Many proto-businesses get carried away with the idea that there is a golden stash of cash out there, called funding, which will help them in all their endeavours to get their business up and running. Funding is a panacea to all start up ills they argue: without it, there is no business; without it, they have no livelihood; without it, they are unable to turn their unique, gleaming shiny idea into a world beater which will eventually see them rubbing shoulders with the likes of Richard Branson, Terry Leahy and Mary Portas.
Trouble is, Funding – the F word – is a like a huge magnet, distorting what the proto business is likely to achieve, distorting its owners expectations and exaggerating the sunny vistas ahead.
What many proto businesses don’t get is that their great idea is not necessarily a great business: not because it can’t attract funding, but because at the heart of it, it is highly unlikely to generate income on its own terms.
A great idea needs eventually to be involved in the messy business of trade. Someone somewhere needs to want your great idea and is prepared to trade you something in exchange for it. Usually that trade, for better or worse, involves the transfer of cash from one person to another in an act of buying and selling. This generates income for the business which is used for the business’s future livelihood. It is not the same as funding and should never be confused with funding.
Of course, cash which is not generated through buying and selling i.e. funding is always useful in order to implement various agendas which may have other political, social or cultural aspects to them: but the proto-business needs to be aware of the differences between that kind of income-with-strings (i.e. the F Word) and income generation. One form will drive you into an early grave, saddled with expectations, agendas and targets; the other might just generate profit for you which will enable your business to continue beyond the unsustainable whims and desires of funding policies and the next funding round.