I live and work in the oldest permanent settlement West of the Rocky Mountains, Astoria, Oregon. The only chain store downtown is JCPenney and it’s housed right alongside independent shops in the kind of facade typical to the downtowns of the West.
My typical day starts with an hour or two of work at Street 14 Coffee, owned by my good friends Jennifer & Micha Cameron-Lattek. After a few hours in my home office, I might move on to the brewery–the 10th fastest growing brewery in the country–where my boyfriend works. Inevitably, my day includes a brisk walk through downtown and alongside the Columbia River. It often ends at Astoria Coffee House & Bistro–whose $3 taco night on Thursdays is not to be missed.
My friends and I often discuss the state of business in Astoria today. It’s booming. It’s diverse. And it’s fun. But that doesn’t mean that every business that opens shop in downtown Astoria will succeed. Many will not. And what almost always predicts the success or failure of a new business is capital.
Businesses that fail in Astoria are undercapitalized.
In a brick & mortar business, undercapitalization is predominantly a money problem. There’s not enough money to invest in initial layout and design so fixtures are cheap-looking or equipment isn’t top notch. There isn’t enough money to fund the owner’s salary let along good help so the shop is often closed or the people who work there are untrained and uninterested in the success of the business. There’s not enough money to properly reach new customers so the website remains unfinished, the Facebook page unloved, and email marketing just a pipe dream.
It takes a lot of capital to start a business, even in a town where life is relatively cheap and business is booming.
Capital has long been the biggest barrier to entry for entrepreneurship. If you didn’t have money, know people with money, or have access to other forms of real capital (land, equipment, oompa loompas), you likely couldn’t start a business no matter how good your ideas.
I also find that undercapitalization is a problem in the world of microbusiness, only, in this world, it’s not money that is the chief problem.
In the You Economy, capital looks different. No longer is it money in the bank or your name on a deed of land; ideas are capital.
Recently, a server at a restaurant I frequent asked me if I had a job or if I just drag my laptop around to different breweries to look busy. Obviously, the answer is the latter.
I explained that what I do is help people who are interested in growing businesses that, instead of filling up office buildings full of staff and equipment, will deliver a regular dividend on their ideas.
To put it another way:
I help people get a bigger return on investment for their ideas.
Because it’s the idea that’s the capital.
And I only work with businesses that are properly capitalized in that department.
So what do I mean when I say that I believe there’s an undercapitalization problem in the world of microbusiness?
I mean that all too often I see businesses following someone else’s model, vying for a piece of an already established idea pie, instead of investing their own ideas.
That is not to say that you need a big idea to have a properly capitalized microbusiness. It doesn’t mean that you need to have the secret sauce for disrupting the existing market and turning an industry on its head.
No, when I see this form of capital paying the highest returns it comes from obsession, a learning mindset, and a willingness to take big risks. It manifests through social media, guerrilla networking, and clandestine projects. It springs forth through clever marketing campaigns, on-target email updates, and why-hasn’t-someone-thought-of-that-before products.
Have you ever noticed that the people who are truly succeeding in microbusiness aren’t the people who have followed some pre-ordained system? Set their websites up just so? Or doing things by the book?
The people who are truly succeeding are investing their idea capital.
They’re taking big risks, doing things against the grain. They’re obsessed with exploring new angles and charting new territory.
Take a look at Erin Giles and her End Sex Trafficking project. This is one monstrous idea. Last year she published a book by raising $10,000, this year she’s working directly with organizations who are creating change on this front. And she’s recruited top talent in the idea industry and produced creative products that support her vision.
Your idea doesn’t have to “world changing” in the traditional sense, however.
Last year, I interviewed Stephanie Alford about her first 5-figure month as a yarn-dyer. Over the last few months, Stephanie has messaged me to let me know–multiple times–when she’s cracked 5-figure days. I would attribute this to her unceasing ability to turn very simple ideas, like her mini-skein club, into capital. And once she has an idea, she turns on her creative engine to continue to produce ideas that fuel her initial investment.
Had Stephanie done everything she could to “optimize her Etsy shop” or had Erin ventured down the typical solopreneurial service path, neither would be featured in top publications, bringing more revenue than they had dreamed, or earning the praise of their colleagues and customers.
There is a fine line between learning the how-to of something and defaulting to someone else’s best practices.
In the end, your ideas are the capital that makes your business work. Click to tweet!
Don’t be frustrated when ideas come fast & furious. Use them. Take risks. Experiment. Obsess. Learn what turns you on. Learn what turns your customers on. Venture into new territory. Dare to be disagreeable.
And, by all means, don’t worry about doing things the right way.
Find people who will support your crazy ideas–your obsession, your learning, your risk-taking–and help you turn that capital into a strong investment in your future.