Mark Cuban: This is the 'biggest mistake' people make when starting a business

Mark Cuban.
Stacie McChesney | Getty

A little self-reliance can go a long way for entrepreneurs.

That's according to tech billionaire Mark Cuban, who told Ryan Seacrest the "biggest mistake" an entrepreneur can make when launching a new business.

"I think the biggest mistake people make is once they have an idea and the goal of starting a business, they think they have to raise money," Cuban said on Thursday's episode of Seacrest's podcast "On Air."

"And once you raise money, that's not an accomplishment, that's an obligation," because "now, you're reporting to whoever you raised money from."

Cuban says entrepreneurs who rely on outside funding can become too beholden to the interests of their investors, who might have a different idea of how to grow the business.

"If you can start on your own … do it by [yourself] without having to go out and raise money," Cuban tells Seacrest.

Business experts and entrepreneurs often argue the pros and cons of raising outside money to start a business versus self-funding (aka "bootstrapping"), the latter of which can typically involve sinking the founders' personal savings into a new venture and can result in slower growth if the business is reliant on slowly increasing revenue in order to expand.

While fundraising injects much-needed capital into a nascent startup, taking on outside investors can also bring pressure from those investors to grow the company faster than might be healthy in the long-run in order to create an immediate return on their investment.

Mark Cuban: "One of the great lies of life is follow your passions"

In Cuban's own case, the billionaire owner of the NBA's Dallas Mavericks started his first business after moving to Dallas with only $60 in his pocket in 1982. Called MicroSolutions, the company was a computer consulting business that he launched with money he and his roommates made throwing keg parties and charging guests $20 apiece for entry.

Cuban, who had recently been fired from a computer software store at that time, marketed his new company to his former clients from his previous job and built it into a successful business that he would eventually sell to CompuServe for $6 million in 1990.

So what's Cuban's advice?

"Try to find something that you can make, or that you can buy yourself, and sell to people around you and then ask for referrals and grow the business that way and you can turn it into something enormous," he tells Seacrest.

Don't Miss:

Mark Cuban says this $25-an-hour gig was his 'best job ever'

Mark Cuban: This is the one lie all successful entrepreneurs tell

Like this story? Subscribe to CNBC Make It on YouTube!

Bill Gates, Mark Cuban and Alexis Ohanian all limit their kids' tech use–just like Steve Jobs did