The Power of Being Broken

Think a business’s success is all about money? Think again. Some of the world’s biggest success stories, like Airbnb and Netflix, started with little money but a lot of creativity. Here’s why…

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Article Highlights
Money is not the most important factor	Creativity, a good action plan and potential customers are more crucial to the success of a business than available funds.
The Sears example	Despite its financial resources, Sears failed by neglecting the importance of innovation and adaptation to the online market.
Creativity is born from lack of resources	A lack of funds pushes entrepreneurs to be more resourceful and develop creative strategies to succeed.
Reconciling expenses with income	It is crucial to align expenses as closely as possible to revenues generated to avoid financial errors.
Money can kill creativity	Having too much money can stifle innovation, leading to inefficient spending instead of finding creative solutions.
The example of David and Goliath	Like David, an entrepreneur must use strategy and creativity to outperform his competitors, even with fewer resources.

Money isn't everything

Contrary to popular belief, money is not the most important factor in starting a business. What really matters is having a good idea , a clear action plan , and potential customers . Money comes next to support these elements. Many people are mistaken in thinking that money is the number one criterion for success. In reality, it is creativity that separates a successful entrepreneur from those who fail.

Sears and its lack of creativity

Consider Sears . The company used to be known for its popular catalog. However, in the age of the Internet, it neglected this customer base by creating a poorly designed website and abandoning its catalog. As a result, it lost its customer base, which was largely rural and elderly. Despite its financial resources, Sears chose to sell its buildings in hopes of reversing the trend, but it failed. This lack of creativity and reinvention in the face of a changing market led to its downfall.

Netflix and the reinvention of streaming (example of creativity)

Take Netflix, for example. In its early days, Netflix didn’t have the financial resources of the big Hollywood studios. Instead of focusing solely on DVD rentals like its competitors, the company got creative by launching an online streaming service, which revolutionized the way people consume media. Through this innovation, Netflix was able to differentiate itself and establish itself as a market leader. Today, despite fierce competition, Netflix continues to innovate by producing original content, showing that creativity is at the heart of its success.

Airbnb and the sharing economy (example of creativity)

Consider Airbnb. Founded with little money, Airbnb started out as a simple air mattress in its founders’ living rooms. However, the company stood out with an innovative idea: allowing individuals to rent out their homes on a short-term basis. In the midst of a recession, travelers were looking for cheaper options than hotels, and homeowners wanted extra income. Through this creativity, Airbnb reinvented the hospitality industry, becoming a global company, even though it was initially short on funds.

Creativity is born from lack

Businesses that start with little money are often much more imaginative . As Daymond John points out in his book The Power of Broke , being strapped for cash leads to ingenious strategies. When you have no funds, you still have to sell your product, which requires differentiating yourself and approaching customers from a different angle.

Reconciling Expenses with Income

Spend Smart

One of the keys to business success is to ensure that each expense is as close as possible to the revenue generated. Rather than spending blindly, it is crucial to make strategic choices. Take the Videotron Centre in Quebec City for example. Built with the hope of attracting a National Hockey League team, the centre has still not fulfilled this objective. This major expense is based on hypothetical revenue, a common mistake among many businesses.

A different approach

When it comes to spending on office space or marketing, timing is key. Why invest in an office if you don’t have clients yet? The solution lies in a more measured approach: sign a contract first and then invest accordingly.

Money Kills Creativity

Too much money, a handicap

When an entrepreneur receives too much money, it can become a real handicap. Money, instead of helping to grow, often stifles creativity . Rather than finding innovative solutions, the entrepreneur relies on his funds, thus squandering resources on ineffective strategies. The entrepreneur must remain vigilant and never lose sight of the importance of creativity, even in times of prosperity.

David versus Goliath in Entrepreneurship

Like the story of David and Goliath, the entrepreneur with few resources can outperform well-funded competitors through strategy and ingenuity. Consider Dollar Shave Club . Taking on giants like Gillette, this small company exploited a market problem: overpriced razors. With viral advertising and an affordable subscription model, it captured the market, proving that it’s not the amount of money, but strategic intelligence that makes the difference.

The risks of too much money: a recent case in Quebec

While capital injection may seem like the key to success, many Canadian companies, even well-funded ones, have failed. Here is an example:

RenoRun

RenoRun, a Montreal-based startup specializing in the delivery of building materials, raised an impressive $181 million in its Series B funding round in 2022. Yet, despite this massive funding, the company failed to secure new sources of capital or secure acquisitions to continue its operations. In 2023, RenoRun finally closed its doors, illustrating that even a company with significant funds can fail if it fails to adapt its business model to market conditions.

The Drunkenness of Heights

The lesson of bad investments

When you have too much money, you are often tempted to invest it recklessly. After selling my business, I myself made the mistake of investing without doing the necessary checks, simply because I had funds available. I invested in projects without really getting involved, thinking that the money would do the work for me. This lesson taught me that, even with significant financial resources, it is essential to remain rigorous and creative.

Conclusion: The Key to Business Success

Entrepreneurship is a complex path, based on a multitude of factors. However, creativity and smart expense management often play a crucial role in the success of a business. Every decision must be thought through to optimize resources, while remaining flexible and open to innovation. Keeping a close eye on your finances and knowing when to invest are key elements, but they are only part of the entrepreneurial puzzle.

And you, do you have an experience where creativity surpassed the importance of funds? Share your opinion in the comments.