The number one biggest barrier to starting a business that most people cite is access to funding. There are only so many ways to come up with funds; either you have the cash, you borrow the cash, or you get cash you aren’t required to pay back in the form of a grant or an investment.
You often hear of people maxing out their credit cards, turning to friends and family, or you watch Shark Tank and enjoy the discomfort of people pitching to investors. There are lots of books about “bootstrapping” which just means paying as you go and keeping expenses as minimal as possible. You can borrow money in the form of a commercial loan through the SBA but you’ll need to fill out lots of forms, have excellent personal credit, and you’ll need to provide collateral. You can apply for a grant but you have to know how to write a grant, have the time to wait to see if your request is denied or approved, and often the amounts you receive are quite small. If you go for larger government funded grants like an SBIR or STTR grant and you receive it, be prepared to document how you spend every dime – and in some cases you will have to spend the money first and then request to be reimbursed. If investment money is what you are after just know that you have to give up a percent of ownership to get the money and now you set an expectation that you will sell your company completely at some point in the future in order for the investors to receive 7-10 times more than they invested in you.
No wonder funding is seen as a huge barrier. What if there is a better way to start your own business that doesn’t cost so much? What if you can start a second business easily and use that to provide a cashflow cushion to your primary business, the one you trained for or have sunk so much into already you don’t want to walk away? Then you’d be economically ambidextrous! If that exists, don’t you want to know how to get started right away? It does exist!
There IS a better way! There is a capital creating model of business that is inexpensive to start, inexpensive to maintain, and you can use the cash from it to support your traditional business, your children’s college fund, your house fund, your vacation fund, contributions to charity – whatever you choose.
But what kind of numbers are we talking about? If funding is a barrier for most people who want to start businesses, why? How much does it all cost?
For those of you with small to medium-sized businesses already up and running, you can assure the rest of us that you are very accustomed to dealing with numbers with lots of zeros after them. Heck, your utility bill each month might be over $1000 or your fleet bill could exceed $10,000 depending on how many vehicles you have. If you are a solopreneur, someone who works by yourself, then these numbers may be intimidating because you are neither spending – nor earning – much over subsistence. But that’s not why you went into business, is it?
So let’s look at real examples just to get oriented.
- Average initiation fee for a franchise – $30,000
- Average annual royalty fees for a franchise – $38,000
- Real estate, inventory, employees, advertising, etc. for a franchise – $Big Number!
- Start-up-up costs for an average small business – $50,000 (per Inc magazine, Entrepreneur Magazine not inclusive of monthly overhead )
- Web costs – $2000-$100,000
And none of these figures take time into account. It takes time for a developer to create your site. It takes time to scout a location and get a lease and everything else you need to do for your new franchise or brick & mortar business. It takes time to set up your gym or your nail salon or your restaurant or your home décor store. It takes time to find your employees and get your permits if you are a development or construction company, an HVAC company, an exterminator, or you are in the trades – plumbing, electrician, etc.
If you work solo, as a consultant or a professional, you still had to pay for and complete all the training and apprenticeship, right? Let’s not forget the time and tuition it cost you to first become an accountant, a lawyer, a physical therapist, a chef, a mechanic, a pilot – whatever it is that you know how to do that you have turned into a business. That sort of training runs 2 years to 10+ years depending on your occupation, cost $20,000 at a minimum, and could easily exceed ten times that much!
While we’re discussing numbers let’s look at a few more. How comfortable are you discussing expensive investments, picturing yourself laying out large sums of cash? Where does your comfort zone lie? Because if you dream of owning your own business you will need to spend money to get started. If you dream of owning your own business, part of your dreams will be picturing a better, more fun-filled life, driving a nicer car, doing more for your children’s future, and maybe even playing more golf. What might that cost?
- Initiation Fee at an Exclusive Golf Course: $500,000 plus monthly fees!
- A Bachelor’s or Master’s Degree at a Reputable Private University: $248,000
- 4 Years of Prep School: $176,000
- Kindergarten in NYC: $28,000 per child per year (we’re talking about 5-yr olds here!)
- Mercedes Benz 2013 GT Coupe: $202,000
- Lexus 2013 LS: $114,000
- Porsche 2013 Panamera: $77,000
- Volvo 2013 C70: $38,000
- $15,000: the average investment made per deal by an angel investor with the hope of recovering his money within 5-7 years
- $10,000: minimum required for a 12-month CD at Bank of America ( 0.14%: rate of return on your $10,000 CD at Bank of America!)
Huh, those are some pretty big numbers, right? The cool thing is once you are kicking ass and making a lot of money in your Evolved Economy business, those numbers won’t seem so big. What if you are earning $2000 per week? Or $20,000 per week? What if your Evolved Economy business is paying you even more? What would you be willing to spend today to own your own business today to have a shot at making that kind of money within 10 years, maybe even within 5 years? How long did you to go to school? Five years goes by pretty fast, doesn’t it?
There are 10 reasons I endorse the Evolved Economy as the premier business model and one key reason is that it’s simple to fund. If you are serious about owning your own business and you don’t want to have to suffer through all of the tired, risky, time-consuming, and expensive traditional ways of getting started, decide to be a Business Builder.
In fact, there is only one step left that’s required to make your dream of business ownership a reality. You simply have to act! Take the action now to make your dreams real, to live the life you’ve always longed for, to stay home with your kids, to contribute and make a difference! Act now, email me or call me, message me, find me, but take action. Tell me you are so ready to be a business builder, too, and you want to own your own Evolved Economy business. Do that, and you’ll be in business within the hour. Simple!
We would be honored to have you choose to co-create your own business using a smart business model.
If you found this article independently and wish to know more, all my contact information is in the “resource” section.