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Key Idea: Prepare To Invest Personally

Sohrab Voussoughi, founder of Ziba Design, started his company with $400, a wife who agreed they could cut their personal expenses and  a good idea where he would get his first job.    More...

Key Question:


At first, it is all about MOM. "It takes money to make money." And, we all know that truer words were never spoken. And in the earliest stages of starting a business there is only My Own Money. You can not ask anybody to put "skin in the game" until you do. That is a basic reality.

MOM has simple analogies to your own Mom. MOM gives you all the basic motivations to stay focused and to carry your own weight. And, if it only takes nine months to incubate your business (create the foundations for a sole proprietorship), you will be one lucky person.

Not only do you need some cash to start a business, to purchase the stuff of your business (whatever your particular business requires), you'll need cash throughout your entire start-up period. For some of our people that was as long as ten years! Even if everything goes better than you imagined -- you're immediately profitable -- most customers will not pay you in advance and you'll at least need enough cash to fund the gap until the money starts coming in and your business becomes profitable.

Q: What sources of MOM, (My Own Money), are available to the small business owner?

A: Some business owners started their businesses with personal savings. Others sold assets, such as their homes, to obtain the necessary start-up funds. Tom Gegax and his partner quit their jobs at Shell so they could get their hands on the money in their profit-sharing accounts. If you currently work for a company with some sort of deferred compensation plan, which is what a profit-sharing plan is, this might be a viable alternative to you. You may have 401(k) plan that permits you to borrow against it.

One of the worst MOMs is a withdrawal from your retirement plan. Because the penalties are very steep, it is also an expensive source of MOM. If you have no alternatives and just "know" you are on track, make sure you hold back what you'll need to pay the penalty and the taxes.

Most new business owners keep their "day jobs" and start their ventures in the other eight hours of the day. Some take on new jobs that complement the schedule. Albert Black worked the night shift for 10 years while running his business during the day.

Not all of the necessary funds have to be available at the inception of the company but the business owner does have to have a plan to meet his or her personal financial obligations while (s)he is building up the business. Many business owners take little or no salary from a newly formed business relying on other family members to fund the household expenses.

Be appropriately conservative in forecasting the amount of time it will take before your business can provide you with the level of income you need. Don't start a business without the necessary financial resources for the business and for you, personally, to support both until the business is profitable and generating adequate cash flow. This can take years.

Think about it

If you are thinking about starting a business, how much money will you need to carry you through the point in time where you can support yourself entirely from your business? This is your "gap." How will you close it?

Clip from: Money: All about Financing Your Business

Silicon Valley, New York City, Sydney and the World:   When you are just  starting, it is usually about your money, called MOM, an acronym for My Own Money. It is also called "skin in the game."  Very few of us have a track record and can write a business plan that is so compelling that we begin with Other People's Money (OPM).

If you are growing, there is an abundance of stagnant capital that may be looking just for you.  Qualified investors (and people who believe in you) are looking for ways to grow their money either as a loan or as an investment for equity. It will require an excellent business concept, a well-detailed business plan (your story), and real financial projections. They will also require that you understand your financials, even if they are quite modest. Those numbers are the organics of a business, the basic 1-2-3s.

Business is just a series of problem-solving exercises. That's its nature.  If you do not have the stomach for it, get a job. If you think money is going to be given to you just because you have a good idea, keep your job!

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Ziba Design, Inc.

Sohrab Vossoughi, Founder, CEO

334 NW 11th Street
Portland, OR 97209

Visit our web site:

Office: 503.223.9606

Business Classification:
Design, Invention,

Year Founded: 1991

Prepare To Invest Personally

HATTIE: (In the studio) Hi, I'm Hattie Bryant. Every few years since our first episode in 1994, we have done a special show about money. It is the one question we receive most often. 'Where do I find money to start or grow my business?'

Money is an equation that connects the past with the future. If the future of your business is private and limited, so is the money that is available to you.

If that future is public, well-defined and expansive, you may have many paths to other types of money.

Basically there are two types of money. My Own Money, we'll call MOM, and Other People's Money, OPM.

Most of us start and grow our companies depending solely on MOM. And there are two types, your personal assets and then the retained earnings generated by your business. Most owners use a creative mix of the two.

Meet Sohrab Vossoughi
(Voiceover) Let's visit with Sohrab Vossoughi. He was tired of working for other people. After many discussions with his wife they sold their home and paid off all their debt. With just $400 in their bank account he quit his job and they lived on a shoestring, while he operated from their kitchen table.

SOHRAB: (Voiceover) We are a really a brand consultancy with our expertise in product development and developing brands in the domination of spaces. Anything you make, you put it back in the business, that's what I used to do. Just think for the first six months I didn't take a single dime out of the business. We had our saving, we got rid of the house, we went with one car, we did everything. You sacrifice. There's a saying back home in Persia that says, 'For one year you eat bread and just water.'

HATTIE: Bread and water.

SOHRAB: 'Then you can eat bread and butter for the next 10 years.' Meaning that you've got to really make things -- it's hard at the beginning. If you want to really make it you have to sacrifice.

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