“Less is more.” It is a phrase often used and many tend not to believe it – especially when it comes to business. This lesson especially applies to small business entrepreneurs would be worried that they do not have enough capital to achieve their goals. When a company is operating on a tight budget, it will tend to have a lean cost structure and accordingly perform much better than a company that has received a lot of cash from venture capital firms.

When opening a new business it is important to realize that success is not absolutely dependent on funding. Skills and the quality of goods or services offered play a much more important role. Furthermore, a lack of capital resources can often lead to an entrepreneur developing creative and innovative ideas, thus creating a competitive advantage and success. And with success comes an increase in revenues and capital. Another reason why bringing too much money from outside sources is not always a good idea is that VCs can try to force rapid growth,  often at an earlier stage than management believes is appropriate. A team focused on working towards best quality is essential, especially in an economy downturn. Perfection will lead to growth of the company in a competitive environment. Finally, outside money leads the founders to spend less time thinking about customer needs and more time thinking about pleasing the board of directors.

A final bit of advice to all new entrepreneurs: focus on providing customers with what they need, and the profits will come in accordingly. Focusing on capital and the desire to grow will only distract you from the core of your business.

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