Start a business: Which one comes first, money or network?

Depend where you’re coming from, there are usually 2 schools of thoughts on what you need to have before starting a business:

  1. You need a lot of money (capital)
  2. You need to know a lot of people (the right people)

The choice is usually driven by the culture you grew up with, people you hang around and if you’re in an environment (country) where business start-ups are encouraged or not. I found a lot of people with great business ideas were put down by the lack of one or the other. For me, this is similar to asking the questions that you’re all too familiar with:

Which one comes first? The chicken or the egg?

 

Money Matters

Having a lot of capital can be of huge benefits. That is if they are used wisely. Too many businesses I’ve noticed have the mentality of “To get big, you have to spend big”. This is not always true. I can give you examples after examples where businesses with big capitals disappear. The lack of strategy and planning can really make a big impact what become of those investments. To me, this is almost the same as gambling. You are betting your business on the odds of the money you invested will give you the return you expected.

Many gamblers often find themselves get some big wins only to lose it again from expectation of getting bigger win. If you are in this category, good for you! But don’t let the amount of available resources fools you. What separate a businessman and a seasoned gambler is that a businessman has realistic goals and strategy how to achieve those goals. Investing your money in the right place coupled with the right strategy can have a massive impact. But gone are the days where you can only get big when you spend big.

 

Money Options

There are many alternatives to get capital if you don’t have a lot of money yourself. One thing I would say though is that you need to at least figure out how you can survive. If you don’t have enough money in the bank just to survive, don’t quit your job yet. Keep saving money until you have enough to support you for at least a full year.

After that, anything you need to start your business can be obtained with outside help. Here’s some idea on how to get your start up capital:

  • Investors (Venture Capitalist, Angel Investors)
  • Crowd Funding
  • Government Grants
  • Bank Loan

Your start up capital should only go to the essentials, for example: websites, business cards, business registrations, etc. Depend on your type of business, most of the time you don’t even need an office space. But don’t let the availability of these financial facilities fools you. The majority of your start up activities should be focused around planning, researching and crafting your products.

 

Relationship Matters

I personally have always been fond of networking. I could never grow tired of meeting people and network with the right crowds. I have personally benefitted and grow my business more through this approach more than others. However, I too will say that going crazy with meetings and networking without purpose and understanding of your target market can be mentally draining. This has been my personal experience as well.

Back when I started my business, I attended every networking event I can find on a daily basis. Although those periods have been a great learning experience (and I do get a few clients), it is not without consequence to myself and my family. More important than working hard is working smart. Be smart who you network with. There are a lot of people who would like to know you, but there’s only a handful that make good business clients or partners. Always evaluate the quality of networking and meeting you attended.

Why am I so fond of networking? Simply said:

Profit follows relationship

 

I found the more people trust you, the more they are willing to invest in your business. The more they trust you, the more they will send you new business. This will eventually equals more profit for you. So you see if you focus on developing relationship with your market you will find that overtime, your profit will increase. Now, there’s no magic pills here, you still need the right target market, the right product and the right delivery mechanism.

This is what I call “The Core” of your business with clients. If you don’t know your target market (or you targeted the wrong market), your networking won’t be effective. If you don’t have a good product, I don’t have to say it twice that you won’t have a good business. Likewise, how you deliver your value to your target market also matters (you’re not likely to run a good pizza business if your delivery takes 2 hours to get to customers).

 

Conclusion

Use what’s in your hand

The reason I write this post is I don’t want you to let the lack of one of money or network stops you from creating your dream business. In this modern age, there are many ways to get your business up and running. The most important is to form your business core before deciding on spending money or growing your network.

If you have an existing business that’s currently leaking financially or maybe you feel drained by excessive networking activities, don’t lose heart, all is not lost. Take a closer look to your business core and make the necessary adjustment. Feel free to drop me an email if you have questions.

Which school of thoughts are you from? Share your experience below.

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Emmanuel 17 July 2014 0 Comments

Should I Run My Business Part Time or Full Time

In my book, there’s no such thing as a part-time business. Running a business demands more than just your time. It requires energy, passion, focus, and even some financial commitment. You either have a business or a hobby.

Somewhere in between, I’d call it freelancing, and in my book, freelancing is something else. To represent my point further, let me say this:

You can’t be a part time millionaire

Granted, there are those who make a lot of money starting part-time, but eventually at some point in life, they need to make a decision to go full steam ahead.

A good business needs to have a strong vision & mission, a clear positioning on how their offering will deliver value for their customers, as well as some kind of leverage that the business can use to sail forward without having to sell their souls to overwork.

Online Business

A lot of people start an online business because of the freedom that online business promises. They enjoy having their work desk sitting across their beds, being able to finish work and jump straight to bed, skipping traffic, bad weather and sometimes shower altogether.

While all these promises are true, it often hides the real building blocks that made up an online business. Despite what’s being advertised out there no online tycoons made their millions by sleeping all day at home. It takes hard work and determination just like any other business.

Freelancing vs. Business

In legal term, freelancing is a business just like any other. However, in my book, freelancing is still not a business. Freelancing is a job structure where you’re not being bound to any specific employers. There are several components in my opinions are missing from having freelancing to be called a business:

Vision & Mission

Few freelancers started the venture with clear vision and mission or even a simple goal. If any, the goals would be to create as much money as possible, making it no difference than a job. Fact is, the way you conduct your business is strongly driven by your vision and mission statement (if you have a vision/mission statement that doesn’t drive your business, then you have a different problem).

Clear Positioning

Established businesses have a clear target market, understanding of their problems and strategy to bring the business value into the face of their target market. Some call it marketing strategy, I call it positioning. And positioning is what makes convinced your customers/clients to buy from you instead of your competitors. Many freelancers have some ideas about who they market their service to, but few understand how to get to them.

Leverage

A business should be something you can leverage. This means, the more money you make doesn’t have to mean the more time or energy you have to spend. A high leverage business is businesses that can make lots money without the owner have to work like a horse. This is not possible through freelancing since freelancers can only make more money by working more.

On the other side of the coins, I’ve also seen many freelancers evolved to establish a business with clear target market, strong positioning and unique value proposition. These are people that started freelancing with big dream in mind and slowly work their ways towards that dream.

My Point

Why did I say this thing? For me, business is a vehicle for you to achieve your dream. It is a long and hard road to give you financial freedom, all the time you want with your family and even your hobby. It’s a vehicle to allow you to give more to the community without having to worry about meeting your own needs. But all this can only be achieved through perseverance and hard work.

That’s just my views, would like to get yours to see if miss anything. Type in your comments below.

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Emmanuel 8 July 2014 0 Comments

The Key to Getting All The Clients You Want (ANZ Presentation 21-May-14)

Positioning will ensure your business will stand out against all the competitions.

4 Keys to successful positioning:

  1. Focus on Benefits, not Features
  2. Be Authentic
  3. Separate yourself from the competitions
  4. Be Unique

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Emmanuel 21 May 2014 0 Comments

How to Turn Ideas Into Business Workshop (19-Oct-13)

4 Simple Steps:

  • Step 1: Knowing Yourself
  • Step 2: Knowing Your Market
  • Step 3: Knowing Your Market Emotional Need
  • Step 4: Know Your Marketing Weapons

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Emmanuel 19 October 2013 0 Comments