Strong Opinions @marksbirch

You cannot start a company without funding.  Face it, you need money for the simple fact that you need to eat, you need shelter and you need the basic tools and services required to start a business such as a computer and the electricity to operate it.  Unless you are living with your parents or a well-off spouse and they accept the fact that you are mooching off of them, you need funds.

You also cannot run a company without funds.  Even with the low-cost options available for budding tech entrepreneurs for creating Internet services and mobile apps, there is still money required for both living expenses and for supporting business operations, such as a merchant account to accept payments or server fees to run your app.

This is why I believe the best time to start a company is when you are either in school or after several years of working experience.  In school, students get to mooch off of parents or government or school, but the great thing is that you have nothing to pay back until you graduate.  Some odd jobs can generate enough free cash to get more flexible, and schools have lots of free resources.  For people that have been working after many years, they have built up some personal wealth and established a solid credit rating.  This nest egg is the principal for building the company until it can generate revenue and the credit rating provides less-expensive access to debt.

If you are in the middle of that range, for example you are just out of college or a mid-career professional with your own family, examine closely whether you are ready for the financial burden of going the entrepreneurial path.  Assume that your spouse or parents or friends cannot fund you.  Assume that you will not cover costs of the business for at least 12 -18 months and see if you can sustain yourself till then. 

How do you do this?  Determine all the sources of cash available to you versus existing debts.  If you have a boatload of debt from school loans or mortgages or car payments, then you need to account for those first.  On the cash side, look at income from your job and investment dividends, then liquid investments like stocks and bonds, then cash savings, then hard assets such as houses and cars as collateral for debt, then lastly all available credit lines such as credit cards and home equity.  This is your total available funds.  Remove low-quality credit lines and the salary from your job and see what your real runway is for available startup funds.  If this does not cover you for 12 – 18 months until you hit cash flow positive, then you need to think of alternative funds or go on a budgetary diet.  Tomorrow I will go into detail on the budgetary diet and then after that get into how one acquires alternative funds.