Why You Shouldn’t Figure Out How Much Money You Need To Raise

Many entrepreneurs try to figure out how much money they need to start their business. But it's the wrong question for you to be asking.

In today's short video, I'll explain what is the right question you should be asking before you start your business.

The transcript for today's video is below:

So I see this question all the time on Quora, how much money do I need to start business x or business y? You know what? It's completely the wrong question that you should be asking because you know what? You can start a company with $0.

You could go to your parents, your friends, your family, raise a little bit of capital, a few thousand dollars, whatever to get yourself off the ground and started depending upon what the company is. But that's not the right question to be asking yourself because that doesn't give you the right answer for what the question should be.

And the question that you should be asking yourself is how much money do I need to get this company to cash flow positive? Why is that such an important question? Well, if you don't know how much money you need to get the cash flow positive, in other words, the amount of money that you need where you don't need any more money to go into the company, then essentially it's almost like a bottomless pit of money.

Think about why is anybody going to give you money unless they know how much more money you need. You need to know that too. As a business owner, if you go in blindly and you don't know how much money it's going to take to run your company,  

Well then how can you make any decisions? So what do you do? Do a plan.

Business plans have. Don't have to be complex. They don't have to be crazy. They don't have to be a 50 page documents that take forever to do.

They can be simple and easy and succinct and they can take a few hours to prepare and it's so worth it because once you have a plan in place, then you know how much money you're going to need the people you're going to hire, how long it's going to take.

And you know what? Even if it's wrong, it's kind of like a North Star for you. It's pointing you in the right direction.

Yes, you will modify your plan, yet she will adjust your plan. Yes, she'll change your plan, but it's the start that you need to get going without a plan.

You have no idea what's going to happen. So take the time, spend the energy, develop a plan. I have a very simple tool that I'm going to put it into notes to today's video so that you can use this tool to develop your own plan. Use it please. It will be worth the time.

This is Brett, at brettjfox.com. Have a great, great day. Thank you.

Resources: When Should You Hire Your First Employee?

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