Do you think funding is necessary to launch a really successful business? Look at Quibi. Quibi had some of the most well respected founders, tremendous amounts of funding, and it’s listing like the Titanic after it bumped into that iceberg. Funding is not the deciding factor in determining the success or failure of a business. Strategy matters so much more.
I started reading this article from Crunchbase about Susannah Bailin, the founder and CEO of AC Health, when it occurred to me that we cannot repeat this lesson often enough: Funding isn’t the most important thing for almost every business. When Susannah was asked “What’s one thing you wish you had known before starting your company?” she responded with the following:
I wish I had known to ignore the temptation of scaling a process before you know what works. Automation is everywhere, convincing you that creating the flow from A to B is your primary goal. However, until you create a UX that everyone can follow or write copy that isn’t ghosted by everyone you send it to, you shouldn’t get near anything that automates anything!https://about.crunchbase.com/blog/improving-patient-engagement/
A couple of weeks back CSUF Entrepreneurship Director John Bradley Jackson did a short book review on Nail It Then Scale It and that book is all about this. If you scale something that is fundamentally flawed it is doomed for failure. Doubly so if you have limited funds, which is the plight of us all, even the Quibis of the world. We don’t have an endless amount of capital to throw at a solution and force it to work.
No. Instead, smart founders start out by discovering true problems that people have to deal with on a daily basis. For Susannah, the problem she had identified was that patients who need to do physical therapy at home had poor solutions that led to poor patient engagement with the therapies that would improve their overall quality of life. For Quibi? They thought that they would do YouTube but better and, as it has so far turned out, isn’t a pressing issue for most people who can just as easily watch antics conducted by amateurs captured on phones to wile away the pandemic hours.
Once you have identified what the problem actually is then you can start building but you shouldn’t start out by building a skyscraper of a business to start off with (in other words, don’t launch at scale). Build something simpler, start with a WordPress blog or record a few episodes of a show. Start by consulting for a business that has the issue you have identified as being a pressing problem and work on building a more scalable solution over time.
The fact that most of us do not have a lot of funding to start is actually an advantage, not a disadvantage. No matter who you are, you are going to make mistakes in the early parts of launching a business and if you are making those mistakes without much downside risk then you are better off then the founders who are spending tens of thousands (or millions) of dollars on mistakes (another way to look at mistakes in a startup situation is that all mistakes are learning, which is a 100% accurate way of looking at things).
As you continue to build your solution you can start investing more money in the parts of it that are getting more traction. For example, we are currently working with a founder who had a concept for a full-on event streaming business. When the coronavirus pandemic hit his business obviously had to pivot (and the fact that it would have cost a lot of money to launch his original concept necessitated this pivot as well). A pivot is a change in strategy and what this founder did was scale back his concept to a website and periodic newsletter where he aggregates the best online events and activities for families with children. Guess what? In less than a month he already has traffic on his site, signups for his newsletters, and has advertisers.
Over time, that founder will continue to build on his solution and will invest more in the parts of his business that are getting the most traction. And, let me warn you here, being able to make these changes does take a bit of humility. You have to go into a startup with the customer in mind and not with the mindset that your untested solution, however elegant it may seem to you at the time, is the best way to go because, almost always, it isn’t.
Now, of course, there is a lot more to nailing it, then scaling it then this. There’s a lot that goes into building any business and while there are some time tested tactics and strategies that you can employ, no two business are exactly the same (no two McDonald’s are exactly the same). Every situation is different and if you would like to discuss your business with us please do not hesitate to reach out.
We are dedicated to helping the next generation of entrepreneurs develop the skills that they need to compete locally and globally. The CSUF Entrepreneurship program does many things,