Is starting a business with a bunch of money in the bank harder (or more risky) than desperation fueled boot-strapping?

[SeePetey]

I’ve rewritten this post several times to try to not sound somehow arrogant or like a moron, but I’ve just accepted that the post title is probably gonna sound like a stupid question. But it’s something I legitimately worry about, and I was curious to see what the good folks on this forum had to say.

Basically, my situation is that I’m getting a few hundred grand in a disability payout in a month or two as a result of getting banged up on the job and getting medically disqualified from continuing the career that I loved and had been doing for 19 years.

It’s not retirement money by any means, but it’s a hell of a potential lever to something that I can actually retire on. In the words of my attorney, this is intended to help me move on to whatever the next phase of my life is.

I’ve read all of MJ’s books over the years, and I’ve always had aspirations of starting my own business, but because I loved my old job and it always kept me really busy, I would tell myself that I would pursue a business when I was done with my regular career.

So now that my old career is officially over, I’m at the crossroads about what to do next.

I’ve got a month or two before I cash the big check, so I’m using the time between now and then to try to figure some of these things out.

And while I’m not making this one of those annoying “What would you do if you had X amount of money” type posts, I’m always interested in ideas beyond my own.

But chiefly for this post, I wanted to hopefully glean some knowledge about a nagging doubt that keeps returning; the oft-mentioned thought that in some respects, entrepreneurs with everything-to-lose tend to have something of an advantage because their desperation and hunger fuels their drive.

Even MJ’s story and books echo this narrative at times.

I don’t want to “start soft” somehow and dick things up because my safety cushion makes me feel immortal, or something along those lines.

Some questions:

For folks who have some bootstrapping experience under the belts, what might you have done differently if you had started with money?

And if you had money to begin with, any thoughts on using it most effectively?

And any just general thoughts on definitely do/don’t do’s?

 

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[BizyDad]

To a person with a weak mindset, every way to start is going to feel dumb and difficult.

To a normal person, obviously starting with money in the bank is better than bootstrapping.

Just because you have money in the bank doesn't mean you have to spend it willy-nilly. You can have money in the bank, and still be a bootstrapper.

 

[amp0193]

Take 90% of it and sock it away where you can't touch it.

Use 10% to start the business and force yourself to make do with it.


This way you won't affect your day to day life and bills, and you'll make more thoughtful decisions about your resources, because they are limited.


Without experience in how to deploy it, a pile of cash can disappear so fast.

 

[biophase]

Take 90% of it and sock it away where you can't touch it.

Use 10% to start the business and force yourself to make do with it.


This way you won't affect your day to day life and bills, and you'll make more thoughtful decisions about your resources, because they are limited.


Without experience in how to deploy it, a pile of cash can disappear so fast.

The dumbest thing I remember someone who had too much money doing in e-commerce was to hire a marketing agency for $30k to define their brand. I’m like WTF?

They end up with a logo, mission statement, market identity and a color scheme.

This is what happens when you are overfunded to begin with.

The problem with too much money is you outsource a bunch of stuff you know nothing about like PPC, SEO, social media, etc… You don’t even try to learn it because you can just spend money on it.

 

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[Yeti]

Take 90% of it and sock it away where you can't touch it.

Use 10% to start the business and force yourself to make do with it.


This way you won't affect your day to day life and bills, and you'll make more thoughtful decisions about your resources, because they are limited.


Without experience in how to deploy it, a pile of cash can disappear so fast.

I second this. This seems like a simple advice. But I learned this the hard way for sure. Just put em away as @amp0193 said, then think with whatever you left with.

 

[amp0193]

This is what happens when you are overfunded to begin with.

The problem with too much money is you outsource a bunch of stuff you know nothing about like PPC, SEO, social media, etc… You don’t even try to learn it because you can just spend money on it.

I started current business with way too much money in the bank.

Paid $17k for a 90 second professional cinema quality video ad (lol). But actually $0 UGC videos shot on a phone do way better.

Also spent way too much on marketing agencies because I didn’t know enough at the time to know they weren’t doing a good job.

I speak from experience here as the guy who blew through a large pile of cash (and won’t do so with the next one).

 

[Johnny boy]

There is something to be said for how you work like your a$$ is on fire when rent is due and the phones aren’t ringing.

But at the same time it was easy to look at people with extra cash and think “it must be nice to be able to make wise decisions instead of ‘I need cash now’ decisions”. So there’s benefits to each.

Park most of that money away or in some appreciating asset then focus on getting customers for something. If you’re going to spend money, make it on a piece of equipment, not on a service.

 

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[Kevin88660]

I’ve rewritten this post several times to try to not sound somehow arrogant or like a moron, but I’ve just accepted that the post title is probably gonna sound like a stupid question. But it’s something I legitimately worry about, and I was curious to see what the good folks on this forum had to say.

Basically, my situation is that I’m getting a few hundred grand in a disability payout in a month or two as a result of getting banged up on the job and getting medically disqualified from continuing the career that I loved and had been doing for 19 years.

It’s not retirement money by any means, but it’s a hell of a potential lever to something that I can actually retire on. In the words of my attorney, this is intended to help me move on to whatever the next phase of my life is.

I’ve read all of MJ’s books over the years, and I’ve always had aspirations of starting my own business, but because I loved my old job and it always kept me really busy, I would tell myself that I would pursue a business when I was done with my regular career.

So now that my old career is officially over, I’m at the crossroads about what to do next.

I’ve got a month or two before I cash the big check, so I’m using the time between now and then to try to figure some of these things out.

And while I’m not making this one of those annoying “What would you do if you had X amount of money” type posts, I’m always interested in ideas beyond my own.

But chiefly for this post, I wanted to hopefully glean some knowledge about a nagging doubt that keeps returning; the oft-mentioned thought that in some respects, entrepreneurs with everything-to-lose tend to have something of an advantage because their desperation and hunger fuels their drive.

Even MJ’s story and books echo this narrative at times.

I don’t want to “start soft” somehow and dick things up because my safety cushion makes me feel immortal, or something along those lines.

Some questions:

For folks who have some bootstrapping experience under the belts, what might you have done differently if you had started with money?

And if you had money to begin with, any thoughts on using it most effectively?

And any just general thoughts on definitely do/don’t do’s?

Well this isn’t a windfall.

It is to compensate for the severe injury that unfortunately happened to you. If you were to lose this money entirely it would put you at a much worse spot than someone with no physical impairment.

Instead of thinking what to do with the hundreds of thousands dollar I would put in a traditional mainstream investment vehicle and converts it into monthly payout. Then treats the monthly payout as what I have and sort of “forget about touching the rest”.

This gives you enough breathing space to explore someone new, but also limit yourself from any potential harm of financial self-destruction.

You are also “forced” to learn things along the way without throwing the money into outsourcing everything.

 

[jakerouse]

I’ve rewritten this post several times to try to not sound somehow arrogant or like a moron, but I’ve just accepted that the post title is probably gonna sound like a stupid question. But it’s something I legitimately worry about, and I was curious to see what the good folks on this forum had to say.

Basically, my situation is that I’m getting a few hundred grand in a disability payout in a month or two as a result of getting banged up on the job and getting medically disqualified from continuing the career that I loved and had been doing for 19 years.

It’s not retirement money by any means, but it’s a hell of a potential lever to something that I can actually retire on. In the words of my attorney, this is intended to help me move on to whatever the next phase of my life is.

I’ve read all of MJ’s books over the years, and I’ve always had aspirations of starting my own business, but because I loved my old job and it always kept me really busy, I would tell myself that I would pursue a business when I was done with my regular career.

So now that my old career is officially over, I’m at the crossroads about what to do next.

I’ve got a month or two before I cash the big check, so I’m using the time between now and then to try to figure some of these things out.

And while I’m not making this one of those annoying “What would you do if you had X amount of money” type posts, I’m always interested in ideas beyond my own.

But chiefly for this post, I wanted to hopefully glean some knowledge about a nagging doubt that keeps returning; the oft-mentioned thought that in some respects, entrepreneurs with everything-to-lose tend to have something of an advantage because their desperation and hunger fuels their drive.

Even MJ’s story and books echo this narrative at times.

I don’t want to “start soft” somehow and dick things up because my safety cushion makes me feel immortal, or something along those lines.

Some questions:

For folks who have some bootstrapping experience under the belts, what might you have done differently if you had started with money?

And if you had money to begin with, any thoughts on using it most effectively?

And any just general thoughts on definitely do/don’t do’s?

Your concerns are valid, and it's commendable that you're giving careful thought to how a substantial disability payout might impact your entrepreneurial journey. Here are some insights and considerations:

Bootstrapping vs. Starting with Money:​

• Bootstrapping Experience: Entrepreneurs who start with limited resources often develop a keen sense of frugality, resourcefulness, and resilience. They learn to prioritize and focus on what truly matters for the business. If you had to bootstrap, you might appreciate the value of each dollar more keenly and be more cautious about expenses.
• Starting with Money: Having a substantial sum can provide a safety net, allowing you to take bolder risks. However, the challenge is to avoid complacency. It's essential to maintain the same level of discipline and strategic thinking that bootstrapped entrepreneurs often cultivate.

Using Money Effectively:​

• Invest in Learning: If there are aspects of entrepreneurship you're unfamiliar with, consider investing in education and mentorship. This might include business courses, workshops, or hiring experts to guide you in areas where you lack experience.
• Build a Strong Foundation: Allocate funds to build a solid foundation for your business. This includes investing in a robust business plan, legal advice, and professional services. It's crucial to set up the right structures from the beginning.
• Mitigate Risks: While having money can provide a cushion, it's wise to diversify your investments and not put all your funds into a single venture. Mitigate risks by thoroughly researching and validating your business idea before committing substantial resources.

General Thoughts on Do's and Don'ts:​

• Don't Rush: Take the time to thoroughly plan and strategize. Rushing into decisions, even with ample funds, can lead to avoidable mistakes. Ensure that your business concept is well-defined and has a market.
• Stay Hungry: While financial security is important, maintaining a hungry and ambitious mindset is crucial. Set challenging goals and strive to achieve them. Complacency can hinder progress.
• Network and Collaborate: Leverage your financial resources to build a strong network. Connect with experienced entrepreneurs, industry professionals, and potential collaborators. Networking can open doors to valuable opportunities.
• Adaptability: Be prepared to adapt your business model based on market feedback. Even with financial resources, the ability to pivot and evolve is essential for long-term success.
• Focus on Value: Whether bootstrapping or starting with money, the key is to create real value for your customers. Focus on solving their problems or fulfilling their needs, and success is more likely to follow.