Most books that advise entrepreneurs on how to start a business do it assuming that you’ll want to raise venture capital, build a huge team right off the bat and go public in a couple of years. I don’t have anything against that way of starting a business, but it bothers me that very few books talk about the actual way most businesses are started.
Although the Fortune 500 companies usually get all the attention, most businesses in the US and the rest of the world have fewer than 5 employees. They don’t have exit strategies. I don’t have an exit strategy. I love what I do. Why would I want to “exit”? I don’t need venture capital. I started six out of my seven businesses with less than $5,000. Some of them made a lot of money.
My way of starting a business is testing a product with as little money as possible and if it works, then I throw in money and time to grow it. Some books suggest doing it the other way around: first raise money, then see if you have a profitable business. Doesn’t it bother you when companies talk so much about how much they raise in investment and they don’t even mention their revenues? In my opinion, revenues is the best way to fund growth.
I agree with Guy Kawasaki: too much money is a worse problem than too little money. When you have too much money you hire too many people, you pay them too much, you get offices a little too big and fancy, and you are not as desperate to make money (because you already have some). An entrepreneur I used to work with founded a company, got outside investments and now he no longer calls the shots. He’s really depressed because the investors are now running his business and there’s nothing he can do about it.
Raising millions, working 15-hour days for five years and potentially being acquired by Microsoft Google is an option, but it’s not the only one. It’s not even a likely one. You hear about the Amazons and eBays, but you don’t hear about the millions of companies that fail every year. Starting a business with very little of my own money, not risking much and doing something that I love and pays well sounds pretty good to me.
What do you think? Do you want to start the next Google or are you not that ambitious?