Starting a business while keeping full time job

The following post was on the FSB Blog this past week and it had to do with starting a business while keeping your full time job. For most entrepreneurs that is a classic dilemma since they may have an idea that they would like to explore but find it difficult to give up the fulltime job. This situation arises from the lack of places to obtain capital. A lot of Caribbean Americans (among other groups) here face this problem and end up having to hustle and save funds to start their projects. But this situation is not as bad in the over all scheme of things as I think it maintains a sense of balance. If there was a steady pool of cheap capital available there may be 1. A lack of innovation 2. A lack of proper management.

A lack of innovation would result from easy capital because there would be no need to find cutting edge ideas as virtually every idea put forward would be capable of getting funding. With the tight availability of capital, entrepreneurs have to ensure that their ideas are well thought in order to compete for the available capital. Also, a lack of proper management of the capital obtained would result since the ability to dip back into the capital pool would offset poor funds management decisions. So the lack of readily available funds is a controlling factor for small businesses. Of course, it is frustrating for entrepreneurs but the economic theory of scarcity (ie demand outpacing supply) has a powerful effect.

Venture capitalists and angel investors networks at first glance may threaten this balance. But, venture capitalist rarely invest in start-ups unless the entrepreneur has a proven track record. In applying this to our Caribbean community, entrepreneurs would be hard pressed to get venture capital (unless VC is organized specifically toward the Caribbean American community). Angel Investor group as I have stated in prior posts would be good for our community if we can get past some organizing and trust issues. But, assuming that this network is formed, one would assume again that the criteria for getting funds would be strict in order to weed out poor projects and so the scarcity model comes back into play.

So what are entrepreneurs to do? Well, they bootstrap their ventures with their own funds like I have to do, and borrowings from friends and family. And they have to be innovative in their approach until the project takes off.