Insufficient funds.

[biophase]

So I came up with a new idea the other day, and due to my last project im short on funds. I will need about 15 grand to develop it, and some more for the marketing. The problem though is that I don't have 15 grand, and if I wait to save up all that money the opportunity may not be there anymore.
The market is worth hundreds of billions a year, and theres very little competition. I also meet a need that hasnt been met. Its easy to scale, and doesnt take much of my time.

I never understood these issues if all your facts are true. It's a no brainer to put all $15,000 on your credit card IF... It's truly a multi-billion dollar market AND there is no competition AND it meets a new need AND it's easy to scale. But something tells me that everything you said is not true, because if it is you would not be asking this question.

When I'm putting money into something and I go through these calculations it's always a very easy answer. But you need to be honest with yourself. When I import a new product I already know my risk:

What if I can't sell my product at the price I expect? Then I lower the price? Still not selling? Wholesale it in lots? Still can't do that? Sell it at my cost on ebay or craigslist. Can't sell it that way? Sell it at 1/2 of what I paid? Still not selling? Toss it.

Those are my options, but realistically because I know my market. My real worst case scenario is sell it at cost on ebay or craigslist.

 

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[biophase]

Ive sneezed through 6k on a previous venture.

I have already talked to my friend who is a developer. He told me he can have it out the door for 15k.

Yeah my other venture needs about 100k.

Something's not right here. I don't know what kind of ideas you keep getting, but you talk about startup money like it's just something everyone needs. To put it in perspective I have started 5 businesses and have spent under $500 in starting each one. It seems like you get an idea and then just think that start up money is the key when it is actually a very small part of whether or not you are successful.

My current start up is about to go live (in 2 days) and I've spent under $500 ($183 to be exact) and I'm shooting for $200k/yr within 2 years. I don't even know what I would do with $6k to spend on a start up, let alone $15k or $100k.

Maybe you should step back and think of how to accomplish your ideas without large amounts of money.

 

[LightHouse]

15k.... this is the biggest action fake ever.

If you actually needed that, which I wouldn't really on some quote from a buddy, you could generate it a million ways to 1. We aren't talking about 500k here, but 15k.

It doesn't sound like you really want to be in business to be honest. If I saw an opportunity like you describe, I wouldn't be on a forum waiting for answers, I'd be out getting them, or working on making that money any way possible.

 

[Unknown]

This seems like the high of finding a new idea. This is usually followed by the bleeding of money. The next phase usually involves imagining all of the money you'll be raking in. The next phase is when you realize that maybe the idea wasn't so great, but then you talk yourself into believing you just need to get the message out. Then you borrow some more money to advertise, because that will fix it for sure. This is followed up by fretting, because now you owe everyone around you money and you've made $27 so far. The last phase involves taking on a second job to pay back the debt you took on....

Ok so maybe a bit dramatic, but don't just jump into an idea that requires $15,000 when you just said that you're short on funds from your last project. Weren't you extremely excited about your last project? Wasn't it the big project that was going to make you a millionaire? Go back and take an honest look at your previous projects, and I bet you'll find that you need to move slower and stop worrying about the opportunities passing you by.

This isn't meant to be a judgement. I mean I bought a freaking trademark for a name on a product I hadn't even properly validated. $300 down the drain as far as I'm concerned, but you have to learn from those mistakes and move forward. I'd just rather not see you learn from a $15k mistake.

 

[biophase]

Hey Bio, thanks for your contribution always on the forums.

Do you mind breaking down how you started the business with only $183? Meaning, how are you going to do the marketing and get the word out there? And are you a one man band on this business, so not paying anyone?

Thanks

Sure, I'm going to go the same route as the soap biz. If you are an INSIDERS you can read my thread in there.

But basically:
Got an idea: $0
Researched competition: $0
Hired a guy to do design: $65
Called manufacturers and got samples made: $58 (some sent me samples for free)
Made an Amazon Pro account: $40 (listed product on Amazon, not for sale yet though)
Bought a domain: $10
Logo design: $10

What I have not done yet:
Haven't decided on how many to make intially
First production run of 50 units: $850
First production run of 100 units: $1400
Create FB page, market on FB (without ads at the start)
Create my webpage
Create a separate LLC

Marketing
Ask friends and people to buy
Use FB, Instagram and Pinterest

 

[biophase]

Parker, the only reason I was/am on your case on this thread is because of statements like these, "market is worth hundreds of billions a year, theres very little competition. I also meet a need that hasnt been met. Its easy to scale, and doesnt take much of my time."

People that make statements like these are a huge red flag to me. It shows way too much emotion and not enough research. If you watch Shark Tank, you notice that they hate it when people say stuff like "this is a 3 billion dollar market", because it doesn't really mean much. You can say that clothing is hundreds of billions of dollars a year, but you aren't making all the clothes in the world. Maybe you just make socks, what's its market like? Maybe it's just athletic socks, what's its market worth? That's why saying "hundreds of billions a year" to me just sounds wrong and inexperienced.

I don't know what the market is of much of the stuff I get into. But what I do know is that most markets are large enough that if you capture any percentage in it, you will be making at least six figures. I concentrate on them because the markets are small and easier to compete. I only need 5-6 six figure companies to make me happy.

 

[DennisD]

If you can get the 15K in preorders or advanced funding you don't need to raise anything, you down' owe anybody anything, you don't have to worry about giving up equity or debt

 

[Kyle Tully]

All of it seems good except for one problem. In order for it to work I need tons of people on board, and I need engagement. That is the only thing holding me back at this point. If it doesnt work out at all, I will be in debt. If it somewhat works out I will make some passive money. If it has a viral effect though, I wouldnt have to work ever again.

Sounds like you're day dreaming.

What's your plan for this "viral engagement" (there's a red flag if I ever saw one) you need so dearly?

 

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[JDM]

If the opportunity is as you describe, the only thing stopping it happening is you taking action. Capital will not be an issue.

This time six months ago I was in your exact situation, however the capital required to go to market was closer to $500k.

I went in search of a product that I assumed existed and realised it didn't. I did some further research and had found my opportunity. At this stage, I was in debt with no cash flow to fund the idea. I downgraded my car to generate seed capital and moved to a cheaper unit to reduce overheads. With my seed capital ($30k or so) sorted, I engaged an industrial designer to bring my product to life.

Long story short, that $30k has been spent, along with another $10k won in a start up competition. Although the money dried up again, I was now in a position where my product had received international media coverage and I am currently gearing up for a crowdfunding campaign to keep the product development moving.

I am in talks with the two largest companies in my market for my country (one being the largest in the world for this product area) to explore an early stage buyout or licensing agreement and also talking with a few angel investors.

Every opportunity I have had has been a result of me taking action. I did what I had to do because I believed in my product and the opportunity. I did what I had to do to get the idea off the ground, I called the people that could take my idea forward (companies and investors), I flew interstate to meet with people and pitch my idea, I emailed nearly 500 journalists to get internaitonal coverage...all while working as a lawyer by day.

Moral of the story - If your idea is truly as you believe and you want to make it happen, take action and the money will come.

 

[Yury]

hundreds of billions a year, and theres very little competition

Ok so there's billions hundreds of billions on the table yet hardly any competition... wow.
And the entry ticket costs 15k and the entry barriers are rather low so you can just jump into it?

Man I really hope you'll succeed with it and all, just it kind of sounds a bit too good to be true...

Of course it can be that easy (maybe you've noticed the unmet need that appeared due to technological changes etc, why not), but before you jump into the debt etc please please make sure that you're not missing some "fineprint" like that one https://www.thefastlaneforum.com/community/threads/how-i-lost-550-to-google.53043/ as I figure that if you weren't happy with losing $550, losing $15k would be even less pleasant.

Having said that, of course I don't say "hey don't to this" as I don't know any details and anyway it's up to you to assess and execute, just please be careful. Maybe it would be a good idea to try and figure out if you could validate your plan first (with mock-ups or whatever, depends on the industry). as seen in some good threads on this very forum.

What would you do in this situation?

Well with a validated idea of providing solution for an unmet need at a huge market (and if you can provide this solution) you shouldn't have much trouble raising these 15k from the 3F (family, friends, fools) or an angel. I figure a half-page brief would be enough to get you overbooked, on your terms.

 

[DennisD]

The only downfall I see is that everybody's personal experiences will lead them to different outcomes and different solutions.

If I was trying to be the "funniest man in the world" and I asked a youtuber how to make it happen, they'd tell me to make funny videos. If I asked a stand-up comedian they'd tell me to hop on stage, and a humorist would tell me the most efficient way is to syndicate columns to newspapers.

Similar with business. @biophase will give advice based on his experiences filling product based needs on the cheap, @D. Maxwell will tell you the best way is to build a SaaS by outsourcing funding to your intended customers, and I'll tell you the best way is to gain popularity through Content Creation and videos and then jump onto crowdfunding.

Your particular expertise, experience, and knowlege determine what works best for you

 

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[ZCP]

Im not looking for the answers to just be given to me because im lazy. Im seeking answers because there are so many of them. This isnt my first rodeo and i dont need my hand held. I have contributed to this forum, and I have held peoples hands. I just dont understand why nobody gets on anybody elses case when they ask questions, but when I ask an innocent question I get chastised? And yes i know that a loan at 6% is better than 22%

We get on everyone's case. Especially those that are in your spot and trying to let the excuses slow them down. That is one of the great things about this community. We speak from experience and are trying to help push you through the tough spots.

This isn't some sidewalker community where they tell you all the reasons it can't work and their uncle bob lost all he had and so and so couldn't do it. If you notice, most comments are positive on the idea and not accepting of you hiding behind excuses.

Now go get something done and report back. Start a $0 to $15k progress thread. Or start a 'how to get an angel to invest' thread. We'll all follow and try to help as best we can.

 

[GuestUser113]

https://www.thefastlaneforum.com/co...arch-22nd-zen*******.45392/page-5#post-272579

 

[biophase]

Bloody hell Biophase, that's insanely impressive if you can pull it off, I need your kinda' experience.

knowledge is power (and potentially money!)

I know I suck at marketing and social networking so I never start things like apps or software. I just stick with what I know and start simple businesses.

I've come across some needs in the software space but I steer clear of them. I think I'd bleed money if I hired a developer to make me software.

 

[Spacecake]

The market is worth hundreds of billions a year, and theres very little competition. I also meet a need that hasnt been met. Its easy to scale, and doesnt take much of my time.

If I'm sure the market is worth that much (BILLIONS), and I have confidence in what I'm offering, a 24% APR won't hurt tbh.

 

[biophase]

Most businesses need capital to start, unless your in services or information.

Yes they do. But they don't need alot of money. And they usually don't need as much as you think. I started my first ecommerce store with less than $500, and the bulk of that money was setting up the LLC, the SSL certificate and getting a credit card processor.

 

[LightHouse]

I am working on getting the money. Read the op. Im on this forum because most people on here have experience. For instance people have told me I can get a loan for 6% APR. If I went out and asked my friends they would tell me to get a personal loan at 22%. I value personal experience answers better than something I find on about.com and with that being said thank you everyone.

Also this isnt an action fake, this is seeking wise council. I can have a thread going while I do a myriad of other things or go to work. Im not sitting around hitting refresh every five seconds. Plus if I jumped straight in and dumped the cash and failed I would have been told to do more due diligence or split testing etc. There is no pleasing everyone on here.

I am not trying to be mean but you can tell yourself whatever you want to believe. You should know getting a loan at 6% is better then 22%... that is basic math. Same with saying answers here are better then about.com, you are waiting or searching for someone else to give you easy and obvious answers. That is exactly what an action fake is.

Everyone's first reaction is usually getting defensive, I want you to know I am not trying to offend you, only make you realize something. As entrepreneurs we have to find the procrastination and laziness itch everyday.

You need 15k, go make 15k. There is a world of commerce out there waiting to be pursued, bought, sold, and traded. It is right outside your doorstep. If you don't get it, the next guy will. Then you can read his story in the magazines in a few years and get angry about that too.

 

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[parkerscott]

Come on, don't play victim, i tear everyone up, and in turn i get torn up all the time. The thing is, it sounds mean here on the forum, but if we were chatting over a beer it would sink in a bit. You just have to go get it.

How much have you made today that puts you closer to that 15k?

only 85 today. I bought some bicycle parts on craigslist that im flipping too.

 

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[Hope]

(Owing) debt is the root of all depression...

At least for me it is, I never owe debt to anyone, If I were you I'd just focus on bootstrapping, hustling to get the money needed, or maybe investors.

I'm in the same situation you are, trying to get some decent funding, although I need quite a bit more then 15k.

Good luck!

 

[tafy]

borrow it from whover you can, at no more than 5-6%

 

[biophase]

Its not that new idea high like I had last time. My previous idea was exclusive to the fitness industry, and there were already tons of competitors. The mold costs were insanely high, and I think the product I had is more novelty now that I look at it.

Now im able to look at it from a different perspective and examine it. There is not a niche this time around, and people dont have any other options to choose from. The startup costs are very low, and the scalability is huge and its a worldwide market and i dont have to worry about wholesalling like the last project.

All of it seems good except for one problem. In order for it to work I need tons of people on board, and I need engagement. That is the only thing holding me back at this point. If it doesnt work out at all, I will be in debt. If it somewhat works out I will make some passive money. If it has a viral effect though, I wouldnt have to work ever again.

Also yury that 550$ stung because it was something I hadnt even considered. In any business I go in knowing I may never see that money again.

So it sounds like this idea is more about your ability to market it. That is what you need to weigh your $15k against.

 

[youngtrep]

Exactly!! The price to acquire each person would have to be very low as well, and the conversions would have to be pretty high. Its one of those things that would need a viral effect to be really successful. I think I will do some more validation just to get an even better idea.

Be very careful with this. It is easy now to say "well if I can only get a few thousand users this will really take off". Getting 50 users is difficult let alone 100x that. I have had that line of thinking and allowed myself to just assume things would work out because I wanted to dive in so quickly. Of course in the end, those acquisition costs weren't cheap and the conversions weren't high. I say plan for the worst case scenario, not the absolute best.

 

[vinylawesome]

I am not sure what your idea is but could you possibly pre-sell the app like DennisDuty suggested?


For instance kickstarter seems to take a lot of pre-orders for consumer oriented apps.

The AirBNB squatter, Maksym Pashanin, Successfully pre-funded an app on Kickstarter:

https://www.kickstarter.com/projects/829559023/confederate-express

 

[randomnumber314]

I don't even know what I would do with $6k to spend on a start up, let alone $15k or $100k.

I get your point, but for most businesses there are some initial capital expenses.

 

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[tafy]

Most businesses need capital to start, unless your in services or information.

 

[parkerscott]

15k.... this is the biggest action fake ever.

If you actually needed that, which I wouldn't really on some quote from a buddy, you could generate it a million ways to 1. We aren't talking about 500k here, but 15k.

It doesn't sound like you really want to be in business to be honest. If I saw an opportunity like you describe, I wouldn't be on a forum waiting for answers, I'd be out getting them, or working on making that money any way possible.

I am working on getting the money. Read the op. Im on this forum because most people on here have experience. For instance people have told me I can get a loan for 6% APR. If I went out and asked my friends they would tell me to get a personal loan at 22%. I value personal experience answers better than something I find on about.com and with that being said thank you everyone.

Also this isnt an action fake, this is seeking wise council. I can have a thread going while I do a myriad of other things or go to work. Im not sitting around hitting refresh every five seconds. Plus if I jumped straight in and dumped the cash and failed I would have been told to do more due diligence or split testing etc. There is no pleasing everyone on here.

 

[parkerscott]

If the opportunity is as you describe, the only thing stopping it happening is you taking action. Capital will not be an issue.

This time six months ago I was in your exact situation, however the capital required to go to market was closer to $500k.

I went in search of a product that I assumed existed and realised it didn't. I did some further research and had found my opportunity. At this stage, I was in debt with no cash flow to fund the idea. I downgraded my car to generate seed capital and moved to a cheaper unit to reduce overheads. With my seed capital ($30k or so) sorted, I engaged an industrial designer to bring my product to life.

Long story short, that $30k has been spent, along with another $10k won in a start up competition. Although the money dried up again, I was now in a position where my product had received international media coverage and I am currently gearing up for a crowdfunding campaign to keep the product development moving.

I am in talks with the two largest companies in my market for my country (one being the largest in the world for this product area) to explore an early stage buyout or licensing agreement and also talking with a few angel investors.

Every opportunity I have had has been a result of me taking action. I did what I had to do because I believed in my product and the opportunity. I did what I had to do to get the idea off the ground, I called the people that could take my idea forward (companies and investors), I flew interstate to meet with people and pitch my idea, I emailed nearly 500 journalists to get internaitonal coverage...all while working as a lawyer by day.

Moral of the story - If your idea is truly as you believe and you want to make it happen, take action and the money will come.

Ive been in your shoes as well sort of. Yes im a little more skeptical of taking action this time, because the last time hasnt worked out like I had hoped. It still has legs, but its still somewhat of a burden. I had prototypes built, and had companies requesting pricing for 50k units etc but those requests havent come to fruition yet.

This idea has way more potential than the previous idea, and I dont have to serve a certain niche either. I am taking action, but just not at the same speed I did last time. Im playing this a lot more safely to try and mitigate some of the risks. Im running a survey right now to see what questions people have, and if the idea is something that interests them. 15k isnt a whole lot for the potential that this idea may yield. An idea is nothing without execution though, so im trying to find out what angle to kill this from.

 

[Gale4rc]

You realize there are people who only invest in people like you right?

I've always got actual angel investors (not friends or family) pretty easily.... I would never consider taking a loan :/

Research investors local to you in that industry and contact them relentlessly.

 

[BeingChewsie]

So let's just assume you are right about everything. Your buddy who is going to develop your product isn't getting $15,000 upfront. Let's run it out 4 months instead of 3 months...that is only $3,750 a month. That isn't a lot to generate. You could flip stuff of CL or ebay and make that. You could do gigs on off of CL and make that. I said 4 months because you should always plan for delays in business. I'd plan for cost over-runs too. I'd be highly curious what you are building for $15k. We had a learning management system, testing software, data analytics, e-courses and e-books developed in 2009 and our initial investment was less than $15,000. I'd shop that around myself.

 

[JDM]

I cant get them to pick up the phone lol, thats my excuse and its a terrible one. I guess I should start stalking them, or send them a huge teddy bear to get their attention.

I had the same issue and found adding them on LinkedIn was a good start and make the approach somewhat less cold. I had success with messages on LinkedIn or calling after I had added them. Another approach is to add them to LinkedIn and then do targeted ads on Facebook so that they are aware of your product/idea before you call. This will obviously not work in all situations though.