Believing in the conventional wisdom that it takes money to make money, is the main reason behind startup entrepreneur’s inability to get his new venture off the ground. The myth that most startups live by is that starting a business requires outside capital that comes from either Venture capital, friends and family, incubators and accelerators or even crowdfunding, forgetting that initiating and sustaining their venture is dependent solely on them. Because before a business, there is you. It’s you who creates this business and you that will sustain it. That business is a reflection of you. And if “you” are believing in outdated beliefs, your business will be doomed sooner rather than later.
Getting bogged down by this business myth that it takes money to make money, tells a revealing story. It’s a story of the startup’s urge to figure everything out before starting. But the reality is that every big business starts out as a small idea based on a problem in the market that needs solving. It’s the consistent effort and incremental progress, done by the startup, that build momentum and lead to a sustainable business over time. There are plenty of things that are more valuable than money when it comes to building a successful business. Having the guts to start, adapt, and grow along the way, are at the top of these valuable stuff.
According to CB Insights, New York-based venture capital database, only 0.05% of startups get Venture Capital funding, leaving the 99.999% of startup entrepreneurs in the cold. The dreadful failure rate of startup entrepreneurs is due largely to their dependence on outside funding before working on getting the basics right. Before looking for traction, revenues, investors are keen on finding out the startup’s vision and character; because these two main components tell everything about the future of the business. It’s true that investors want to see the validation of the startup’s idea, the sustainability of the product or service, whether the product solves a real problem, the scalability; still, they focus on teams with great vision derives from the founder’s leadership.
It has been estimated that there are more than 450 million entrepreneurs around the world who are working on startups in some form or another, and more are joining the community every day. Those founders are often poorly equipped for their journey. They need to work on a model that helps them capitalize on the resources that they already have and from where they are in life. The best way is to look at themselves as being the raw material from which everything is manufactured. Raw materials are the inputs in the production process to create finished products that are ready to sell to consumers.
The startup entrepreneur must shift his mindset towards what really makes money. It doesn’t take money to make money but rather devising a model to be followed to enable him make money. The model I suggest is a four-sided model. The first side is developing a winning mindset, the second side is to approach your business from the bottom up, the third is to develop your capacity, and the fourth side is to master your core capabilities.
The first side, that is, Developing a Winning Mindset. Your beliefs play a pivotal role in what you want and whether you can achieve it. Beliefs, especially the deeply-rooted ones, must be re-examined. One of these beliefs is that it takes money to make money. By acting on such beliefs, it won’t get you to where you want to be. A mindset refers to whether you believe qualities such as intelligence and talent are fixed or changeable traits. You fall under one of these 2 categories: Either you have a fixed mindset or a growth mindset. A fixed mindset person believes that qualities like intelligence and talent are inborn, fixed and unchangeable.
A growth mindset person, on the other hand, believes that these qualities can be developed by way of commitment, creativity and hard work. Developing a growth mindset is a blessing; for it helps you examine your beliefs and see whether they are obsolete or timely. A growth mindset helps to reach the conclusion that it doesn’t take money to make money but it takes other traits to make money. It takes creativity to make money: the ability to come up with innovative solutions to problems. It takes resilience, passion, perseverance, and sheer grit to make money.
The second side in this 4-sided model is The Bottom-Up Approach to your business. As a startup entrepreneur, forget about the top-down approach to your business. Start with a problem that needs solving, work out a solution for this problem. When Ben Chestnut, the co-founder of Mailchimp email marketing company that has more than 20 million users, decides to launch his startup back then, he bootstrapped Mailchimp to an annual revenues of an $600 million dollar company without raising a dollar of outside funding. Ben chose his market well. He decided to help improve the marketing channels for small businesses. Ben didn’t look for investors, instead he found paying customers. For me, it’s a great way to start a business.
The third side in this 4-sided model is to Develop Your Capacity. As a startup, you need to be equipped for your entrepreneurial journey with developing your capacity. It is how equipped you are to face the day-to-day challenges of running and leading a startup. It’s about developing your people and galvanizing them towards a common vision. It’s a journey of personal development and growth of the leader and his team on all fronts: physical, mental, emotional and spiritual. The team must be physically fit and mentally and emotionally ready to face daily challenges – even setbacks.
Building capacity is like the fuel in the tank that keeps the team energized and willing to resume the journey. The founder increases his team’s capacity as well as his own through upgrading themselves. They got to stay relevant and keep on learning on a daily basis. They shouldn’t get complacent. The reason many founders struggle is mainly because of failing to build and develop capacity. They haven’t taken care of developing themselves and their teams.
The fourth side in this 4-sided model is Mastering Your Capabilities. To build a successful startup, you need to work also on developing your capabilities. The founder’s capability is more easily quantified and as it comprised the skills necessary to run a startup. This covers the technical, communication, negotiation and conflict resolution skills. Capability is far easier to acquire than capacity. You need both to build a successful startup, but I would suggest that capacity is more important for success than capability is.
It takes more than money to make money. The things that money can’t buy such as creativity, resilience and passion are more impactful in making money than having money. To embody this principle, you need to devise a 4-sided model. The first side of it is to develop a winning mindset, the second is to approach your venture from the bottom-up rather than the top-down, the third is to develop your capacity, and the fourth is to master your core capabilities.
