The first category of insights regarding money and the start-up process is that there is a silver lining to having limited start-up funds. While Truths 23 through 27 focus on how to raise start-up funds, more people finance their start-ups with their own money than from bank loans, money from investors, or some other means.^[1] Although this reality leaves many business owners with skimpy start-up funds, there is an upside. Many successful business owners, looking back, feel that having limited funds forced them to focus, become self-reliant, and develop a mindset of frugality—qualities that have served them well as they’ve grown their firms. This sentiment is affirmed by Caterina Fake, cofounder of Flickr, the popular photo-sharing Web site, which was started in 2002. In reflecting back on the role of money in the early days of her firm, Fake said:

There is another silver lining to launching a firm with limited funds. Although in some cases it is necessary to go to a bank or an investor to obtain financing, the problem with obtaining money from these sources is that there are consequences that business owners often don’t fully anticipate. While most bankers and investors have good intentions, they assert considerable control over the businesses they provide money to as a means of protecting their investments. So for people leaving traditional jobs to start their own businesses, obtaining money from a banker or investor is often like trading one boss for another. You might free yourself from working for a boss in a traditional sense but could have an equally influential boss in the form of a banker or investor.

The second category of insights regarding money and the start-up process is that there are techniques that enable business owners to minimize the costs associated with starting a business. There are three predominant techniques.

The first technique is to select an appropriate business to start. If you have limited start-up funds, you should start a business that requires a small up-front investment. Fortunately, many businesses meet this criterion. Home-based businesses, which now represent more than half of the 26.8 million U.S. small businesses, are popular largely because they take very little capital to start. The second technique is to seek out help. For small business owners, there are many sources of assistance that provide counsel and advice on how to minimize start-up expenses. An example is the Service Corps of Retired Executives (SCORE), which is a nonprofit organization that provides free consulting services to small business. There are also organizations that provide coaching and support to specific groups of business owners and tailor their offerings to fit the groups. An example is Ladies Who Launch, an organization that sponsors workshops and provides materials that encourage and inform female business owners.^[3]

The third technique is to cut costs and save money at every opportunity. The most effective way to do this is to develop a mindset of frugality and resourcefulness. While many people aren’t naturally frugal, they foster these qualities to get their businesses off the ground and to minimize the costs of their ongoing operations. Common money-saving techniques include buying used equipment instead of new, obtaining payments in advance from customers, and buying items cheaply but prudently through discount outlets or online auctions such as eBay, rather than at full-price stores.