Why Seeking Out Investors Could Sabotage Your Business

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One too many episodes of Shark Tank can leave us feeling superhuman when it comes to building a business. You come up with an idea, make a few sales, go after a bunch of people that have money to burn, and the rest will just work itself out… right?

Not exactly. As Jonathan Siegel notes in the book The San Francisco Fallacy: The Ten Fallacies That Make Founders Fail, many founders and entrepreneurs actually lean too heavily on investor funding to bring their ideas to life. As a result, they don’t learn the valuable lessons that come with working on and perfecting a product. Burning someone else’s cash day in and day out can turn your business into a ticking time bomb.

As the founder of Next Vacay, a software company in the hyper competitive travel deals industry, I have to stay on my toes constantly. The instincts I honed from bootstrapping our operation help me make big decisions each and every day. If investor capital seems like the only answer to getting started as an entrepreneur, heed the advice below on what you should be doing instead.

Why investors won’t save a broken value proposition

Too often, entrepreneurs skip what is perhaps the most important step of building a business: Validating a value proposition. It’s one thing to grow a social media account of followers or even email subscribers, but are these followers able and willing to purchase from you? If the answer is no — or worse, you don’t know, because you haven’t asked — you don’t actually have a business yet, you have a hobby at best. 

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