The Truth About Starting a Business: Money Might Not Be Your Friend

The Paradox of Starting a Business with or without Money

It's quite a paradox that starting a business with no money is more likely to succeed, while starting with a large sum often leads to heavy debt.

I've noticed a common phenomenon. Once ordinary people have some spare cash, they can't help but want to do something with it. For instance, if they have a few hundred thousand dollars, they might think about buying another house or upgrading to a new one, getting a new car, or suddenly coming up with ideas like investing in financial products, trading stocks, starting their own business, or joining a franchise.

In short, it's hard to keep that money unless there's a clear purpose. Maybe they'll save it if they know they'll need it for something specific in the future. But without a clear plan, all sorts of ideas will pop up, and chances are that money will end up going down the drain.

I've seen this happen more than once. Some people have 300,000 or 450,000 dollars. It's not a huge amount, but it's also not small. This money is actually suitable for a small investment, like starting a small business or joining a franchise.

I've found that most successful entrepreneurs either started from scratch or were already wealthy enough to have room for mistakes and keep trying. There's a saying that goes, "If I had money, why would I start a business?"

However, if someone who is already rich decides to start a business, it's probably because they have a strong sense of mission and want to achieve an ideal. Otherwise, most people wouldn't do it, considering how tough and tiring starting a business can be. If you don't like it, it's hard to find joy in it.

The advantage of starting from scratch is that since you have nothing to begin with, as long as you don't take out loans or borrow money and end up in debt, you're already making a profit.

Starting a Business with No Money

When you start a business with no money, all you can think about is income, cash flow, and profit. You'll wonder how to make money tomorrow, how to achieve your sales target, where to find customers, and how to sell your products.

You'll always be focused on cash flow and profit because without them, you won't be able to survive, not even until tomorrow, let alone next month.

In this situation, you'll do everything you can to make your business model work, and work well, so that it can keep generating profit. Once you start making money, you can then make investments, expand your business, and hire more people.

Starting a Business with Money

If you start with a large sum of money, say at least a few hundred thousand or even over a million, you'll think that the initial investment is necessary. For example, if you're opening a business, you'll rent an office, hire some employees, and set up everything properly to make your company look professional.

At this time, you might not make any money in the first few months, or even in the first half of the year. You'll have to dip into that large sum to cover the expenses. But you'll tell yourself that this is a necessary investment in the early stage and that you'll make the money back in the second half of the year or next year and start making a net profit after that.

You'll give yourself a psychological hint, setting a payback period. You'll calculate how much you've invested and how long it will take to get your money back, which could be a few months, half a year, or even a year.

The problem is that the sunk cost is too high. Once you've spent half of your budget, even if you realize that the business might not work, it's hard to back out because you've already invested so much. You'll want to hold on and see if you can turn the revenue positive.

As a result, you might end up putting all your money in. You'll see that you're starting to make money and the revenue is increasing, but it's still not fully in the black. You'll feel like you're just a little bit away and decide to keep going.

What if you run out of money? You'll borrow or take out a loan and keep investing. Some people are lucky and manage to make it through. Once they start making a profit, they'll gradually pay off the loan and get back the money they invested. Maybe they'll start making real money after two years.

But many people get stuck when it comes to borrowing more money. They can't get enough funds, and the business isn't improving significantly, or they're just barely making a profit. With market fluctuations, they might not be able to hold on and end up closing the business. The reasons could be related to money, their mindset, or family issues.

Conclusion

So, this is the difference between starting a business with no money and with money. Of course, this is just my personal speculation and doesn't represent all situations.

For those who haven't succeeded in starting a business, I think they should focus on profit and cash flow from the beginning and avoid making large investments.

If someone has already succeeded in business and is wealthy, and they just want to expand into a new business or start a new company, they have the money, experience, and judgment to afford losses, and their chances of success are indeed high.

But for those who have never started a business or run a company, it's easy to make mistakes and lose all their money. After one or two years, or two or three years of struggling, they might end up broke and have to go back to working for someone else, carrying a huge debt.

Daily Reading & Writing by Xiaolu 05/18/2025 [Day 622]