Starting at Absolute Zero

One of the things about getting started on any business is capital to cover the costs of what is needed. Most of the time there seem to be two options outside of bankrolling it out of your savings. Crowd funding or bank loans. I am sure there are a number of people with zero savings they can put towards a venture who still would like to try. If they have bad credit (likely for the same reasons they have no savings), then loans are almost impossible to obtain. So then there is crowd funding, which is a hit or miss thing if you don't have a solid platform to drive people towards your project. The most solid suggestion I have seen that applies to those stuck in an absolute zero funding situation is to just start very small. For some ideas this is great, but I suspect there are some projects where this would not be viable.

I am wondering if there are any other innovative ways to circumvent a lack of funding and get a reasonable bit of capital to launch a promising project. So far, the only thing that has come to mind for a person in this situation would be to help them find a grant suited to the project they have in mind. Does anyone else have ideas for what to suggest aside from crowdfunding or 'start small'?

My first thought would be financing that doesn't involve a bank. Angel investors, wealthy patrons, etc. The formal process for this might be much like getting a grant or loan, unless of course you have access to wealthy people and just start pitching them your project.

But I don't have any experience with that sort of fundraising. I was just imagining something like what happens in silicon valley or on that t.v. show that invites contestants to pitch their million-dollar ideas.

Something keeps coming up more and more strongly in my mind as I read between the lines of many of the questions posed in this section of the forum, and Eric alluded to this in an answer in a different thread...

Buying "my own land" or starting "a new business" or developing "a new permaculture demonstration site" or anything else new might not actually be the most appropriate way to achieve your goals, make the most efficient use of resources, take the best advantage of your unique skills and whatever else you bring to the party, etc... though it certainly seems to be the preferred option based on the questions here. Why is that, I wonder?

There are so many forms of capital: financial, social, ecological, intellectual, cultural, experiential... I realize that this part of the forum is dedicated to finances, AND let's not lose track of the other forms, as they will also be crucial in launching a new venture, or supporting an existing one.

If you are in fact starting from "zero," one possible path toward your dream (and I don't make any assumptions about what that is!) would be go get some experience working with others who are doing something similar to what you want to do... while perhaps getting out of debt, and even building your savings, in the meantime. Even if you find yourself in a position where you are not actually earning money while contributing to a project that's not "yours," if you are intentional about it, you can make significant gains in the other types of capital.

It doesn't matter whether you're looking to commercial lenders (such as banks or credit unions) or foundations or individual people to support your endeavors; they'll all want to see that you manage money well, you have a clear plan in place, have demonstrated that you can accomplish what you have said you would do, and you have actual experience in the field you plan to go into.

Quite frankly, I would hope that you would want to prove to YOURSELF, first and foremost, that the numbers related to your idea add up in a spreadsheet, and that you have what it takes, spiritually, physically, and otherwise, to DO that work... before you take the biggest risk of all: dedicating your precious time and life energy to this dream. Crunch the numbers and get some good experience on the ground and you'll be in a much better position to raise money from others if and when the time comes to launch out on your own.

-Elizabeth

Wow, great post. Somebody give this gal an apple!

Lots of people chafe at the adage, "it's not what you know that matters; it's who you know." But there's no reason to resent it. It's life. You know the rule of the game, so play accordingly. That's "social capital," and you can't get anywhere without it.

My favorite expression of this came from a manager at Tyson Chicken. He said someone one told him, "You may think you're in the chicken business, but you're not. You're in the people business."

I remind myself of that often- "Mike, you may think you're in the insurance business, but you're not. You're in the people business."

Same with permaculture teaching, or sustainable agriculture, or natural building. You may think you'll be in those businesses, but you won't. You'll be in the people business. And that means, to back up Elizabeth's point, you can go ahead and get into the people business NOW, before you file for a DBA or buy land or announce a kickstarter. You can make connections, learn how it worked for the people you're emulating, and make a name for yourself right now, long before you try to make a living at it.

In fact, it seems reasonable to think of launching your business, in a sense, as the END of your project, and not the beginning!

Don't forget, fast convenient money is rarely free.

If you borrow it from the bank, you have to pay it back--plus interest. This debt also increases your risk of failure down the road.



Grants often, if not universally come with strings attached. Maybe you don't mind the particular strings that come with the grant you find, but read all the fine print and think about the

long term ramifications.


Grants that originate from various levels of government are made of money that was forcibly taken from some other poor schlep. I personally have ethical

and moral problems with that, but that's my own personal hang up and may not apply to you at all.



A grant from some rich dude that invented velcro or kitty litter and just likes to support stuff like you want to do, no strings attached, hey-go for it.



The best time to get out of debt and start saving money to bankroll your project is 10 years ago. The next best time is today.



I am always suspicious of the short, fast, easy path. It often turns out to be the not so hot outcome path as well.



troy

Joel Salatin wrote a book related to this issue that you might find pretty useful in terms of growth hacking and accelerating your progress: http://www.polyfacefarms.com/2013/06/14/fields-of-farmers/

Here's the excerpt:

America’s average farmer is sixty years old. When young people can’t get in, old people can’t get out. Approaching a watershed moment, our culture desperately needs a generational transfer of millions of farm acres facing abandonment, development, or amalgamation into ever-larger holdings. Based on his decades of experience with interns and multigenerational partnerships at Polyface Farm, farmer and author Joel Salatin digs deep into the problems and solutions surrounding this land- and knowledge-transfer crisis. This book empowers aspiring young farmers, midlife farmers, and nonfarming landlords to build regenerative, profitable agricultural enterprises.

More on Joel here: http://organiclifeguru.com/farming/

D. Logan wrote:...get a reasonable bit of capital to launch a promising project...

Sources of capital, unless you get something like a MacArthur genius award, exact a price of equity and/or control in exchange for their valuable resource. There is very little free no strings attached money out there. Even grant money has a price in limiting what you can do and who you have to report to. Bootstrapping is the only way to retain all the equity and maximum control-no escaping the tax man!

So do you want a small slice of a big pie (leverage) or a whole smaller pie (equity)?

So today I'm excited to draw some connections between the various forms of capital that I referenced above, what Ann said directly above, and the "rich dude" that Troy mentioned in his post... and I need to apologize to Ann right from the get-go, because a forum is very challenging way to have a "conversation," and I don't really know what experiences you have had that led you to write what you did... and my experiences have led me to quite opposite conclusions.

Here goes:

I'm willing to bet that D Logan has all sorts of other capital to draw from, if not financial capital; so in fact, there is no starting from ZERO. We all have something valuable to bring, and often, what we take for granted about ourselves (or what we think everyone else has too, so it's not unique) is exactly the thing that someone else desperately needs.

I'm also willing to bet that no "rich dude" is going to invest in a permaculture-related project unless (s)he finds something of value in that project, or more likely, in the PEOPLE who are part of the project. Maybe it's the beneficial outcomes of the project that they're excited about. Maybe you are really cool and have lots of friends and get invited to all the potlucks and they want to bask in a bit of your glow. Maybe they just sense that you're cut out to do something amazing and they want to support you in that. The trick is that you Just Don't Know until you start talking, and if you're curious about who that person is and what makes them come alive, you'll ask the right kinds of questions to learn those details.

And finally, I'm putting money on the likelihood that if you treat Rich Dude like a bag of dollars that you're trying to get your hands on... you're not going to get very far in building that relationship. Similarly, if you genuinely believe that all people with money (or in control of money, ie, bank employees or people who invest other people's money) view their money as the only / the most valuable resource out there, that's what you're going to see... because if you don't believe that there are people who have money who are interested in using it to improve their communities... or make reparations for their family's actions generations ago... or to learn something new... or to create a really cool permaculture oasis where they can hang out with their families AND make a tangible contribution with their skills and time and connections... or to otherwise be an engaged citizen that shows up with what they have... you're never going to find them. Worse -- and egad, I wonder how often this is happening on this forum -- you're alienating them with your language and the assumption that there is nothing of value that they can bring.

My experience working with a variety of stakeholders in the "good food" or sustainable agriculture or social justice movements (whatever you want to call this bigger thing that permaculture would address) is that the people who are most successful at attracting interest of all kinds, whether that be volunteer support, or customers, or like-minded investors, you name it, are the people who are excited to learn how anyone who is interested may be able to participate. Many people with money would love to be included in projects that they believe in, and are waiting to be asked to be a part. Lynn Twist's book The Soul of Money is the classic text that explains (much more eloquently than I am here) the mindset and philosophy that I am just uncovering the iceberg-tip of here...

Bootstrapping is one way of going about your business. So is trying to do everything yourself. You might find yourself free of "strings," and burnt out and lonely with nobody else who feels they have a stake in your endeavor. A healthy ecosystem has a niche for everyone.

If you make no assumptions about what people want, you are free to discover what kind of mutually-agreeable arrangement you can negotiate between parties, and this is true in financial relationships just as much as any other kind of relationship. Sure, a lot of "traditional" financial agreements are not stacked in an entrepreneur's favor, but to say that ALL financial agreements force one to give up equity and/or control is just inaccurate. I will concede that the innovative and creative examples are not always easy to find, and writing a book full of them was my attempt to highlight some of the great ones that I've seen over the last 10 years of working in this space!

Ann, I realize that you have asked me to illustrate some of these innovative examples yet, and I haven't done so; there are just so many, and it's helpful to have some context. I see that you've now provided more context, so I will work on responding tomorrow. I just couldn't bear to leave this thread hanging without a beacon of hope to people who still believe -- rightfully so -- that it IS possible to find what you are looking for... even if it doesn't necessarily come in exactly the form you may have been expecting.

-Elizabeth

Elizabeth Ü wrote:So today I'm excited to draw some connections between the various forms of capital that I referenced above, what Ann said directly above, and the "rich dude" that Troy mentioned in his post... and
I'm willing to bet that D Logan has all sorts of other capital to draw from, if not financial capital; so in fact, there is no starting from ZERO. We all have something valuable to bring, and often, what we take for granted about ourselves (or what we think everyone else has too, so it's not unique) is exactly the thing that someone else desperately needs.

....

Bootstrapping is one way of going about your business. So is trying to do everything yourself. You might find yourself free of "strings," and burnt out and lonely with nobody else who feels they have a stake in your endeavor. A healthy ecosystem has a niche for everyone.

I can see how what I wrote might suggest I think bootstrapping is the best/only way to go. Au contraire, I would love to bring in partners who extend my skill sets and knowledge WITH a fair exchange of equity, especially as we grow our business. What I was reacting to was not D Logan either, but the occasional whinging on the forum that all I need is some free money from someone else and I can make MY DREAM. That attitude, like you put better than me Elizabeth, does not treat as valuable what the partner brings to the table. And you are right, it's not just fiscal capital, it's experience running profitable enterprises, it's their creativity, it's their relationships and connections, it's negotiating skills, etc. But before I bring in a partner I'd better do some self-examination on whether I can actually let go of any level of control, because the partner has an implicit right to give input and direction. If I am so deeply committed to MY DREAM and can't stand the thought of adapting it to someone else's needs in a collaborative process, bootstrapping is probably my best alternative, IMO. I could have said it better, for sure.

FWIW, over the years I have had the occasional opportunity to meet some very "rich dudes" on boards of trustees and the like. Elizbeth is right, they want is to contribute in a meaningful way--to be met with a handshake rather than with a hand held out to receive dollars. Like all of us, they want relationships first, to be valued as much for what's in their heads as in their pockets.

Elizabeth, looking forward to your examples!

Just to share some perspective from my own experience...

We worked really hard to get a property out where we could "farm" and ended up with a 160 year old house on 1 acre in the county. Don't get me wrong, I love our property, and being where we are at has allowed us to experiment with building hugelkulture and raising chickens and learning oh so many things. But it is also an enormous burden. I spend a tremendous amount of time, energy, and money on home repair and maintenance. I am committed to working full time to pay the mortgage, insurance, and utilities. I do all this for a home that will always require energy inputs to function, and it puts me further and further from the passive solar, earth sheltered, simple home of my dreams. More often than not I find myself designing things that I simply lack the resources to implement.

In hindsight, I realize that I missed a huge opportunity in urban gardening. There are some amazing operations out there on borrowed or rented land. Learning about them has made it clear that I could have been learning and growing while we were still living the easy life of an apartment dweller in the city. If I had done this, I would have had a much better understanding of our needs when we "bought the farm".

Elizabeth Ü wrote:Buying "my own land" or starting "a new business" or developing "a new permaculture demonstration site" or anything else new might not actually be the most appropriate way to achieve your goals, make the most efficient use of resources, take the best advantage of your unique skills and whatever else you bring to the party, etc... though it certainly seems to be the preferred option based on the questions here. Why is that, I wonder?

There are so many forms of capital: financial, social, ecological, intellectual, cultural, experiential... I realize that this part of the forum is dedicated to finances, AND let's not lose track of the other forms, as they will also be crucial in launching a new venture, or supporting an existing one.

If you are in fact starting from "zero," one possible path toward your dream (and I don't make any assumptions about what that is!) would be go get some experience working with others who are doing something similar to what you want to do... while perhaps getting out of debt, and even building your savings, in the meantime. Even if you find yourself in a position where you are not actually earning money while contributing to a project that's not "yours," if you are intentional about it, you can make significant gains in the other types of capital.

I can attest to this, and to Josef's point above! My partner and I received our PDCs 2 years ago and were invited the following year to "practice permaculture" on a family member's land. We could live rent-free, join the CSA at the organic farm just down the road to help cover food costs, practice permaculture with food and animal systems, get part-time jobs and start up a few small ventures which could help us achieve financial independence down the road.

Sounded ideal, but we didn't take into account a couple of vital things, namely the family member's understanding (or lack thereof) of what permaculture on her land would look like, as well as how much a like-minded community (or again, the lack thereof) to learn with/from would mean to us as beginners. So although it seemed like we had plenty of resources at our disposal to make things work, it turned out social capital was at the top of the list of resources we needed, and it just wasn't there.

To make a long story short, things didn't work out with the family member and we are now down the road work-trading at the little organic farm with the CSA. We've been here since January and thankfully we've had no food or rent expenses, which allowed us the time and space to develop a few small income streams while starting up an oyster mushroom-growing operation. While things are much better here, development has been slow and we are still lacking a community of people with whom to interact around permaculture, either in a business, learning or social setting. The owners of the farm, while committed to organic practices, are not all that attracted to permaculture. I think they are a bit weary of farming here (I would be too, after 14 years of trying to make modern ag models work in the tropics!) and they see adopting permaculture techniques as "starting over," for which they just don't have the energy. They are looking to move elsewhere, they don't want to be here anymore and neither do we. We are going to stick it out for the upcoming busy season, when hopefully we'll see a bit of return for all our efforts we've put into the mushroom operation. After that, we are outta here, and we'll be a helluva lot more thorough in deciding where to land next!

I'm really enjoying this thread, and a lot of Elizabeth's points have certainly rung true with some of the conclusions we have been coming to recently. Wherever we end up next, we won't be so bent on "making it work" with permaculture in a financial sense, at least not yet. Certainly, we'd love to find employment with something permaculture-related. Certainly, we will continue to practice permaculture and experiment with creating valuables for our community. But we're realizing that as beginners, our relationship with permaculture right now should be one of stress-free learning, not financial dependency. Once you remove the pressures of making something produce for you, suddenly you get to interact with that thing in a way that allows you to see the full beauty of it. Deeper learning and understanding can take place, successionally and at fuller maturity. That extra time spent in the beginning will save you time in the long-term.

If you wanted to plant a food forest, you wouldn't just spend a bunch of money on trees and plant them around willy-nilly, at least not if you expect those trees to flourish. Instead, you would take time to prepare the ground, research what works in your area, visit people who have fruit trees, and plan slowly and carefully to maximize the health and efficiency of your forest. You might even decide to mimic nature's successional stages, in which case it may be a few years before you even plant your first fruit tree. Why wouldn't we take the same approach in launching a career in permaculture? I certainly don't mean to suggest that anyone on this thread is being rash or careless, and I would be the last person to judge another person's readiness in such matters. But I am now in a place where I can critique my past self, and I can assert that for me, haste makes waste. This time around, I'll be more humble and cautious in my approach, and I will be diligent in seeing each learning stage through to maturity before moving on to the next one!

I feel like I've gotten a few compliments here, so thank you for that on those who have directed comments towards me rather than just the topic itself. I do agree to the sentiments here and though I currently have very low financial options at the moment, I am never one to consider money the end all of anything. When I started this topic, I wanted to post something that had not yet been posted. Not for myself, but for others who would come later and be thinking the same question. I make a point of never posting unless I feel it is something new and/or useful. What has followed my seemingly simple question has been a powerful series of responses that offer up more insights for anyone who reads this thread than I could have hoped for. Thank you. Thank you to each who has been involved in this discussion. It is illuminating. I can't imagine anyone would read what is here without learning at least some new viewpoint or idea worth keeping ahold of.

I think it would be easier to answer the question with more specifics about what the project is.

What I look at, going along with Elizabeth's point, is ways to serve the mission or purpose of the project that don't need money (many elements serving one function--is there a term for that) and also stacking functions. I can serve the purpose before money comes, as well as during and after. It's hepful to write out the definition, direciton, and purpose of hte project even if it seems obvious, just verbalizing it helps to clarify some things. I'll give an example when I have a minute here. Great discussion! Sometimes having no money creates greater ingenuity or higher performance--the problem is the solution--just like in Moneyball (spoiler alert) firing the "better" players was necessary to have the new strategy work.

D. Logan wrote:One of the things about getting started on any business is capital to cover the costs of what is needed. Most of the time there seem to be two options outside of bankrolling it out of your savings. Crowd funding or bank loans. I am sure there are a number of people with zero savings they can put towards a venture who still would like to try. If they have bad credit (likely for the same reasons they have no savings), then loans are almost impossible to obtain. So then there is crowd funding, which is a hit or miss thing if you don't have a solid platform to drive people towards your project. The most solid suggestion I have seen that applies to those stuck in an absolute zero funding situation is to just start very small. For some ideas this is great, but I suspect there are some projects where this would not be viable.

I am wondering if there are any other innovative ways to circumvent a lack of funding and get a reasonable bit of capital to launch a promising project. So far, the only thing that has come to mind for a person in this situation would be to help them find a grant suited to the project they have in mind. Does anyone else have ideas for what to suggest aside from crowdfunding or 'start small'?

I am one that is so eager to start. I want the security of growing my own food. Rent seems like such a wasteful thing nowadays. Traveling to other peoples farms costs money as well!
Sorry Im half asleep

As mentioned by the person referencing Joel Salatin, I am on of those old farmers with land and cattle.  I have been looking for some time for a hard working, intelligent, willing young person to partner with me, take over the chores and inherit the farm.  Opportunity often comes disguised as hard work.

Ellen Schwab
SE Ohio

OK, long-delayed but here's definition, direction, and purpose statement example:

to increase sustainabiliity in the field of food production of ___, ___, and ___ staple crops consumed in Kentucky (purpose),  in a garden and design on a piece of land of 1/4 acre (definition), and to increase the leveraged impact and awareness-building of people anywhere over time (direction).  Secondary puroses: to increase my health, independence, stewardship of resources, autonomy, responsibility/invovlement in the necessities of my life.

There was a great post on here about someone putting a craigslist post up "if you let me use your land I'll do good things" and they got yards first and later a farm!  sold stuff from the land they worked and then saved financial capital.

I so agree with Elizabeth's statement you're not starting from 0.

Also, there's a book "free money 'they' don't want you to know about" by Kevin Trudeau, idk if it's any good but I know it hasn't done me any good yet because I've never gotten around to reading it! and neither have any of the people who've coffee-tabled it.

Joshua Myrvaagnes wrote:I think it would be easier to answer the question with more specifics about what the project is.  

What I look at, going along with Elizabeth's point, is ways to serve the mission or purpose of the project that don't need money (many elements serving one function--is there a term for that) and also stacking functions.  I can serve the purpose before money comes, as well as during and after.  It's hepful to write out the definition, direciton, and purpose of hte project even if it seems obvious, just verbalizing it helps to clarify some things.  I'll give an example when I have a minute here.  Great discussion!  Sometimes having no money creates greater ingenuity or higher performance--the problem is the solution--just like in Moneyball (spoiler alert) firing the "better" players was necessary to have the new strategy work.  

D. Logan wrote:One of the things about getting started on any business is capital to cover the costs of what is needed. Most of the time there seem to be two options outside of bankrolling it out of your savings. Crowd funding or bank loans. I am sure there are a number of people with zero savings they can put towards a venture who still would like to try. If they have bad credit (likely for the same reasons they have no savings), then loans are almost impossible to obtain. So then there is crowd funding, which is a hit or miss thing if you don't have a solid platform to drive people towards your project. The most solid suggestion I have seen that applies to those stuck in an absolute zero funding situation is to just start very small. For some ideas this is great, but I suspect there are some projects where this would not be viable.

I am wondering if there are any other innovative ways to circumvent a lack of funding and get a reasonable bit of capital to launch a promising project. So far, the only thing that has come to mind for a person in this situation would be to help them find a grant suited to the project they have in mind. Does anyone else have ideas for what to suggest aside from crowdfunding or 'start small'?

Joshua Myrvaagnes wrote:Also, there's a book "free money 'they' don't want you to know about" by Kevin Trudeau, idk if it's any good but I know it hasn't done me any good yet because I've never gotten around to reading it! and neither have any of the people who've coffee-tabled it.

In general, I'd be very suspicious as anything sold as "XYZ they don't want you to know about" as its usually a cheap marketing trick. In Kevin Trudeau's case, it was so bad that he's now in federal prison.
http://articles.chicagotribune.com/2014-03-17/business/chi-kevin-trudeau-sentenced-20140317_1_kevin-trudeau-global-information-network-guzman

D. Logan wrote:One of the things about getting started on any business is capital to cover the costs of what is needed. Most of the time there seem to be two options outside of bankrolling it out of your savings. Crowd funding or bank loans. I am sure there are a number of people with zero savings they can put towards a venture who still would like to try. If they have bad credit (likely for the same reasons they have no savings), then loans are almost impossible to obtain. So then there is crowd funding, which is a hit or miss thing if you don't have a solid platform to drive people towards your project. The most solid suggestion I have seen that applies to those stuck in an absolute zero funding situation is to just start very small. For some ideas this is great, but I suspect there are some projects where this would not be viable.

I am wondering if there are any other innovative ways to circumvent a lack of funding and get a reasonable bit of capital to launch a promising project. So far, the only thing that has come to mind for a person in this situation would be to help them find a grant suited to the project they have in mind. Does anyone else have ideas for what to suggest aside from crowdfunding or 'start small'?

I like neither of your options to be honest. Debt is a trap that I never want to be caught in. The other relies on others which I don't really find works out for most people.

What I did, funded it out of my full time job paycheck. Digging kraters and swales nights and weekends and planting a few hundred trees a year. I suppose that classifies as "start small" but it's a more realistic way of funding a project.