Kathryn Finney has seen the challenges entrepreneurs face, first as an entrepreneur herself and later as a venture investor. After making her name with a popular style blog, The Budget Fashionista, Finney decided to take her career in a new direction in 2009, joining an accelerator program for aspiring business owners. The challenges she encountered went far beyond the classroom.
"I was the only Black person — I was actually the only person with a tan, to be perfectly honest — and was one of the only women. It was one of the worst experiences of my life," she told Grow. "It was the first time in my life that people had no expectations — not just low expectations, but no expectations — of me. And here I am, this overachiever, a Yale-educated epidemiologist, graduated at the top of my class. And people totally thought I couldn't do anything just because I was a woman. And Black. That stuck with me."
Determined to create a better path for others, Finney has since founded several businesses and nonprofits dedicated to supporting start-ups run by women and people of color, including digitalundivided, which focuses on Black and Latinx women founders, and Genius Guild, a $10 million venture investment project that supports Black entrepreneurs.
While Finney's focus is on underrepresented groups, she has wisdom for aspiring business owners of all stripes. Below, she shares her advice on how to find a great start-up idea, build a product that people want to buy, and get investors' attention.
Video by Mariam Abdallah
With the Covid-19 pandemic pushing millions of Americans to reevaluate their priorities, many are considering starting their own business. But how do you know it's the right path?
"Running any small business or start-up is hard work," says Finney. "You've got to love it. It has to be something that you would do anyway. And then you're just trying to figure out how to monetize it."
Finney's first big venture, The Budget Fashionista, grew out of her existing passion for affordable clothing. "Budget shopping is who I am. I still, to this day, shop at Target and Walmart," she says. "For me, it was not a business — it was something I was doing anyway. I was going to go to Marshalls and go to the bargain bin and text or take pictures of what I was buying to send to my friends. I would do that anyway, whether it was a business, whether I was getting paid for it or not."
To figure out which of your passions might make for a good business, Finney suggests diving deep into online communities surrounding that particular hobby. If you're excited about knitting, for instance, Finney suggests searching for "knitting businesses" and spending time on platforms, such as Etsy, where such ventures might already exist.
"Do some market research. What are they selling? What are they charging? What does it seem like people are buying?" she says. "There's a lot of message boards and social communities that you can engage with to find out what's happening."
A common mistake for nascent business owners is trying to create something that is perfect and fully formed from the jump. That's not the right approach, says Finney. Instead, "get to what is called an MVP, a minimum viable product."
An MVP shows potential investors that customers are willing to engage with, and spend money at, your business. "It could be as simple as a landing page. It could be as simple as a basic site that you created on one of the site-creation platforms — just something to test out," she says. "As an investor, I never expect things to be perfect. I just want to see, 'Can you go from idea to execution?'"
Video by Courtney Stith
Aim to spend as little money as possible to get there, Finney says. "If you can do it for less than $100, that is really the goal."
That can be particularly challenging for women and people of color, who face increased scrutiny from lenders and investors, Finney says. "We often are required to do more than the MVP. We are often required to have a fully developed product that's in market, because sometimes people don't trust our vision."
"My advice to people of color is to bootstrap as much as you can. Because the fact that people are not eager to invest at the beginning stages with you is to your advantage. Once you prove that there's a market, the investment is going to be a lot more costly to the venture capitalists than if they had bet on you early. When people come too late, make them pay for it."
People start their own businesses in order to make money, and for many founders, getting funding from investors can feel key. But Finney urges would-be entrepreneurs to ignore the prospect of receiving funding, at least in the early stages.
"I know that sounds counterintuitive, but if you build a product that other people want, that people are willing to pay for, you will find the money," she says. "And you will be able to dictate what type of money you get, whether it be loans or investment."
Video by Neha Dharkar
Focus on impressing potential customers, not investors. "One of the mistakes I see is that people — particularly people of color and women — tend to center the angel investors or venture investors rather than centering the building of the product. If you have a great product, you may not even need them," she says. "I often say to people: 'You don't want me to invest, because I become your boss.' And if your goal is not to have a boss, then you probably don't want venture investment. You probably want to look at other financing options."
Once you're ready to seek investment, be sure you meet what Finney calls the "100 rule": "Do you have 100 people who have interest in buying your product? If you have that, then we're very interested in talking to you," she says. "We are even more interested if you've actually built the product and have shipped it out to people as well, because that involves a lot of actions that involve a lot of work."
In most cases, it's smart to forgo funding for as long as you can. "I don't think you should take any loans or any investment to build a product unless you're building some biotechnology, or something really big," she says. "I think you should bootstrap as long as humanly possible."
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