I had a conversation with an aspiring entrepreneur this week about her company’s need for capital and how she thought I could help. I’ll admit, I am not that fond of her idea, but I was somewhat intrigued at how open she was about her struggle with convincing others to believe in her. I actually never told her whether I thought the idea was good or bad, because quite frankly I didn’t think it mattered given how early she was in the development process. What I did tell her was that her idea was simply too early for someone like me to consider and that she would be best suited to ask friends and family for capital to help get her idea off the ground. What she said next is what prompted me to write this blog post. She said (and I quote) “We don’t really have any family who would help start this. I understand this is the time for known networks, but what if someone doesn’t have them (friends), or family can sometimes not be the greatest choice.”
Strangely enough, I’ve become accustomed to working with entrepreneurs who’ve had support from friends and family and raised the capital they needed to at least build a successful prototype. However, I don’t think this is the norm. I think the majority of people out there who want to be entrepreneurs do not have the social or family networks to help them mitigate the financial risk of starting a new venture. Fortunately, with the advent of technology, it doesn’t cost nearly as much money as before to test a concept and get an idea off the ground. This may be slightly different if you’re developing a physical product. But even still, with virtual prototyping and in some cases, 3D printing, a simple prototype can be produced for very little money.
I can relate to this woman’s dilemma, as I think most people can. Not everyone has access to friends or family who are willing to part with their hard-earned money to invest in an unproven idea with an unproven entrepreneur. However, I think that what has to happen for people like her is to have a shift in mentality about what it really takes to be successful. Similar to this woman, I used to think money alone was all that was necessary to turn an idea into reality. But that is incorrect thinking. Money is a commodity – by itself it has absolutely NO VALUE. In fact, the worst thing anyone could ever do with money is have too much of it sitting around not doing anything. When I worked at the Federal Reserve Bank we used to assess how much money banks had in reserves. There were guidelines/limits for how much cash the banks should have sitting idle. If they had too much (or too little), they received negative marks. More importantly, it hurt their profitability because money is the only asset banks have to generate meaningful revenue. Occasionally, they’ll repossess real estate for loans that go sour, but this is by no means their primary business. The point of this example is that aspiring entrepreneurs must change their perspective on money and think of it as more of a commodity than a necessity.
Another important mindset shift is to NOT focus on how few financial resources you have, but to focus more on being resourceful. To be resourceful means having the ability to find quick and clever ways to overcome difficulties. Thinking resourcefully is a mindset shift where you focus not on what you don’t have, but instead you focus more on “how” to get what you want. Instead of saying to yourself “I can’t afford that,” you must say to yourself “How can I afford that?” When you make a conscious decision to think about things this way the synapses in your brain begin to realign, and overtime you start to view the obstacles in your life differently. The sooner you can crossover into a mindset where you no longer consider obstacles as roadblocks and more as opportunities, the sooner you’ll realize that you’re capable of accomplishing whatever you choose to put your mind to.
The power and freedom to “choose” is one of the greatest gifts given to mankind. It is this power to choose that empowers some entrepreneurs to achieve greatness, and it is this same power that often holds many entrepreneurs back. For the purpose of this post, I think the most important decision aspiring entrepreneurs can make is to choose to be resourceful and view obstacles as opportunities. Eventually, you will need money to build your company, but in the beginning when you’re starting out, what you need is a well-crafted vision (or story) that is highly effective in convincing others to invest in you. If you’re an entrepreneur and you don’t have friends and family who can invest in your company, don’t be discouraged. Remember, money isn’t always an obstacle OR the solution. You yourself are. Cheers –KM