Starting a business? You don’t need finance!

There’s one difference between those who want to start a business and those that have already started one: the meaningless pursue for finance. Finance? You don’t need it. And if you do, there is a good chance you and/or your business shouldn’t be in business.

Almost all businesses start by accident. Get it right, they grow into big corporations. Look at successful entrepreneurs around you. Ask them their story. Very few (if any) will tell you about the amazing business plan they created, how big banks or venture capitalists financed it and how they started with great funding and became a success. No. They will tell you how they started with their own cash, their pension fund, a loan from their grandpa, how they started from a bedroom, a garage, a coffee shop, how they hustled day and night to make it work. And they do. With finance? No, with a lot of hard work!

We always hear about the businesses started internationally out of a garage: Apple, Microsoft, Amazon, the list goes on… This is no different in South Africa. Sport nutrition brand, USN, was started in a flat and with no funding, 15 years later: a billion rand in revenue. Activations agency, The Creative Council, was recently acquired for a rumoured 1 billion rand and started with zero capital. Again, the list goes on…

If these big companies could start with no funding, what makes you think that your idea needs anything more?

If you think your idea is different – YOU definitely need funding. Then you are wrong. Your idea needs to change.

How do you do it? You need to get costs down: you can’t start with a big salary, you can’t rent an office space, you need to get rid of all the expenses you don’t need. Then you need to validate your idea and build a customer base. You need to get your first customers! And you are going to use your own money to do that. Don’t have money? I’m sorry, if you are not able to generate and save anything, you are wasting your time starting a business.

Let’s use some examples:

You want to start a restaurant and need a million rand for set-up costs and start up capital. Change your idea. Start making food out of your kitchen, advertise to your local neighbourhood and deliver freshly made food to their door. Use your profit to build a business and if it grows to a restaurant, congrats you will have cash in the bank and a track record to get funding to expand.

You want to manufacture products and need R5 million to start a manufacturing plant. You’ve never ran a business. Your idea is solid and will work. Forget it! Banks will gladly accept your application and tell you how they care about small businesses. When you close the door, they will burst out laughing. Change your idea: Get someone else to manufacture the products or import them. Use profits to grow cash and validate the business. If you turn millions in sales, those laughing bastards at the bank will line up to fund your manufacturing plant.

In summary: You can either start a business with hard work or you can try forever to raise capital. Bottomline: You shouldn’t be going to the bank when you start a business.

11 Comments

  • xolani
    January 19, 2016 at 9:22 pm — Reply

    Wow i need to hear more from you man damn you harsh but in a righr way i can be glad if you can be my mentor in future really spot on Sir!!!!

    • Marnus Broodryk (Author)
      January 20, 2016 at 2:06 pm — Reply

      Thanks Xolani.

  • JC
    January 20, 2016 at 9:06 am — Reply

    Great article and examples. I suspect that the pursuit of start-up finance has a bit to do with the culture of instant gratification as well – not to mention that the work ethic seems to be going out the door these days…

    If your heart/passion is in it, you’ll gladly put in the time to build your own business, and gain valuable experience in the process. Your wisdom and savvy will grow with your bank balance, and the deep end of the pool won’t be nearly as intimidating.

    • Marnus Broodryk (Author)
      January 20, 2016 at 2:06 pm — Reply

      Completely agree JC – spot on.

  • Neil
    January 20, 2016 at 9:45 am — Reply

    Great article and spot on with ‘you need to get your first customers’. So many entrepreneurs think you can start a business with capital and then start looking for customers which is exactly the wrong way round! Sales is fundimental to any business. Start there and then build your business with reinvestment as your client base expands from one or two, to many. Unfortunately few people are willing to put in the hard work associated with building a healthy business, step by step over many years.

    • Marnus Broodryk (Author)
      January 20, 2016 at 2:04 pm — Reply

      Couldn’t agree more!

  • wim
    January 20, 2016 at 4:19 pm — Reply

    Ideas change the world (and business for that matter) – Great!

  • Fritz
    January 22, 2016 at 9:43 pm — Reply

    i’m really touched by this article ey and i’m glad i red it from start to finish and again only business minded people will understand what you mean in the article

  • Niva Druberg
    March 9, 2016 at 12:23 am — Reply

    Wow! I love how Bold you writers of these articles are.

  • fortune buwa
    March 12, 2016 at 7:33 am — Reply

    This just opened my eyes on a business I’m busy developing. At some time I hide myself from all the plans I have about it. But today I believe I have to think result

  • Phoebe
    March 22, 2016 at 7:35 am — Reply

    When my partner was in the process of starting up his business, he went asking for money from people closest to him by pitching his ideas. He managed to get the funds and together with the little savings he had, he started up his business (used the funds to buy stock, everything else was DIY). I was annoyed and kept pushing him to get a business loan with the bank but he would not have it. Reading this article has helped me open my mind as I am in the process of starting up my own business, I would have blindly gone to the bank to get finances to make it happen. My motto is to always focus on the stepping stones that will lead me toward my goal rather than putting my focus on the goal (successful businesses, having money, etc) and forgetting the work that needs to be done to get there, and you have clearly and wonderfully justified my motto.

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