So like a lot of people I’d love to start a business. I have (what I think is) a pretty decent idea for a small startup and I’ve made a thorough business plan. I would say I’m confident that this business will be successful. But you can never be 100% confident, nobody knows the future, and that’s my concern.
Starting a business requires startup capital, and unless you have serious connections, you can’t just go to a VC and get an investment, you need to use your own money or take out a loan. For me my startup capital would be around $15k. So not that much but for someone like me who has no money and lives paycheck to paycheck, it’s a lot of debt to go into.
So my options are to take out a bank loan (which I can’t because I have no collateral) or open a credit card, either way I’m going into debt and will need to start paying it back within a month, so if my business is profitable then that’s no problem but what if it isn’t? My life would be over. I would be saddled with a debt that I would be paying back for years. Bankruptcy isn’t an option because if I do that all my credit cards will close and my credit will be destroyed.
So how do people do it? It seems like you have literally one shot at making a business work, so for every successful entrepreneur out there, that means that their very first business idea was a success? They never started a business that failed? If they did, how did they dig themselves out of that hole?
Basically I want to take a shot at this, but what if it doesn’t work out for whatever reason? How do entrepreneurs do it? I see so many new startups advertised on Instagram (magic mind nootropic shots, dose daily turmeric drink, rotten candy, etc). How did they do it? Did they all secure funding from a VC before they started their business? Or did they use their own money? For someone like me who has no money and lives paycheck to paycheck, how do I start my business?
How do you start a business knowing that if it fails then your life is ruined?
byu/SuspiciousPrune4 inEntrepreneur
Posted by SuspiciousPrune4
17 Comments
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Build an mvp, test it, learn from it. Dont just take out $15k if you don’t have a validated idea and don’t know what you’re doing.
You dont risk your family
Its one thing to risk your own life but others is irresponsible
Bootstrap and make money even a dollar and move up
Also your idea of VC is dead wrong. VC is for growth and scaling but to get that you need to prove the market yourself first. You can bootstrap until you prove traction and need an angel or VC to scale up.
That clearly depends on your business idea
Losing 15k will not ruin your life. Do you have customers ready to pay for whatever you create? If you have customers, spend 20k and do it right. If you do not have customers, learn how to get customers before you invest a dime.
Run it as a side hustle for a short while until it can sustain your lifestyle. Just put the hours in, if you’re not willing to put in some stupid hours then it’s probably not for you. Ignore all of this work life balance shit, business isn’t like that. It’s hard work and long hours.
You seem to be operating under the assumption that most people starting successful businesses are people in your position, but I think that’s relatively rare for the ones that are actually successful.
Generally speaking the most successful small business are run by people who built lucrative careers in their industry for a long time before eventually spinning out to start a business on their own. Self financing a 15K expense should be trivial for people in this situation, as is working for a reasonable amount of time with little to no pay because they were making good money before and should have built a sizeable nest egg.
Of course, you’ll hear rags to riches stories about people barely making it starting successful companies, but that’s survivorship bias and you are only being told those stories because they are exceptional and outside the norm.
If you’re in a position where your business needs to not only break even but start making a profit and paying your bills immediately that’s a massive risk and you probably should focus on getting outside funding (an angel investor or VC) rather than trying to bootstrap when you can barely cover your own bills. If you can’t get outside funding alternatively, you could focus on developing skills that are valuable in the industry you intend to work in, start to make more money and build a nest egg and then pivot to being an entrepreneur once you’re established.
For example, if you wanted to start a restaurant go get experience working in one, move your way up in management until you have a few years being a general manager, build up your nest egg, and then branch out on your own. You’ll have a safety net to fall back on, and you’ll also develop a lot of skills that will help you be successful.
No empieces endeudándote de esa manera, menos si tienes poca o nula experiencia, peor aún cuando en el caso de fracasar, estarías pagando un crédito que cavaría tu tumba financiera como mencionas. En su lugar, empieza con poco: lanzando un producto mínimo viable a un grupo reducido de personas con una necesidad que tu producto cumple y sobresale. Sé que tienes una enorme presión por hacer que este negocio sea el bueno, pero no vas a saber la viabilidad de tu idea hasta que obtengas retroalimentación real, lo que consigues al vender, no hace falta crear un negocio valuado en $15,000 para obtener conocimientos del mercado al que te diriges, puedes empezar con poco e ir mejorando hasta alcanzar la excelencia. Tu mentalidad será crucial, ve este proyecto como algo a largo plazo y a raíz de eso, asegúrate de aprender algo en cada paso dado y por dar.
Don’t start a business if you are risking everything. Businesses fail, even good ones. Start only when you have saved enough to recover after a failure.
Moreover, no VC will ever invest in you (for a bunch of reasons, it’s a separate post). Maybe FFF – friends family and fools. But then realistically, what do you know about business? Would you take their money knowing that most probably you will never be able to return?
Most of the first timers fail. Doesn’t matter why – some don’t know what they are doing, some have other reasons. A failure can be devastating. The downside of entrepreneurship is much bigger than the upside.
And another thought. Even if you succeed and the business becomes profitable, it will still be risky forever. So it had to produce amount of profit that will be enough for you to retire in some limited time. Maybe 10 years, maybe 20 years, depending on your situation. But anyway, chances of surviving 20 years are always lower than 10 years. Have you made this kind of calculation?
Your life is not ruined if it fails. I actually don’t believe in absolute failure. You might come to the conclusion the business is not viable but you will learn why among learning many other things. The knowledge you take with you means you are never truly starting all the way over again. Even if you start again from the ground up, you will always start from slightly higher ground than the last attempt as long as you gained a new understanding, perspective, or some knowledge from the prior attempt.
Your true value will always come from the wisdom you gained along the way, and no one can take that from you.
Your life wont be ruined you can always start again and again
Hi, so I am in similar situation as you. I have no idea what kind of startup you want that require $15k upfront but I recommend you to start low like $2k if possible. Be active on Reddit ask feedback about your idea, check if there is a market. Because you can “think” and ask AI to show you the proof of the market but the reality is that it’s making an illusion that “there is” market. You need ask people what they want and what they need. If you get a little of bit green flag then it shows it might be a market. Sometimes you need to modify your idea to actually meet people needs and that’s ok.
I have spent at least $200k on my business and it’s barely generating more than $50/mo. It’s a work in progress and involves an online service.
I don’t lose a wink is sleep though because I have a seven figure law firm, and a seven figure liquid net worth. I’m still confident this new business will turn the corner, and keep making improvements on it.
I wouldn’t do it if I knew my life would be ruined if it failed though. I honestly don’t know how people do stuff like that. I am all about building a foundation and safety net first, then take calculated risks.
First, I’d suggest that whenever you ask for advice, you include some basic context. It’s hard to tailor advice to you without any background.
My honest answer to your question, “How do people do it?” based on my entrepreneurial journey is: they fail a lot. The stats are brutal: 9 out of 10 businesses don’t make it. About 50% don’t survive past the first decade. For every praised startup or brand, there’s a whole graveyard of those that died in silence.
Reality check: the odds of your startup succeeding are significantly lower than the odds of dying peacefully. Should that stop you? Hell no. But you’d better think hard about whether you have something 10x better than your competitors, whether the timing is right, and whether you have the knowledge to deliver real value to your customers. If not, keep your job (or try a new one), keep learning and saving, and jump in at the right time.
First off, how old are you? Married? How much debt do you have? Can you live off little to no income while you get it off the ground?
Start there.
A LOT of people start businesses off credit cards. I did 23 years ago. You have to be a little bit fearless. Now, I had family of six to support and I wouldn’t take the same risk.
Because my life would be ruined if I didn’t