a college degree did not discourage him from executing his plans. Injap hired experts to help him survive his early startup challenges. He always asked and learned from them.
Building a business needs the collaboration of different minds. Start doing your research and consult experienced professionals for advice. There will always be areas in the business where you need help like branding or pricing, for example. You may have the great plans for your business, but without the right skills, you may not be able to execute this properly.
4. Use other people’s time
When Steve Benitez put up his first store of Bo’s Coffee in 1996, he was doing all the work. He trained the servers, cashiered, delivered coffee to customers and even became its barista. As the company grew, Steve slowly built the organization with a team of managers that allowed him to focus more on growing the business.
As a startup, there is nothing wrong with trying to handle all the functions of the business as this can help you appreciate how the business really operates and give you valuable insights for future decision making. But when you are growing the business, you will need to prioritize certain tasks that you want to focus on and delegate other functions to equally competent managers. In this way, you can move faster and achieve more.
5. Use other people’s money
When Euclid Cezar launched Famous Belgian Waffles in 2011, he was coming off a personal financial crisis. He got nothing but ideas. He risked his remaining emergency funds to pay for his food cart kiosk. Luckily, his gamble paid off. The business venture was so successful that he immediately began raising money to expand by selling franchises. The cash proceeds he received enabled him to organize his company and build his team.
Building and growing a business from zero cash does not mean that you can set up a business with nothing. You still need cash to build a business but only that it will not come from your pocket. You can raise cash by selling franchises, or selling shares to investors or borrowing money.
Inviting other people to invest in your business needs a solid business plan. You must have a compelling business proposition that will convince your investors to put money into your startup. Innovate a proven business concept, use an existing business operating system and improve, do your research and interview experts, hire the right people for the job and you will have a promising business that can raise money to start-up your business.
Henry Ong, CMC, is president of Business Sense Financial Advisors. Email Henry for business advice firstname.lastname@example.org or follow him on Twitter, @henryong888.