Posted on December 13, 2018 @ 09:13:00 AM by Paul Meagher
One way to start a business is to begin accumulating the assets you will need to start that business. Those looking to get into farming, for example, might accumulate a tractor, some old farming equipment and any good cheap acreage they can get their hands on.
When we use the term "startup" we might think there is a specific point in time when that startup was conceived or launched. Sometimes a
startup is what happens after an extended period of business asset accumulation.
If you wanted to someday start a hair salon, and you have the storage space, you might spend alot of your spare time searching for deals on
a building, chairs, mirrors, lights, and products that you might eventually need to "start" that business. You are arguably starting the business already if you are accumulating the assets you will need to start it, but it may not feel like that. We expect some official opening to happen to make the startup seem real.
If you accumulate alot of useful assets prior to starting a company, that can help you get the further funding you might need to ditch your
current job and start your new business. Business asset accumulation demonstrates seriousness, it reduces your launch cost, it can help secure the investment (reduce investor risk) and it means less of your operating income will need to be used to pay down debt that you might have incurred if you didn't accumulate these business assets.
There are many ways to start a business. Asset accumulation is an often used approach. Probably more important in situations where goods and services are physically produced and/or sold. Business assets, however, can include intangibles such as patents, copyrights, team composition, letters of intent, permits and useful know how.
Hobbies can often be turned into businesses because of asset accumulation. My photography hobby resulted in me purchasing more photography assets to get better at my hobby. There are many more assets I could be purchasing if I thought I might ever want to turn this into a paying gig. Some of these asset purchases might come over time without an explicit intention to make money from my hobby; nevertheless, these accumulated assets bring me closer to being able to offer a paying service to people and would involve fewer startup costs to fully launch.
Asset accumulation also signals to investors that you have "skin in the game". Investors like to see that an entrepreneur has sufficient confidence in their venture that they have invested some of their own capital into getting it started. Not just time, but actual money.