J. Anthony Allen breaks down the difference between the money you want and what you actually need to start. He created two budgets for Slam Academy: a fantasy version and an essential one that cut $150,000 down by ditching an expensive computer lab and asking students to bring their own laptops instead.
Okay, how much money do you need? This is the big question now. When you think about how much money you need, think about the difference between how much money do you want and how much money do you need? So it's best to come up with two different budgets here, one as kind of a fantasy budget and one as a downright essential budget. We'll talk about this a little bit more at the end of this section. We're going to do a little recap on what's essential. So when we started Slam Academy, we made a budget and it came out to be around $150,000 that we thought we needed for startup. And we thought, how are we gonna get this? We don't know anything about getting loans. We don't really know anything about anything. So I went to a business friend of mine who became a trusted advisor and he essentially ripped it up and threw it out and said, this is all stuff you want. This is all stuff. None of this you need to get started. You can get started in your business with very, very little. So keep that in mind. What you absolutely essentially need and what you'd like to have a good example of that is for us, you know, we teach classes in electronic music. That's our business. So we thought we needed a computer lab. But after we thought through it a little more and got a little clever about it, we thought, you know, almost anyone who's really interested in electronic music has a laptop. So what if we formatted everything as kind of like a bring your own laptop? Then we don't need to buy a computer lab, which means we don't need all kinds of extra pieces of hardware, which means we don't need to support a computer lab. We don't need it, people. Then things suddenly get a lot cheaper. And then once we had money, we stuck to that because it turned out to be kind of a cool niche where people would come into classes not use our gear, but they would use their own gear, which students ended up liking and looking forward to. So this initial financial barrier became kind of a trademark in a way, of the company. It's interesting, you know, it really worked out. Now we do have a little arsenal of laptops, but we only use them for, like, our kids programs and things like that. Things where it's maybe not necessary to expect that students have a laptop on their own. So keep that in mind as we go through this. Don't get freaked out when I start talking about loans and equity. You don't have to do that. We're going to talk about loans and equity first. So I want you to remember that there is a solution coming up at the end of all of this, when we're going to talk about bootstrapping, which is a way to do it without loans or without equity. Takes longer, but can be worth it.
