So I realized I have shared insights on how I started my entrepreneurship journey, lessons learnt and preparing for a new year without actually talking about funding! One of the key and consistent questions intending entrepreneurs have today. Let’s dig-in on that in this episode.
Many times I have heard entrepreneurs blaming the lack of funds as a reason for not positioning their business as a serious and professional brand or even worse not doing anything at all. The lack of funds shouldn’t stop you from pursuing your dreams. Actually, it’s possible to start and grow your business with almost no personal financial investment.
I started my business with almost no capital and leveraged on the lean startup methodology; built my minimum viable product and signed my first deal within two months’ worth half a million naira. Well you may be thinking your line of business is different and will need some funding; two possible ideas for you:
1. Start Lean, build an MVP, Bootstrap
Ask yourself, what do I need to put in place to land my first customer? What kind of customer can I even go after at this stage? Starting lean means not building a castle in a day but building on a stage by stage basis; starting with just the basics. Starting lean can mean several things to different people; your first office in your house, your family members and friends as your first employees; your expert friends providing free consultation and services; the list goes on and on. Don’t forget Larry Page and Sergey Brin started Google from the garage rented from a friend Susan Wojcicki.
Building an MVP according to the Lean Startup Methodology is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Basically building the minimum infrastructure needed for you to start making money then you can scale up later. This is relative depending on the kind of business you intend to run.
I like the way Wikipedia explained bootstrapping: “a self-starting process that is supposed to proceed without external input”. When I bootstrapped, I figured out my MVP needed to kickstart; then I learnt how to launch my MVP without any external input because usually, external input means money out of pocket. And don’t forget, new skills can be learnt in this era of the digital revolution. Just go on YouTube or Coursera. Mailchimp and AirBnB bootstrapped before taking on investments.
2. Funding from Family and Friends
If you absolutely need capital to start, then the first place to look is from family and friends. They believe in you and can easily invest in your idea. According to Funders and Founders, before looking for external investment from angel investors and VC’s, family and friends are the best places to solicit for help.
Now how do you convince your family and friends to invest? If you have a family like mine, sitting down and explaining your idea won’t cut it. You have to show that you are vested, ready and prepared to take on this new adventure. A couple of things to do:
- Prepare a pitch document. Several templates exist online to help you get started. Beyond your product/service, have a deep understanding of your financials.
- Register your domain name. This can easily be done online for less than $20.
- Create a simple landing page. This can also be done online using any of the available freelancing platforms for less than $20.
- Speak to at least 50 potential customers and get their feedback on your product/service. If you can sell to them, even better.
- Then go pitch to family and friends.
We’ll consider the other options in the next post. In the meantime, start something!