Navigating Cost and Risk with Your Start-up

Getting a start-up off of the ground can be enormously challenging. When you are responsible for your own business, you are responsible for all aspects of it. Running your own entity is not like working in a pre-established company. When the cost and risk is legally on your shoulders and you may be facing considerable learning curves ahead, for most, this causes stress.

Sometimes it can feel that we are looking into a vortex–so much to learn, so much to do, so much challenge, so much risk.

Inevitably, the challenge all comes down to money. In starting something new, you gotta spend it to get it and start-up capital can be tricky to come by in this economy. Banks are very frugal and want to see a surety. They are not in the business of taking risks when loaning.

Your needs will be enormous. But how do you address those needs when you have little to no money with which to start? And how do you most effectively spend (and this is key) what you do have or acquire, while being as frugal and efficient as possible?

When you are starting out, you can’t know all things and cannot wear all hats, as hard as you may try. It is better to do a few things really well than to do too much and let all pursuits suffer and slip into mediocrity.

Inevitably, you will need to engage with other people and more often than not, you will need to hire some.

Free Collaborators? There are ways of inspiring people to contribute their energy and effort to your cause for free. For this, you will need a motivating and inspiring vision that is larger than your potential for gain. You will also need to find something in the experience, out of which, people can gain something other than monetary value. This gain might be emotional, spiritual, may fill their day with fun and structure or may be building their underdeveloped resume. However, inevitably, when you are not paying someone, their schedule will likely be inconsistent and if they at some point have to address one of their larger needs (like an amazing gig or job), they are gone.

Financial Return
Banks, investors, granting organizations, foundations, etc. They are all, in some way, financially motivated. Banks make money on interest and other fees, government grant organizations promote your success as their own and their spending maintains and grows their next year budget. Sometimes foundations must fulfill their budgetary giving in order to receive the tax benefits associated. Everyone is going to get something out of their investment in you.

Sometimes engaging other businesses, investors, etc. can be a good way to lift your business more quickly. However, assuming to much debt too soon can also lead to unnecessary stress, lack of control and cost.

Bootstrapping. Spend what you have and no more.
Bootstrapping is, for many, the least risky and most organic way to develop and maintain control over your entity. Once you bring other peoples’ money into your process, they are going to have motivations. However, if you only spend money as you have it and allow yourself to grow slowly, you can generate phenomenal returns. Sometimes in doing so, you have a much larger share of the profit potential and can structure your business in such a way so as to maintain your control over your product or entity, which is necessary when creating a new vision–especially when the vision really is new.

One thing is for sure: All paths, and especially bootstrapping, is a profound commitment. Investing so much, be prepared to Burn your Boats.

Strategic Alliances:
Sometimes you can find goods and services through a process of bartering and alliance building. First, identify those organizations and relationships whose collaboration could potentially be of mutual benefit to you and them. You will need to know what other people need and want and be able to address and, hopefully, meet those needs. In this process, in theory, they would then serve you in some capacity which could limit your cost, expand your awareness from PR and Marketing perspectives and sometimes you can create such alliances in such a way that it has little or no effect on your bottom line. All that is required in such cases, sometimes, is your labor, time and energy.

Spending your Own Money
It is hard for many to get over the mental hurdle of spending their own money on a developing business, as there is just so much risk in doing so. You could, truly, lose a lot of money and see very little or no return. However, there are countless business owners out there who have solved the riddle and have built stable to fabulously successful businesses. Drive through any major city and you will see such. Our country is founded by entrepreneurs. From the street vendor to the mom and pop to the giant corporations and everything in between–they all started somewhere.

How to Think about your Investment
In creating a business, you are investing. You are investing in the potential for a financial return or the accomplishment of a cause (which also brings a hopeful return). You are investing in other people and relationships and you are investing in your future.

Think of it like Grad-School
With all of the amazing technology we have available today, film makers are finding great value in, rather than going to school for film, in creating their own films. The skills they learn–simply out of necessity, enable them to acquire new skills.

What does the average graduate school cost today? A masters degree in just about any discipline will fluctuate between free (the very few programs that can afford to do so) and tens of thousands of dollars a year. Building your business and the money you invest in its growth, you can consider it your grad-school. If you do not require the letters behind your name, this perspective could work for you. After all, the skills you will gain are what matters.

Just because you do not know how to do something, does not mean that you should not still commit to doing it. Where there is a will, there is a way and your proverbial gun to your head, your risk, will motivate you to figure it out problems to situations you do not know much about. You have to figure it out yourself or find people who will help you.

You have to Build your Infrastructure
In your initial development process, you need to build an infrastructure from which you can relate to others from and build upon. Think of your business structure like that of a skyscraper. Skyscrapers can’t just sit on the ground. Otherwise, in high winds, they could topple. They dig the foundation of such behemoth buildings deep into the earth–like a stick inserted in mud. Then they build the infrastructure of steel and cement. The whole process of building is done with safety and support in mind. Your safety and support concerns are: 1. Liability (there are predatory people out there) 2. Does the structure support weight? Can I grow from this foundation and build?

Europe: The International Theatre Academy Norway (TITAN)

Both schools are accepting applications now.


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