Ask yourself: Do you really need that bank loan or whatever it is you want to buy?
"Many times, entrepreneurs will have preconceived notions about what is 'required' to be successful in a certain industry," said John Weninger of the Wisconsin-based Vision Wealth Partners, which advises small businesses. "A lot of times those ideas are floated by people who stand to make a buck selling their product or service to gullible entrepreneurs who just don't know."
Consider all of the free, rentable or lower-cost tools that can be used to boost a new business before borrowing a large sum or hiring people, he said. Purchasing a business address is cheap and offers credibility while working out of a home office, while strategic partnerships can offer free yet valuable resources. "Consider approaching existing businesses who may be able to [share] space, resources … that is of little or no cost to you," Weninger said. Hire interns through a college program instead of employees to keep labor expenses low, he added.
Hawksmoor is expanding to the United States with a restaurant in New York City's World Trade Center set to open later this year. They financed the WTC restaurant with their current revenue and investor funding. The co-founders now have the luxury of being able to finance expansion based on the value in the business and its cash flow. But Beckett sees several restaurant entrepreneurs spending very large amounts of their personal wealth to keep up in the competitive dining environment, and it reminds him of when they started their first restaurant on a shoestring.
"It's a real source of concern for me," Beckett said. "What is it you are signing away if this goes wrong?"