• It doesn’t matter if you invest $100 or $100,000 into your own business. It doesn’t matter if your net worth is in the millions or pocket change. If you self-fund what turns out to be a money pit, you’re going to eventually put an equally painful dent in your future.

    Been there. Done that. Got a bunch of really cool T-shirts.

    I’ve self-funded three startups to success — and by “success,” I just mean the opposite of failure (and there were a lot of failures). My first self-funded startup ran profitably for 12 years. The second was acquired relatively quickly. The third, Teaching Startup, has been running for almost three years now on sustainable margins.

    For all three successes, I followed the same self-funding plan. But here’s the thing, I also followed that plan to self-fund the failures. Doing that allowed me to get past those failures and eventually fund the successes. I’ve never borrowed from friends or banks, I’ve never used credit cards for anything I couldn’t pay off at the end of the month, and I’ve never put anyone other than myself at risk.

    If you eliminate all the bullshit and bravado and bro-ism, you’re left with common sense, hard work, and a simple plan. Because at the end of the day, the success of a startup is based on the brilliance of the idea and the excellence of the execution, not how much money you can throw at it.

    Don’t Invest More Than You Can Lose

    I’m putting this up front because you’d be surprised at how many people would never walk into a casino and put $10,000 on the roulette table, but think there’s something more altruistic about putting $10,000 into a new and untested business plan.

    Yes, it has never been easier or cheaper to start a business, even a high-tech, high-growth startup. But that doesn’t mean it’s free, and depending on your financial circumstances and your business plan, it doesn’t mean that it’s within your reach.

    Be prepared for the long haul of life. When you decide how much you will ultimately invest, imagine walking into the casino, putting all that money on black, and the roulette wheel comes up red. What’s your plan, beyond slinking out of the casino even before your free drink arrives?

    Map Out a Funding Strategy

    You need to invest in yourself in tranches, like any smart VC or angel would.

    A $1,000 investment isn’t going to get you to a million dollars in annualized revenue. But it might get you to $10,000 in annualized revenue. Once you hit that first milestone, you need to figure out how much you’re spending in labor and cost of goods sold (COGS), and then figure out how to make up the difference.

    If you’ve got $1,000 or $10,000 to invest in your business, spend a fraction of it now, a larger fraction in X months, and the largest fraction in Y more months. The end of X + Y months is your stop-loss point. If you haven’t found traction by then, you should bail or pivot. But give yourself X + Y months of runway to figure that out.

    Learn How To Do Things Other People Pay For

    I would never go to work for someone else doing things like marketing, sales, accounting, human resources, or at least a dozen other skills where I’m not even close to being an expert. But I’ve learned enough in each area to not need to spend thousands of dollars on experts doing these things for me. At least for a while.

    Oh, and furthermore, I kind of hate all those things (actually I’ve learned to love sales and marketing, but it literally took decades for that to happen). My point is, if you’re going to start and lead a business, you need to know the basics of tactical application of everything.

    I’ve spent entire nights and even weekends screwing around with things I know almost nothing about, with Google search or Stack Overflow open for when I get stuck. And a lot of those times, I’ve run into dead ends, but I figured out enough to duct-tape together a functional alternative for the short term.

    Consider Alternatives to High Priced Functionality

    Not every business enterprise needs the enterprise-priced tier of functionality of whatever they’re buying. And not every business needs professional functionality for every function. Before you spend money on whatever function your business needs, whether that’s technology, finance, marketing, or whatever, consider doing it yourself, doing it manually, and doing it for free.

    On a side note, I get yelled at a lot for promoting this by people who have more access to more money than I do.

    Cut corners where corners can be cut, just make sure you don’t cut the corners where it counts for the customer. Also make sure you have an “all grown up” plan to paste those corners back in place when the time comes. Spend only on the things that generate revenue, not things that track it. That comes later.

    People Who Get It and Make Deals

    If you have a brilliant idea, you’re passionate about it, and you can show that you can execute on it, other people will want to help you. But make no mistake, with few exceptions, they’ll want to help because they see an opportunity. For themselves.

    Don’t shy away from this. Be honest about it and address it. And if the opportunity is win-win, cut a deal. Here’s how:

    Hands-on help: If you can show the potential value of ownership in the form of equity options, maybe talented people will work for you for little or no up-front salary (for a while, not forever).

    Vendor resources: If you can show that you’ll be a large and loyal customer in the future, maybe you can get a discount or a barter on resources you need to grow into becoming that customer.

    Partnerships: If you can trade service for service, maybe those companies who do what you don’t will help you get business that you do but they don’t.

    Customers: If you give your initial customer prospects a little more than what they’re paying for, you might be able to build an early adopter base who can play a part in recruiting other customers.

    Get To Revenue Immediately

    The final directive should also go without saying, but it also rarely gets followed. Don’t do anything that isn’t a tactical task on a strategic roadmap to sustainability.

    There will be a lot of temptation to skip ahead on that roadmap, sidestep it, or pivot from it — from shiny new opportunities that fall into your lap to desperation moves when times get tough.

    Always make revenue the top priority. This isn’t a greed thing, it’s a survival thing. Your best intentions won’t amount to much if you’re no longer in a financial position to act on those intentions.

    Lastly, track everything you do and analyze your data often to look for return on your own spend. This will not only help you find your growth path, but it will also prepare you for being able to show a return on any outside investment you might take down the road.

    Set Yourself Free in 2023
    High-Income Skills to Make Money Online
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