Evan Carmichael argues that bootstrapping beats raising money. Start with a service to generate cash flow, talk to customers to validate ideas, and test if people will pay before building a product. Most founders who spend big at the start fail.
Don't start a business by spending money. Anybody can spend money, and the people who spend a lot of money to start a business are usually the ones who end up losing a lot of money. The key is to bootstrap it up. Start making money. Show me and show yourself that you can make this into a business and put it back into your company to continue the growth. Hi, I'm Evan Carmichael. I believe that hungry entrepreneurs deserve help. And today I'm answering a question from Michael, who's one of my readers, who wrote in saying, "Let me ask a specific question. What is your best advice—" put me on the spot here— "your best advice if you have no personal seed money, no credit available, and you're not sure which idea would be the one to get you going?" Michael, welcome to the club. You know what, a lot of entrepreneurs when they start up, they don't have a rich uncle, they don't have a lot of seed money, they don't have tons of credit, they don't have people backing them. This is on you. And if you can bootstrap your business up, it gives you a huge chance of being able to be successful versus all the other guys. You don't need that stuff to be successful. The entrepreneurs who believe they need to have the outside capital make themselves go— if you have that limiting belief, then it's always going to hold you back. So congrats for writing in, wanting to start this business, and having the courage to get it going, and knowing you don't need to have a lot of money to launch it. The best way to do it is start talking to your clients. Start talking to potential customers. If you have multiple ideas, go talk to different potential customers and see what they think. Get to know their problems, get to know what makes them tick. Ask them, "What do you think about this idea?" See if they like it. See if they'll order from you. Right? That's going to be the big test. Will they actually spend money with you? You're not going in asking for the sale though. You're asking to go in just to talk to them. Get to know their problems, present potential solutions, and see if they're interested in it or not. The best feedback you'll get is gonna come from potential customers. I made this mistake early on in my software company. I spent tons of time working on this feature that I thought my customers wanted. It's the most complicated feature in our software, and it turns out they didn't really care. And luckily I had enough other great stuff in my software that would make it work, But a lot of entrepreneurs make that mistake. You know, learn from my mistake. Build your business around your customer and find out. You know, you want to know if it's a good idea? Find out if someone's willing to pay you for it. And the best way to get started if you're going to bootstrap is around a service. You may have a great product idea, you may not want to trade your time for money, but at the start you've got to get close to your customers and you've got to keep your costs down. And that comes from starting a service. Find a potential customer with a problem and offer to help solve it for them. See what they think. And by starting the service, it does a couple things. It gets you close to your customers. It gets you to really understand their problems, if it's their business or their personal life, what their challenges are and how you can help. It also brings in consistent revenue for you. You're keeping your costs down, you're bringing revenue in, you're getting to the point of survival where you don't have to go back and get a job again working for somebody that you hate. Doing something that's beneath you and, and watching other people make big dollars off of your idea. You need to get money coming in, and that starts from having a service. If you have consistent cash flow coming in, then that gives you the platform for growth. If that's launching product, if that's launching new services, if that's bringing on a team, if that's growing beyond your local market, whatever it is— growth. So you're asking all the right questions. This is great. I'm excited for you. I hope you'll take those steps. Start by talking to your customers. See what they think. See which service they like best, and start again with that service instead of the product to help you bootstrap it up. For everybody who's watching, if you're in the same situation, you do not need a lot of money to start a business. The guys who spend a lot of money often lose a lot of money. It doesn't guarantee your success by any means. Successful entrepreneurs, by the most part, if you research their stories— look at any famous entrepreneur you look up to— for the most part, they started with nothing. It was them and a dream and a lot of hard work, and you can do the same. Good luck. For those of you watching, if you like the video, you know the drill— thumbs up below. Thank you so much. I love seeing them come in, and I'd love to know what you think about the video. Please leave a comment below, or if you have a question about your own company, please leave in the comment section below. I really love seeing them come in, and I check those every day. So thank you, and I'll see you on the next episode.
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