Entrepreneurship, The Art Of Starting From Scratch.

Someone once told me that the probability of an entrepreneur getting venture capital is like hitting a lightning in a swimming pool on a sunny day.

This analogy is still too optimistic.

People may use a variety of excuses to refuse to invest in your business: you are not a convincing team, no convincing technology, not in a convincing market, or your company simply does not have the potential of venture capital - that is, it is not possible to be listed or bought by a huge sum of money, or your organization is disturbed by too many government or environmental factors.

If you can't get any venture capital, should you give up?

Of course not!

I can give you an example to illustrate that for many companies, too much money is worse than too little money - which does not mean that I do not want to run a business like Super Bowl one day.

But until that day is a reality, bootstrapping has to be built to succeed.

The word comes from the German story "the adventures of a boast". The hero of the story pulls himself out of the sea with his heels.

Here are some of the art from scratch: focus on cash flow rather than Focus on cash flow (not profitability).

Theoretically speaking, profit is the key to survival.

The problem is that theory can not be used to pay bills.

In reality, you pay in cash, so please focus on cash flow.

If you want to start from scratch, your business should have these characteristics: less capital required, shorter sales cycle and payment period, and recurring revenue.

This means that you have to give up the list of 12 months to complete orders, deliveries and receivables.

Cash is everything to a self-made person.

Forecast from the bottom up.

Many entrepreneurs make a top-down prediction: "there are 150 million cars in the United States.

Even in the first year, only 1% of the cars installed our satellite radio system, that is the 1 million 500 thousand system.

The bottom up prediction is this: "in the first year, we could create 10 installation points.

Every installation point installs 10 systems per day on average. The sales volume in the first year will be 10 installation points, 10 sets / days / installation points, 240 days = 24000 sets.

24000 is obviously far from the 1 million 500 thousand conservative estimate claimed in the top down.

Which one do you think is more likely to be realized?

First, shipment, then test (Ship, then test).

I have heard the critique: "how can you recommend sending goods that are not perfect?"

Wait, wait.

Perfect is the enemy of "good enough".

When your product or service is good enough, submit them to customers as soon as possible so as to get cash inflow.

Moreover, spending more time does not guarantee the perfection of products, but only produces more unnecessary functions.

After shipment, you can also see what problems the customer really needs to solve.

Of course, this requires a compromise between your reputation and cash flow: you certainly can't send a bunch of rubbish to your customers, but you can't wait for your product to be perfect.

Note: those companies related to life sciences should ignore this proposal.

Forget the so-called "convincing" team (Forget the "proven" team).

The convincing team demands are too high, especially for most people to define it as a group of people who work for super big companies in the past ten years.

These people are accustomed to a certain way of life, but they are by no means a self-made way of life.

Those who are young, cheap and eager to work are those who are quick but not necessarily full of experience (people with fast chips, but not necessarily a fully functional instruction instruction).

When you achieve a substantial cash flow, hire those senior managers.

Before that, please use those people you can afford and develop them into excellent employees.

Start as a service business.

If your idea is to eventually set up a software company, let people spend money on your software.

This is, of course, a very clear business and a sound business model.

However, before completing your software, you can also provide consulting services based on your mid term products.

There are two advantages to doing this: you can instantly earn income and let real customers test your product.

Once your software has withstood all kinds of tests and tests, you can turn the company into a product type.

Focus on function focuses on function rather than form (not form).

I like good form.

MacBooks; Audis; Graf skates; Bauer sticks; Breitling watches.

You can also quote a lot.

But when they start shopping, they focus on function rather than form.

The functions corresponding to those forms are: computing; moving from point A to point B; skating; skiing; and understanding time.

These functions do not require expensive forms.

A chair is used to seat your ass on it; it does not need a museum that looks modern.

You have to design noble things, but you need to buy cheap things.

Pick your battles.

The self-made people fight selectively.

They will not fight on all fronts, because they can not afford it.

If you want to open a new church, do you really need a $100 thousand multimedia audio-visual system?

Or the gospel from a podium?

If you want to build an advertising revenue website (a content wet site based on the advertising model), do you need to write your own ad release software (customer ad-serving ad-serving)?

I don't think so.

They employ as few employees as possible (Understaff).

Many entrepreneurs reserve employees for the best possible situation.

Conservative estimate (top down), the first year of satellite radio system sales will be 1 million 500 thousand sets.

We'd better set up a 24 hour customer support center. "

What was the result?

You can't sell 1 million 500 thousand systems at all, but you did hire 200 employees, train them, and place them in a 50 thousand square foot electronic market center.

The self-made people employ as few employees as they know that any bad situation can happen.

Understaffed, according to Silicon Valley, belongs to a "a high quality problem".

Believe me, when an entrepreneur starts calling for more money because of surging sales, any venture capitalist will be in a state of joy.

Surprises are called surprises because they seldom happen.

Go direct is adopted.

There should be no third party between the self-made person and his client.

Indeed, stores provide access to consumers, and wholesalers offer ways to distribute goods.

But God invented electronic commerce (eCommerce), so that you can direct your products and achieve higher marginal profits.

God's intelligence lies in that you can understand more customer needs through direct selling.

Stores and wholesalers are used to meet demand, and they do not create demand.

If you can create enough demand, you will always find ways to satisfy it; if you can not create enough demand, then the so-called worldwide distribution channels will be meaningless to you.

Position against the leader is the leader of the industry.

Is there no money to make long winded advertisements?

No problem.

It's better to use the leader of the industry.

Toyota sells Lexus this way: it costs half the price to buy the quality of Mercedes.

Toyota does not need to explain what is the quality of Mercedes.

Imagine how much advertising cost they can save for them!

Others have the same effect as "cheap iPod" and "Bose noise free headphones belonging to the public".

Take the red pill.

Just as Neo decided in The Matrix.

The red pill will let you know the whole truth, while the blue pill will make you feel like a nightmare when you wake up.

The self-made people do not have the luxury to choose the blue pill.

Every day they are busy getting to know the truth -- how deep is the rabbit hole.

A simple formula is: the total number of cash divided by the speed of burning money.

Because this can tell you how long you can live.

As my friend Craig Johnson likes to say, "when the money is spent, you finish playing.

Most start-ups die like this. "

As long as you have money in hand, you are not out.