6 Steps to Mastering Low-Budget Entrepreneurship
It went from a torrent to a trickle of water. What should an entrepreneur do?
The 10-year US Treasury bond rates are approaching 5%. The days of wine, roses and cheap money that have been readily available for the past 15 years may well be coming to an end.
Although some on Wall Street expect a spike and a rate cut soonsome factors call this prediction into question. China reduces its purchases U.S. bonds, and rising federal debt and interest costs raise questions about this optimistic scenario.
Unless you want to bet that money will soon flow freely and become cheap again, these ongoing trends mean that capital will have a real cost like it did before 2008, and that venture financing will become more difficult in all types of entrepreneurship, including that of Unicorn. -Entrepreneurship and social entrepreneurship.
Here are 6 essential steps to finding smart financing when capital is tight.
#1. Change your mindset.
Many entrepreneurs believe that the only viable financing for their growth business is angel capital, followed by venture capital (VC) and an initial public offering (IPO). The assumption is you have a brilliant idea, you join an incubator, you write a great pitch, you pitch it to angel investors, you get seed capital, you take off, you get venture capital and you exit via an IPO or strategic sale. Outside of the world of venture capital hype, pitch competitions, incubator marketing, and Silicon Valley, this is a fantastic scenario for almost anyone because:
· Venture capital firms only fund about 100/100,000 companies and fail in about 80 cases.
· VCs fund after Aha – entrepreneurs need to know how to make it happen.
· The top 2% of venture capital firms, estimated to make about 95% of venture capital profits, are located primarily in Silicon Valley.
#2. Emulate financially smart entrepreneurs to take off with control.
Due to the venture capital hype, not enough attention has been paid to the actual financing strategies used by billionaire entrepreneurs (The truth about venture capital):
· 99% of billionaire entrepreneurs launched without venture capital to prove their strategy.
· 94% took off without venture capital to prove their strategy and leadership skills and to remain CEOs.
· 76% have never used venture capital to create billion-dollar businesses and have kept more of the wealth created.
#3. Develop smart finance business strategies to reduce your needs
There are two types of capital. Internal capital is the cash flow from the business strategy, and external capital is the financing from external sources. By getting paid before having to pay, Michael Dell and Joe Martin used reverse cash flow: they were paid before having to pay and had more capital with a higher growth rate, unlike other companies that need more capital with a higher growth rate. Other billionaire entrepreneurs like Sam Walton and Bob Kierlin (Getting started towards billions) to Gaston Taratuta have built venture-free giants using smart financial skills and strategies, along with the right mix of internal and external capital, to grow more with less.
#4. Find the Smart-Linking sales strategy to sell more with less.
Smart entrepreneurs don’t develop their business plans, financial plans, and sales plans in separate vacuum chambers. They combine their business plan and financial plan with a targeted sales plan to sell more with less. That’s what billionaire entrepreneurs like UnitedHealthcare’s Richard Burke think (Getting started towards billions) did.
#5. Use entrepreneur-friendly financing to grow more with control.
All entrepreneurs can benefit from knowing how to structure the right financing, the right sources, the right instruments, the right structure and the right method to find money at each stage, and then use this limited financing with smart skills and strategies to achieve their goals. goals.
#6. Learn smart financial skills to get off the ground with less.
The most overlooked skill in entrepreneurship training is building a growth business with limited capital that can help 100% of entrepreneurs. Unfortunately, business schools focus on venture capital-based strategy which helps about 20 out of 100,000 companies.
MY OPINION: If money is tight, smart financial skills help you grow more with less. While money is not scarce, smart financial skills help grow more and keep more with more. Either way, skills help.