‘Work on developing a culture of resourcefulness’ – Richard Branson, founder of Virgin
A practice of frugality is endorsed by many successful entrepreneurs the world over. Ben Collins, founder of finder.com.au, recommends that frugality ensures you can worry less about finances thereby having greater room for taking risks. A baseline benefit shared by many who’ve reaped the fruits of frugality, is that pinching the pennies gives a source of freedom.
Two common problems for any start-up are tight resources and uncertain conditions. Entrepreneurs across multiple market places, socio-economic groups and cultures agree that resourcefulness is an effective recipe that helps to dissolve these problems and steer away the chance of start-up failure.
About 90 per cent of start-ups fail. The second most common reason why ‘is running out of cash (29 per cent)’ according to research by CB Insights on 101 start-up failure post-mortems. This follows the biggest problem of there simply being no demand for what they do. Other reasons involve money and resource management issues, including pricing and cost (18 per cent), poor marketing (14 per cent) and even losing focus (13 per cent).
Think resources first, cash second
A nugget of advice given by Michael Glauser, author of Main Street Entrepreneur, is to focus on resources over money. If you can be a master of efficiency over the resources you have, you can create new ventures from practically nothing. We may have heard the glorified rags-to-riches stories, such as that of Steve Jobs, who started Apple in nothing more than a garage space, or of Guy Laliberte, a homeless street performer in Quebec who ended up producing the world-class circus theatre act, Cirque de Soleil. Today’s technology giants, such as Facebook, Google, Microsoft and Cisco, started out with very basic means too.
These may seem like extreme, lucky examples, but evidence – from stories of resourcefulness recounted by countless entrepreneurs – builds to suggest that these examples are phenomenal scale versions of reality. Blake Mycoskie, founder of TOMS shoes, says that most successful companies were ‘started out of a metaphorical garage’.
Make what you have count
The reality of start-up life: you’re a few – or maybe even a one – person band, and resources are tight with little certainty your business can keep running week on week. You refer to your dog as ‘Chief Operations Officer’ to potential business customers, and it’s become habit to take the freegan challenge daily of how many free meals you can feed yourself and your team. Even Anita Roddick, British founder of the Body Shop, took care of those pennies right from the outset, by encouraging customers to bring back their empty product bottles for refilling, which reduced her costs and waste.
Power is in people
Hiring top talent is a particular challenge for a start-up strapped for cash. However, the Young Entrepreneur Council advise that this needn’t be the case. Pejman Ghadimi, CEO of Secret Entourage, recommends leveraging the hidden talent pool: people who have fantastic aptitude and creativity but simply have never been given the chance. To prove themselves they tend to work for less, and harder. In return, you help them grow under your leadership, and give them access to learn through exposure to the vibrant opportunities within the entrepreneur world.
Being resourceful with talent can also go hand in hand with stripping back the ‘perks’ and ‘office gimmicks’ – they come at risky expense to your company and aren’t absolutely necessary to attract top talent. What’s more, removing these exclusivities can help remove a pecking order and cultivate a united team feeling. A great company culture built right from the beginning can help ensure it doesn’t get lost as the company grows. In the long-term, this can turn into a far greater value than simply ‘scraping the barrel’ in your earliest days.
The age of free
When it comes to knowledge, while part of this needs to come from people, new knowledge gaps can sometimes be plugged through self-education. There’s a goldmine of free resources through the internet and libraries – whether e-Books, knowledge forums or YouTube tutorials – that can be exploited. Social media sites are also free marketing resources. Having a presence on these platforms can be a great equaliser between the poorest of start-ups and the richest of large corporates. In fact, start-ups often have a better social media presence than Fortune 500 companies.
Going offline, there is of course a mine of knowledge in each and every person we’re surrounded by, and at least one of those people may know something of great use to you. ‘Ask for help’ is an age-old piece of advice, but do we put it into practice enough? Richa Bhalla, founder and CEO of Pedals, a tech-driven cycle deliveries company, is a champion of practising the art of looking for a helping hand, wherever she goes.
The first start-up
The proof of this pudding really shows when she was beginning her first start-up enterprise, Petal and Cycle, in her early twenties. Knowing near to nothing about flowers, she decided to at first learn by observation. Relentlessly waking up at 3am every day for a solid few months, she visited New Covent Garden market in south London – to observe the largest wholesale flower, fruit and vegetable market in the UK. She was eventually spotted as an unusual regular by one of the sellers, who asked what she was up to. What started with briefly explaining what she was trying to do, soon turned into in-depth discussion about her problems, and the flower seller had a wealth of knowledge he was willing to share to help her. Richa and this flower seller struck up a real friendship, and he continues to be a valuable mentor to Richa. There have been many other helpful incidents since then throughout her entrepreneurial career, which have been utterly priceless.
Extending from the typical start-up garage, there’s a huge rise in co-working spaces in cities that serve to facilitate start-ups. London’s ‘Silicon Roundabout’ is one such district. Start-ups are discovering and utilising these spaces, and while they may not be entirely free, the membership fee can often invest in so much more: such as being surrounded by like-minded people with the opportunity to build ideas and share contacts.
Keep it lean
Resourcefulness can be practised in product development too. The Lean Startup by Eric Ries explains an approach proven to help develop your product to better effect for success, with less waste of time and resources. Professor Steve Blank, a key influencer of the Lean Startup Movement, also links ‘Lean’ to financial resources. Talking at Web Summit in November 2017, Blank warned that raising investment can commit you to executing your idea too early – and that money comes with strings attached that may not best serve your interests.
So, as Ghadimi, founder and CEO of Secret Entourage says: ‘through resourcefulness, not resources, we will grow furthest’.
Gauri Kangai is an Accelerator Programme Lead at Geovation.