I’m often asked if starting a business always requires a big pot of money. The answer is no. While you will need a few core ingredients to launch a business and then make a success of it, lots of funding is not one of them. In fact, having substantial financial backing can slow or stop you from identifying your business’s problem areas and solving them.
In many cases, it can be better to start with very little money, since the skills you’ll develop as you overcome the challenges of growing your business will be invaluable — you’ll notice your mistakes earlier and adjust more quickly, which will make for a healthier company.
Let’s face it: Your first few attempts to start a business are not likely to go according to plan. I’ve launched my share of businesses that didn’t get off the ground, and looking back, these were useful experiences.
Try, and Try again
When I was a schoolboy I tried to launch a number of different schemes — for example, when my friend Nik Powell and I tried to grow and sell Christmas trees, we lost our crop to hungry rabbits. It was disheartening at the time, but if we’d had more capital to begin with, we’d just have made the same mistakes on a bigger scale and lost more money.
If you’re a beginning entrepreneur launching your first start-up, a big pot of money may only mask problems that will eventually catch up with you. From my first experience of failure I began to understand just how much I didn’t know about starting a business, and that even ideas that I thought couldn’t fail, wouldn’t necessarily work out.
And gradually, by making mistakes over time and learning from them, I hit on what became my key guiding principles: That you must only launch businesses that will improve people’s lives and that you are passionate about.
You must try to create something different that will stand out. When things go wrong, be tenacious. It’s important to get out there and sell your product. Many great ideas fail just because their potential customers don’t hear about them.
Rewarding creativity and spirit
A perfect example of how far you can go with-out financial backing is in the Tenner competition held by the business and enterprise education charity, Young Enterprise, in which school kids in Britain are given £10 and challenged to do something enterprising within a month.
Children have used the money to help musicians and artists promote their work, or set up a course on feeding and grooming horses. It’s amazing how creative they are, and how much some are able to do with their tenner.
Through a public-private partnership including Virgin Money, Virgin Unite and Project North East, we are helping to manage a government programme in the North East of England and in Cumbria that makes small loans available to emerging businesses — up to £25 000 at reasonable rates of interest.
The programme is only a few months old but we have already seen businesses ranging from pet shops and hardware stores to digital animation studios and dance schools.
Funding and Mentorship
The StartUp Loans programme doesn’t just provide sensible levels of funding, but also mentorship, advice and invaluable insights from people who have been there and done it. In business, the best way of learning is through doing, so I always encourage young people to start a business over going to business school — it’s cheaper and you’ll learn a lot more about what it takes to run a successful company.
Money is not the sole currency when it comes to starting a business; drive, determination, passion and hard work are all free and more valuable than a pot of cash.