Tip #5:
Start-Up Capital – Ask for twice as much money as you think you will need because you will need it.
In starting a new company, it’s important to follow some good advice I received from a variety of sources. The first maxim is: Don’t put everything you own at risk in the new company. You’re taking enough chances without also risking the security that you and your family might have by, for example, mortgaging your house. Also, be very reluctant about asking friends and relatives for money. If things go wrong, and they usually do, they probably won’t have additional funds to invest in your company, and your relationship with them will suffer greatly.
Most importantly, you should ask the investment banker or venture capitalist for twice as much as you think you will need because you will need it. In fact, many investment people would rather do a bigger deal than a smaller one. Quite simply, investment bankers make more money on a bigger deal than on a small one. This isn’t true of venture capitalists; however, they do like bigger deals because they have so much money to invest. So, don’t be shy about asking for money. If successful, you’ll make millions for them.
Finally, be very tight-fisted with the money that you do obtain because it will disappear much faster than you ever dreamed possible.
John Cullinane’s Entrepreneur Survival Tips of the Day Come from his book, The Entrepreneur’s Survival Guide: 101 Tips for Managing in Good Times & Bad.
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Cullinane Corporation was to become the first successful software products company in the world at a time when computer industry gurus said it couldn't be done, that others had tried, and failed, and so would he. As such, it was the first software products company to have an IPO, the first to be listed on the NY Stock Exchange, and the first to reach a billion dollars in valuation. However, there were scary times. For example, the company's capital got as low as $500 with a payroll of $8,500 due that day when a check of, literally, $8,500 came in the mail that morning. For fifteen years the company had growth in sales and profits of 50% and then it ran into problems because it had stopped doing some of the very things that had made it successful in the first place. That's what these tips are all about. How an entrepreneur can do something that others say can't be done, and how to continue to be successful.
John Cullinane was named three times as the Wall Street Transcript's CEO of the year in the computer software products industry. He was also Founding Chairman of the Massachusetts Technology Leadership Council, Founding President of the Boston Public Library Association, first President of the John F. Kennedy Library Foundation, and a graduate of, and a recipient, of an honorary degree from Northeastern University.
A walk down Wall Street from the perspective of a high tech entrepreneur...
Download John Cullinane's Report, "Widows and Orphans" (pdf, 168Kb)
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