It is the classic Catch 22. In order to have a business that makes enough money to attract investors, you first must build a business that makes money.

Welcome to the true work of entrepreneurship. The job of an entrepreneur is to confront obstacles with determination and to keep at it until you have figured out a workable solution.

To begin the business creation process, you need money. Nevertheless, for most emerging entrepreneurs this money will be yours — not someone else’s. In truth, this focus toward self-reliance is only fair because the initial risk should be yours. When you invest your own money, you not only show commitment to your business idea, you also create stronger personal motivation. In the long run, this will reduce your risks.

Given the statistics, there is a fair chance your first business might indeed fail. If you have carefully read and worked through this book, your chance of success is far better than average. However, startup failure is still a possibility. What if all your assumptions up to this point are wrong?

“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” — Warren Buffett

If you are wrong or if things change (and they will), your business may fail. If your business fails, you (or someone) will lose all of your invested capital, which is all of the money spent on building the business thus far. If this happens and you have not been careful enough in planning, you may find yourself back at square one with no business and no money. You will be on the floor and you will have to pick yourself up, dust yourself off, and start all over again. Only this time you will be determined not to make the same mistakes. This experience will undoubtedly be painful, but you will have the consolation of knowing you are not alone. Business failure is a painful lesson; it is also a common experience among successful entrepreneurs. While startup failure is uncomfortable, it is also survivable. Unless …

… unless you financed the building of your business with loans leaving you with substantial debt. If you owe money to a bank or have an agreement with investors when you fail, you will find yourself not on the floor, but in a deep hole instead. In comparison, it is relatively easy to pick yourself up off the floor. But when you are in a hole, you have to crawl out. And depending on how deep that hole is, it can take you a very long time to surface.

If you are an emerging entrepreneur, consider your first business to be a learning experience. Allow for the possibility that you might make a few valuable mistakes.

You can manage your risk by preparing yourself with skills and knowledge.  What skills?

What knowledge?  Read the book

Photo by Marco Bianchetti on Unsplash