Building a Business vs. Raising Money

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Ten years ago, and certainly 15, this discussion would have been laughable. It’s the ‘debate’ between building a business and just raising money. Of course, anyone raising money will tell you that they’re actually building a business, and much of the time it’s true, but there’s still an important distinction to be made.

These days, everyone has an idea. And, at least up until relatively recently, there were a plethora of investors with money who wanted to eagerly hand it over to any young person they thought had an idea that was going to be the next Facebook or the next Uber. Now, with several years of this madness behind it, purses are being tightened, and we’re face with the need for some evaluation as to what exactly entrepreneurship actually is.

Over the past few years, anyone developing an app has likely at least had the thought pass that they might seek out investment in order to help them grow quicker and build a company much more rapidly than they could do on their own (or at all). That said, there are many of these companies who were never going to reach a point of revenue generation, nor would reach the user volume critical mass that has kept giants like Snapchat alive right up until they finally started generating a few bucks after nearly four years of being on the market.

That kind of run time without making a cent from your company was unheard of just a couple short decades ago, but now it’s commonplace. The problem isn’t that that market dynamic exists, it’s that it’s all many young entrepreneurs are banking on. They want to make something that so many people use that they can make a well-compensated exit, without having to worry about such business-related inconveniences as actually making money.

Soon, however, people will start to realize that everyone’s grandson isn’t Zuckerberg, and we’ll probably see a regression to something a little bit hybrid between how things were and how they are now… what will happen to your business when that occurs?

Answering this question before you have a real, pressing need to do so might be a smart place to start. Much like politicians on their last term with no prospect of reelection, business owners who find themselves in the position of having built a meaningful business that’s bringing in profit in that you are no longer scrambling for the next round, the next investment.

Some of the best business advice now lies in books from the 80’s and 90’s that will go largely untouched for many young entrepreneurs whose mistake is thinking that just because the execution has change, the fundamentals have too. In reality, the people who work the hardest and can make real numbers work, incoming vs outgoing, are the ones who tend to win in the end. Unless of course you really do have the next Facebook under your hat, in which case you and only you can ignore everything here… but still.

But no mater if your business is profitable right now or not, you need to be focusing on building your email list NOW as that is a real asset for your business that can pay you for many years to come.

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