Beg, borrow and sell: Tips for start-up success

By Sarah Michael MAX out your credit card, hit up your parents, and do whatever it takes to start up your own business, guru says.

young entrepreneurs

MAX out your credit card, hit up your parents, and do whatever else you can to get funding to start your own business.

That was the advice from three multi-millionaire entrepreneurs, speaking at an event in Sydney last night.

Jeremy Levitt, founder of ServiceSeeking.com.au, exhausted every avenue he could think of to raise money to start his website, which allows people to compare quotes for different services.

Jeremy Levitt

“I did credit card, mum, then I did ex-boss, then I did venture capitalists, then I did high-net-worth investors, so I’ve gone everywhere,” he said.

Mr Levitt’s family and friends thought he was crazy to leave his job as a lawyer, but they were also the ones he had to convince to give him money.

“How do you know if an idea is good?” he asked. “Well can you convince somebody you know to hand over cash for it?

“If the answer’s ‘yes’, go to those same people and go – OK, now I’ve built the thing, give me money. Because if you can convince those people to pay for it then you’ve kind of proved to yourself that this idea has a market.”

Dan Joyce, founder of the DVD vending machine business RedRoomDVD, said it’s also important to have a good business plan to show potential investors.

He advises aspiring business owners to test the market to see if there’s a demand for their product, but says that sometimes you just have to take the plunge.

Dan Joyce

“You just don’t know if it’s going to be successful, so be as sophisticated and smart as you can to assess the business, and then just give it a crack, because you never really know,” he said.

Mr Levitt warns pitching to investors isn’t an easy sell - especially in the start-up phase - and budding entrepreneurs have to be prepared for plenty of rejection.

“Be prepared to be told ‘no’ heaps of times, like so many times you can barely face yourself in the morning,” he said.

“When you get rejected it helps, it really does help because people will go ‘this part of your business sucks’, and you’ll go ‘Oh OK, why does it suck?’”

Knowing when it’s the right time to sell a business is just as important as raising the funds in the start up phase, said the panelists.

“The best time to leave a party is when there’s beer in the keg and girls wanna dance with you,” Mr Levitt said.

Many people only think about selling their business when it’s struggling, but that’s always the hardest time to sell, he said.

“People can feel that, they can sense that energy, and they know if they’re getting a fire sale,” said Emma Isaacs, owner of networking company Business Chicks, who has sold three businesses in the last five years.

Emma Isaacs

Ms Isaacs says it’s important to have an exit strategy from the moment the business starts.

Business owners should think of bigger companies that could potentially buy the business, and create a strategy that functions in a similar way to theirs, she said.

Ms Isaacs also advises owners looking to sell their business to make themselves redundant as quickly as possible.

“No one wants to buy a business if you are the major person that makes things happen. So making yourself redundant, making sure you have a really good management team around you who can hopefully go on if that’s the way it works out.”

The Essential Young Entrepreneur Event: Passion - Perspective - Possibilities was held as a part of the NSW Government's Small Business September.