In recent times we have heard of enterprises that have started and scaled without customer revenue. They have short lives fueled with investor money, simply based on valuations. While this may be a good game to play and exit at the right times – enterprise creation that lives on customer funding is the only one that supports the society. It is the one that sustains the enterprise, provides jobs, improves lives and enables development over time. But very few early stage entrepreneurs talk about revenue over valuation.
In most training programs and mentoring meets for early stage enterprises, the demand is more to understand building intellectual property, valuation and venture capital. Think about it. There is very little interest in understanding customers better, making better Go-To-Market plans, and managing operating cash cycles. Traditional small business owners on the other hand ask for the latter!
The whole country is talking about entrepreneurship as the way out of the slow down. Entrepreneurship and small businesses are being touted as important instruments in our economic and social revival. But for all this to happen, we need entrepreneurs who can create businesses / enterprises (even healthy small businesses) with some basic economics. Only with basic economics will they stay alive and be sustainable over long periods of time.
While investor money serves its purpose in certain cases – it is not a panacea to all start-up problems. We need more entrepreneurs to not discard their entrepreneurial dreams because the limited venture capital and angel market did not find the proposal too interesting. We need them to make use of the decreasing distance between the start-up and the customer, and try to seek customer money to start and grow the enterprise. If it can be done on crowd funding sites for artistic projects and niche products prototypes – is it not possible at a larger scale for number of our entrepreneurial minds?
Customer money is a source of capital. In fact it is the most inexpensive form of capital and it is also the most sustainable form of capital (if done right) over time.
Think about it!