Creating a Business with Other People's Money

Peter B. GiblettStarred Page By Peter B. Giblett, 18th Sep 2014 | Follow this author | RSS Feed | Short URL http://nut.bz/1im0z87i/
Posted in Wikinut>Business>Starting A Business

When you go to work, especially where you are involved in projects or purchasing then it is true that you spend other peoples money all the time, yet the entrepreneur almost automatically assumes they must spend their own money, yet the heart of financial freedom centres around the ability to have other people fund your projects

Starting something new

Having spent many years building something new one thing is clear and that is new ideas pass by regularly. In order to do something new you simply need to reach out and grasp the idea that is right for you and make it work for you. What idea you grasp should be something that you are passionate about whether it is building computer games, curing a disease, or simply renovating houses for profit - whatever it is you must take the idea and make it work for you, whatever the challenges involved.

Entrepreneurial thinking

Entrepreneurial thinking and entrepreneurial spirit can certainly be at the heart of many people whose ideas we listen to, whether they be Warren Buffett, Donald Trump, Richard Branson, Steve Jobs, or Bill Gates.

However dreams don't work unless YOU do! Action is essential, especially when you are starting your business because this is a time when you know the least but also need to build up a list of connections that can help you achieve your goals. This is a time when you do have to be innovative and perhaps work long into the night in order to succeed, sometimes you have to be inventive and cut a deal that those established in the business would never do in order to succeed.

Knowing every Answer?

You may not know every answer, but you should know who to call or the website to use in order to find the right answer. So building a list of valuable resources is a vital first step in creating any new business, probably even before you start trading. Consider this:

    "Information is liberating! Education is the premise of progress, in every society, in every family."

    Kofi Annan

Of course you will not know everything instantly in order to succeed. To a large part your success will depend on your personal willingness to learn something new, and follow the guidance of people that have already trodden the path you wish to go down. Indeed you should find a mentor who is able to help you make the next step.

Finding a mentor can be a tough proposition because they should be a person with knowledge, yet they should not profit from your actions, they should be able to tell you whether you are about to make a good or bad deal. You should listen to them and particularly understand that when they say "no" there is a reason for it and it may be that there is some information that you are missing and you may actually be about to make a big mistake.

When you are starting out you certainly will not know everything, indeed even seasoned and successful business people will admit to needing to learn something new about their business every day.

Using Other Peoples Money

One common mistake that "would-be" entrepreneurs make is that they must invest their own money into whatever business idea they have, yet the truth is this is not always the case. There are many types of investor that are prepared to fund your project and gaining access to funds is largely about presenting the right thing to the right person at the right time. There are therefore three crucial elements:

  1. The idea/invention
  2. The funder, and
  3. Timing

One time I presented a business plan to a funder to be told:

    "This is one of the best business plans we have ever had presented to us and we like many of the ideas you present, however this financial establishment is no longer able to fund projects of this nature."

This may have been a disappointment but it did assist in knowing that they considered the idea to be a solid one and they did suggest a few sources that we could approach, and this way one avenue can often lead to another, yet it is essential you follow specific leads and listen to the advice offered by others in order to succeed. Timing is everything because there are times when people are prepared to offer millions of dollars to an idea that is founded on quicksand yet at other times they will offer nothing to a well founded but brilliant idea.

Be persistent, pursue your goal, try again and again.

It is Possible!

It is entirely possible to use other peoples money in order to succeed with any business idea that you have. As we have seen it is a matter of having a good idea, pursuing the correct source of funds and timing it perfectly.

Picture Credits:

  1. The Entrepreneur word cloud is by Peter Giblett created using Wordle
  2. Choices royalty free image from Wikimedia Commons
  3. The Tallest Tower was a royalty-free image from dreamstime.

The following are some of the more recent articles that Peter Giblett has published:

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Tags

Big Mistake, Entrepreneurial Spirit, Entrepreneurial Thinking, Ethical, Mentor, Other Peoples Money, The Website To Use, Whatever The Challenge, Who To Call

Meet the author

author avatar Peter B. Giblett
Author of "Is your Business Ready? For the Social Media Revolution"

Social media consultant, with C-Level background.

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Comments

author avatar GV Rama Rao
18th Sep 2014 (#)

Finding a venture capitalist is similar to finding a publisher for one's book.

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author avatar Peter B. Giblett
19th Sep 2014 (#)

Actually they should not be that hard to find through your LinkedIn network, although getting money from them is all about listening precisely to their needs.

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author avatar spirited
19th Sep 2014 (#)

Sometimes as your third point says the timing is so important. Sometimes an idea passes its use-by date and if we push it against the direction business is moving in we can come a cropper.

I had a second-hand bookshop once . Unfortunately, when I tried to do this idea recently again I only lost money the second time around. At the moment, these places have been largely superseded by the internet.

Sage advice Peter, thanks.

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author avatar Peter B. Giblett
19th Sep 2014 (#)

Books in my opinion are always worthwhile, but the Internet is a real challenge here.

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author avatar Phyl Campbell
19th Sep 2014 (#)

Thanks for your timely article. I was contacted to ghost write and provide social media marketing for one business. But the CEO is still thinking about it -- so I am, too. I thought I'd need a significant amount of capital to start up. But as my husband has been telling people of my idea to freelance, we have a growing potential client list. Now, I'm balancing between entering cautiously and refusing to take the leap of faith. I'm putting together my business plan and then to see what kind of capital I need for the legal side. I know I don't need capital for equipment or rent. Still, there's lots to consider, of which you outlined many things.

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author avatar Peter B. Giblett
19th Sep 2014 (#)

I wish you luck with this funding.

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author avatar snerfu
19th Sep 2014 (#)

Business needs investments and other people's money. Truly, one can climb mountains but only if they have climbing equipment and protective gear. It is entrepreneurial spirit that gets us there always.

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