January 19, 2007

“Until we raise money, we’re stuck!”

When I hear an entrepreneur say that his company is "stuck" because he can't raise any money, I cringe because he's probably right. This statement, more often than not, is the outward expression of a mental/creative block.

The fact is that start-up companies are rarely "stuck" -- with the exception of most pharma and biotech-type companies that require a ton of R&D and ramp-up time.

For example, I spoke with an entrepreneur the other day who has a great web-based idea and relationships with the right people to help him make it happen. He has already done a ton of work on the project and he's ready to roll.

One problem -- His website (as he put it) is hideous. When you're a web-based company, that's bad. He can't afford to pay web designers to fix it for him, so he says he's stuck.

Not really though. There are web designers out there who will work for equity and little or no pay if the idea is right. It takes work to find them, but they are out there. If you can't find them, there are people on the other side of the planet who will design a good-enough-to-start-raising-money website for a few rubles a day.

That's just one example. Here are a few examples of entrepreneurs who understand how to make things happen without funding:

  • I spoke with a great entrepreneur the other day who set up a meeting with a few potential investors and convinced a local real estate office to host the event for him and provide his guests with lunch. The dude was so broke that he had to go to a friend's house to print up the last of term sheets because his electricity had been shut off.
  • A great entrepreneur right here in Utah was completely out of money when he convinced a publicly traded company to give him a $100k contract for a service he hadn't even created yet.
  • Carolyn Duncan's Hundred Dollar Business experiment

The skill is part hustle, part bootstrapping, part salesmanship and part gusto. Most of the time it's a skill that comes out when your back is to the wall and your only other option is to close the doors.

When entrepreneurs dig deep and find ways to push forward through the lean times, they often discover on of the most important truths of entrepreneurship: The best way to finance your company is sell stuff and have your customers pay the bills. It took me a while to figure that one out.

Bottom line: Successful entrepreneurs make things happen with or without money. If you ever find yourself thinking "Until we raise money, we're stuck!" you're probably right.

If you have any war stories about making things happen with little or no money in the bank, leave a comment!