- Starting your company without the burden of investors can be quite rewarding. You’d maintain full control and wouldn’t have to make certain compromises as you would if you had partners and shareholders.
- Without investors, small businesses often have to wear more hats, which means you would have to spend more time working “On” your business. But, you also have to spend considerable time working “In” your business as well.
- With you at the driver’s wheel, you make all the decisions and have the agility to set the direction at any time and drive the business in whatever it needs to go.
Many MWBE’s are startup’s requiring that the business be built from the ground up, which is often very difficult, especially at the beginning if you don’t have the money from an investor or venture capitalist. But, this doesn’t make it impossible. In fact, most small businesses start with little to no money and as a sole owner can still yield considerable benefits that outweigh the cons.
As a small MWBE business owner, you probably started the business to gain independence and perhaps even build wealth doing what your good at or what you love to do. It can be difficult to do, but if you have the passion, skills, and will to persevere, you can make your dream come true.
The Benefits of Starting up Without an Investor
There are a lot of factors to consider when starting any business that may include whether or not you’d like to have an investor to shell out some cash to help you. You would have to weigh the good and bad of using someone else’s money. You have to look at it from the perspective of what is right for your business. But, if you do it with your own time and money, the benefits and rewards can outweigh the cons. Here are some of those benefits:
- Maintaining 100% control. Every entrepreneur has a vision of what is best for their company. When they make a decision, it may not always be the right one, but one of the biggest ways to learn is through your mistakes. Sometimes you can win big, but sometimes you lose. You have to be ready to take the ups and the downs as they come and keep pushing forward. With an investor or shareholder, their interests and motivations may not be the same as yours. This can lead to conflicts and complications in decision making. And, if you’re relying on their purse, it can lead to greater tensions.
- Learning to take risks. Every business owner takes risks and by nature, many entrepreneurs are risk-takers, because they understand that taking risks can lead to major growth. You can certainly fail in a particular risk, but because you are ultimately responsible for everything, your risks should be more calculated and well thought. You’re realistically aware of managing the risks entail and work hard to be successful.
- Being Nimble. If you’re flying solo, you answer only to yourself, not an investor. You’ve set your vision and targets and can make modifications or change direction without having to negotiate your reasons with anyone. If you’re seeing a change in the market or see the right opportunity to make a change, then you are free to adapt quickly.
- Understanding your financial benefits. A key aspect of any business is understanding your financials. For a small business, especially a Start-Up, this is very critical. Investors are very keen on financials and so you should be as well. However, in this case, “You” are the investor in your company and in yourself. You need to understand the profit and loss, balance sheet, and cash flow statement. It is a huge benefit for you to really understand your financials and how they relate to your business and market. This benefits you internally to see how good or bad you are doing, but it will also help you when it comes time to borrow money for particular projects, working capital, and other needs. And if you’re really doing well, you’d never have to borrow money from anyone.
- Not needing to take on employees right away. Having employees is a huge responsibility and cash-intensive. They need a steady paycheck, benefits, and supervision. This can be expensive and will have a considerable impact on your free time. Depending on your business type, you may not need to take on employees for a long time or ever. You can hire contractors or independent consultants to perform work when needed. You can even find inexpensive virtual workers, such as bookkeepers and receptionists if really needed. This also helps to get in the cash flow, gain experience, and establish a reputation for your company.
Should you keep your job while building your business?
Many small businesses start off doing side work while working a full-time job because they need steady cash flow for their personal life and expenses. You might have a family and you might be living check to check without much in terms of spare cash. There is nothing wrong with this. Even if you’re working a full-time job, you can form a corporation and start the clock ticking, which is especially important for MWBE certification as, in most cases, you have to be in business for at least a year.
If you’re starting your business as a Side Gig, this gives you more time for preparation. You can do this after work, take needed time off to attend certain events or to meet with a potential client, can even have conference calls or use video conferencing to meet with clients and associates. Of course, don’t do this on someone else’s clock, but you can work out the breaks needed to get some work done.
Remember, you’re wearing several hats. You’ll need to work on your business plan, strategic plan, marketing, website, social media, etc. You can get a lot of this done on your time off if you spend a couple of hours of quiet time every night on your business. You’ll gain experience here on every potential job title in your business. You’ll learn each and every job and will decide on how it needs to be done and what works for your business. Once you start bringing in enough cash to hire someone, you’ll know exactly how you want them to perform the work for you.
Getting FREE advice
I cannot overstate the needs for the help of others, especially for small MWBE businesses. There is a lot of truth in the saying “you can’t do it alone.” You will need help and there’s plenty of help out there that will cost you nothing but your time. Having a mentor or business advisors such as with SCORE or many of the Small Business Services office such as a PTAC or SBDC in your State or City are priceless. You may also have associations with friends and family that understand or are in business.
These types of free “advisors” will be a critical part of your business development and learning process. They can make recommendations and validate the work you are doing or even help you crystallize your thoughts. You can get help on structuring your business, get free legal advice, learn about bookkeeping and financing, learn how to bid, etc.
To close, I want to say that you need to pace yourself. Any expectation that you’re going to be an overnight sensation is not realistic. Building a business takes time, patience, and perseverance. You’re going to have your ups and downs so manage your expectations accordingly. Be smart, be calculated, and over time you will start to see your dreams come to fruition.