DEBT FINANCING

Are You a Tortoise or a Hare Entrepreneur? (It Matters)

Most startups don't raise VC money. Here's why--and an intro to where else to look.
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The entrepreneurial ecosystem is dotted with ambitious go-getters itching to follow in the footsteps of the Facebooks and Googles of the world--creating fast-growing, fast-flying companies with large numbers of early adopters. I like to call these hopefuls hare entrepreneurs, as the race to produce and succeed is done at a fast and furious pace. But, the truth is, the majority of successful entrepreneurs are tortoise entrepreneurs--those who are growing businesses slowly and steadily. 

Entrepreneurs who fit in the tortoise category are most often also building lifestyle businesses, or, businesses that VC-backed tech entrepreneurs patronizingly deem slow and small. In reality, lifestyle businesses afford business owners the luxury of maintaining life outside of work, instead of allowing a fast-growth company to devour every semblance of work-life balance. Lifestyle businesses grow more organically and steadily while meeting the need of some consumer cohort, rather than rushing partnerships and working harder just to satisfy demanding backers who want to see next rounds and rising valuations.

For every sexy, new startup with a business plan that pitches to angel investors and venture capitalists based on soaring company valuations, growth assumptions, and income projections, there are hundreds of startups trudging through the early stages of starting a business with borrowed money from friends and family, savings and small business financing. Most companies take years to mature, not months. Most small businesses show meager profits the first year, not millions in sales.

Hare entrepreneurs who start successful companies with meteoric growth need to be seen as the exception, not the norm. The reality is that most startups don't have the opportunity to raise venture capital and need education and advice on where to look for money to grow their companies.

To that end, this column is for the tortoise entrepreneurs of the world. Tortoises need financing, too, even if the process isn't as glamorous or riveting as the hares would have you believe. I'll examine the different financing options available to tortoises at different stages of a company's journey, like SBA loans, factoring, and purchase order financing, and wade through the pitfalls and the triumphs of each. Small business owners increase their chances of success by understanding the types of loans available and which loans make sense for their particular businesses.

As a tortoise entrepreneur myself, I intimately understand the complexities of steady business growth and small business borrowing. This is my approach too. While tortoise entrepreneurs aren't seen as the obvious icons and heroes of American culture, they are responsible for groundbreaking products, necessary services, and millions of jobs.

Last updated: Jan 7, 2014

AMI KASSAR | Columnist | CEO, MultiFunding.com

Ami Kassar is founder and chief executive of MultiFunding, which helps small-business owners find the best business-loan options. Kassar speaks regularly at universities and small-business events about entrepreneurship and access to capital. He has an M.B.A. from the University of Southern California and a B.A. in American studies from Brandeis University. He lives in the Philadelphia suburbs with his wife and two children.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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