The Hidden Benefits of Not Having Sufficient Capital

Insufficient capital can be advantageous.

Every entrepreneur needs capital to start, run and grow his business. Without capital, a lot of things can be hampered. However, at times, lack of sufficient capital can be a blessing in disguise. In every dark cloud, there is a silver lining. If you think that not having sufficient capital is a curse, you’ve got to read this article. I just need to write this article to motivate some people there who thought that capital is their major obstacle stopping them from starting their business. A lot of ideas have died just because of this perceived problem of insufficient capital. But what I will quickly like you to know is that, as an entrepreneur, you have to learn how to impoverish things. I remember a popular topic that we were taught in Economics in our Secondary school days. The topic is ‘Opportunity Cost’. We were made to understand that our wants are numerous but the means to satisfy them are scarce or limited. That is, we have limited resources. For this, there is a need for us to arrange our wants in a scale of preference. This means that we need to rank the need that is most important first and allocate resources to it. This we should do until all the available resources are exhausted. As a result of the limited resources, this means that we need to forgo certain opportunities for now.

In the same manner, every entrepreneur has many plans and goals for their business. There are many things to spend money on. Entrepreneur needs capital to register his business. He needs capital to open an office. He needs capital to buy inventories, carrying on marketing, recruit and pay staff and to run the affairs of his business. In most cases, the capital to do these things is not always there. One should not abort his dream just because of insufficient capital. I remember when I started my consulting firm. I had just resigned my 5-9 pm job and I used all the money I had for a particular capital projects. I was banking on the cash flow from my existing clients to raise capital to operate my business. (I started the business part time then). Unfortunately, no sooner than I quitted my job that my clients ended their contract with me. It was actually a hard time for me. If these clients had terminated the contracts before I resigned, possibly, I wouldn’t have had the courage to resign. Or if they had terminated the contract before I spent my savings on capital project, I would have kept the money as working capital. There I was left with almost no capital. It was actually a tough time but I learnt great lessons. That is what I want to share with you in this article. Today when I looked back, I discovered that there are certain hidden benefits in not having enough capital. So, what are the benefits? These are enumerated below:

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It prevents mis-investment of capital

There were many things I would have done then, if only I had enough capital. For example, I wanted to rent two offices the same time. The first office was to serve as administrative office while the second would have served as a training centre. I wanted to equip the training centre with the state of the art furniture and other equipment that would make the place conducive and attractive to students. Because of insufficient capital, I just managed to rent one office. I then partitioned it into two. While I used one for my office and the second part served as staff office cum training room. I then started to advertise our training programmes focusing on fresh and unemployed graduates. The adverts were very effective as we started receiving calls. But something was missing! We could not convert these calls into sales. I later discovered that even though the market seemed very huge and there was actually a need for the courses we wanted to run but the target market didn’t have the ability to pay. Imagine if I had invested capital in the second office, I would have tied down the capital unnecessarily. Apart from the mis-investment of capital I avoided, I learnt a great lesson. There is a need to test the market before one makes any major investment. It was lack of capital that forced me to test the market; it wasn’t that I planned it myself. Do you know what I said at the end? I just thank God that the money was not there.

You become more creative

When you don’t have enough capital, you will be creative on how to make most of the little funds you have. The partitioning of the office turned to be a bright idea. I later discovered that I did not even need a big office for the type of consulting business I do. Apart from the training arm, clients do not come to my office. I am the one to visit them in most cases.  I can conveniently operate my business from home if I choose. Also, if I had enough capital, my intention was to place adverts in the national newspapers. This would have cost me more money. For the lack of sufficient capital, I was able to place targeted adverts with just a small amount of money. I can tell you that the adverts actually drove traffic beyond my expectation. The only challenge was that the adverts did not culminate to sales. This would have been the same result if I had invested the money in adverts in national newspapers. On the other hand, adverts on national newspapers wouldn’t have been as targeted as the local adverts I placed.

Read Also: How to Get and Start Entrepreneur Ideas while Working Full Time

You become more hard working

I told you that I lost my clients shortly after I resigned my appointment from my 9-5 pm job. I was practically left with nothing. I started afresh from ground zero. Because I didn’t have any money as working capital and I needed to feed my family and still keep the business running, I had to put in more strength into the business. Instead of the normal eight-hour work schedule, I found myself working for like twelve hours every day. I did not have money to hire staff. Therefore, I was the one doing virtually everything. I had to prospect, attend meetings and execute projects. All my system became wired up for hard work. If someone told me I could work that way, I would not have believed. Since I didn’t have the capital to hire someone or outsource some functions, I needed to double my work pattern. Even though, I have overcome those initial challenges, I realised that I am still as hard working as then.

You easily develop business skills

Business is all about the survival of the fittest. You don’t succeed by chance. Even if you have all the capital, you need to develop some vital business skills. Some of these skills can be learnt through training. But there is a saying that experience is the best teacher. If you have ever found yourself in a position that you didn’t have enough money for the item you wanted to buy, you would not have any option than to negotiate hard. Development of your negotiation skill is one of the hidden benefits you can derive when you lack sufficient capital to operate a business. I remember that I would negotiate everything I wanted to buy to the minimum price. I would even scouted around to be sure that the price I would pay was the minimum available in the market. Even when I was not qualified for any discount, I would still request for a special discount. That was how I was able to keep our overheads down. If you operate in a competitive market, you may not be able to increase your price. But you can reduce your costs through the application of your negotiation skill. This alone can give you a competitive advantage over your competitors.

Another important skill I learnt by force was marketing skill. Having just lost my two clients, I needed to secure new accounts as soon as possible. When business was not forthcoming, I quickly overcome the fear of rejection. My target was that, if I could approach twenty people, at least, one person will sign me on. This approach actually worked. The more I continued prospecting, I learnt what worked and those approaches and methods that didn’t work. Before I knew it, my conversion rate increased dramatically.

Read Also: Business Management Skills Needed by Business Owners


I shared my experience so as to encourage our budding entrepreneurs. Lack of sufficient capital may just be a perceived problem and not the real problem preventing you from starting your own business. I would have thought that insufficient capital was the main issue. The main issue was actually about my person; a test of my ability to handle situation and make best use of the little capital I had. Entrepreneurs need ideas and creativity more than they need capital. If you have all the capital but lack skills to manage it, all the capital will soon disappear.

Have you noticed that investors don’t normally give out all the money a person needs to start a business? If at all they do, they will give it out in tranches. They like to see how well you can manage resources. Therefore, don’t let the lack of sufficient capital hold you back any more. You can start with what you have and from where you are. It is possible you start the business from home. The fact that you are starting the business from home does not mean it should remain a home business. It is just a phase. My advice is that you should take action by start taking the right steps towards realisation of your dream. The first step is the most difficult step to take. Once you’ve taken the first step, the other subsequent steps become easier. Again, don’t allow lack of capital stop you. Have the mind that you will succeed.

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