How can you run a business without loans? - Ask Evan

Hi, I'm Evan Carmichael. Welcome to another edition of Ask Evan. Today we're going to be continuing our challenge series where we answer questions from our readers to help them grow their business. So today's question comes in from Augustine, who's one of the TELUS Talks Business Facebook fans. And Augustine wrote in saying, I want to know how one can run a business without having to get a loan. So thanks for the question, Augustine. Great question, one I know a lot of entrepreneurs are going through and thinking about. How do I start this business without having to get money? And I used to be in the venture capital world where I helped raise capital for entrepreneurs, but I'm actually a big believer in bootstrapping and trying to get it done without having to go and raise money. So in this video, I'm going to share 3 of my top tips to help you, and I look forward to seeing you at the end of the video.

Number 1: Start with a service. I almost always recommend that entrepreneurs start a service-based business. You can have bigger ambitions to create products, but the best way to start is usually through a service. One of the main reasons is the cost. You don't need as much money to start or maintain a service-based business. Often the only thing you need is your time. You don't need an office, you don't need inventory, you don't need storage, you need less equipment if any, and any money you make goes right into your pocket. The first step in in building a successful business is getting beyond the survival phase, and you have to make enough money to pay your bills and survive. A service-based business can get the cash flow coming in more quickly and can allow you to create a solid base from which you can launch products if that's your end goal. Here's some advice from Tony Robbins: the defining factor is never resources, it's resourcefulness. Number 2: Build around the customer. Another great way to build your business without going into debt is to talk to your potential customers before you start. Interview them, ask them what their pain points are, and see if you can find a way to help them. Ask them if you could solve their problem for them, would they hire you? If you can start your business with a customer from day one, you're ahead of the game and have money coming in the door from the beginning. In my first real business, we built software and spent countless days building a tool that we thought would be valuable, but it turns out that our clients didn't really care about it. Luckily, we had enough other great things in our software that our clients still bought from us, but we learned our lesson. Always talk to your customers to build around them before you launch. Here's some advice from Mark Cuban. Of course I was underestimated. I was young and this was a new industry. I just used it to my advantage. I had more energy and I didn't have any preconceived notions on how things should be. I just tried to learn the technology better than anyone else and find the best ways to help my customers. Number 3: Don't spend until you earn. Anybody can spend money. It's easy. If I gave you $1 million, I'm sure you could find a million different ways to spend it. The hard part about running a business is making money. I personally hate spending money until I'm making money. I'll invest my time, but I won't put dollars in until I figure out a model that works. Here's a quick example. I always wanted to get into making YouTube videos to answer people's questions so I could help a wider audience. But I didn't have a way to monetize it, so I didn't want to go out and spend the money on the camera, tripod, lighting, microphone, editor, and so on. So I bootstrapped it. I used the camera I had at home, balanced it on a bookshelf, and recorded. The first videos I made were terrible. The content was pretty good, and people still watch them today on YouTube and give great feedback, but the production quality was brutal. I could have gone out and bought the equipment, but I didn't want to spend the money until I found a way to make money. So I kept at it and eventually discovered a model that worked. Then as money came in, I was able to slowly invest into better equipment and the quality got better. The other benefit here is that I'm only spending money on something that I know works and I want to continue doing. I could have bought all the equipment, found out after a few videos that I don't want to do this, and would have thousands of dollars sitting in my closet never being used. By bootstrapping, you find what works and what you want to continue doing, then you spend money to expand once you've found the model that works. Here's some advice from Lillian Vernon: Work hard. That's the bottom line. Don't spend more money than you've got. Don't spend money before you've got it.

Thank you for joining me for another edition of Ask Evan. If you like the video, you want to see more, please give it a thumbs up below. It always makes me want to do more of these videos for you. And I'd also love to hear what you have to think. If you want to leave a comment under the video, if you have something to say about this video or some recommendations for Augustine, or if you have a question for your own business that we can potentially feature in an upcoming video, feel free to leave it in the comments below. I always read those and I try to respond as soon as I can.

So thank you, and we'll see you on the next episode.

Mm-hmm.