Should You Use Other People’s Time and Money to Open a Business?

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this new series watch, CapForge’s owner reacts to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

CapForge Founder and Owner Matt Remuzzi shares his thoughts on whether you should be using other people’s money and time in starting your business.    

Video Transcript: 

Business Advice Video: 

The fastest way to grow any business is OPM and OPT. OPM is other people’s money. So when you use other people’s money in your business you can scale a lot faster. You can do more deals a lot faster. You don’t have any limiting barriers based on money cause you can raise from other people. The other one is OPT, other people’s time. This is when you hire other people to help you do the work that’s needed. You can have multiple different projects. You can have multiple different people at those projects. There’s no limit on meetings, there’s no limit on calls, there’s no limit on time, because you have other people doing those things for you.

Matt’s Review:

Okay so yes, if cash is a constraint in your business, if everything in your business is working great and the only problem is you don’t have enough money to be able to buy more inventory or hire more people, than using other people’s money might be a solution. The problem is if your business is working great then you shouldn’t really have a cash flow issue. Now it can happen in some kinds of businesses, but then at that point what you probably wanna look for is a line of credit or a loan. If you bring in other people’s money, and that’s a generic term, so maybe he’s including loans and things like that in this, to me other people’s money more typically means investors, private money, people who may be loaning or investing in the business on a private level. The problem with that is they very often they want a say, right? “Hey, I just gave you $100,000 for your business. I wanna decide or help you decide who you hire with it. Or what inventory you buy with it. Or what markets you go into. Or what your marketing messages. Or I wanna critique your ads. Or I wanna have a, you know, a seat at the table, because I just gave you this money.” And they may not be qualified to have any opinions or you may not want their opinions. So there is definitely a big downside to using other people’s money and how much control you’re giving up depending on whether or not you’re giving up equity in the business and or what the terms of the loans are that you’re borrowing, If you’re borrowing from a bank, getting a line of credit, or using credit cards to fund the expansion, then as long as you make your payments nobody’s ever going to tell you what to do or how to do it. So before you bring in other people’s money, you have to decide what you’re willing to give up or what controls you’re gonna place around that. So not quite as easy as just saying other people’s money. 

And then again you have to have something that other people are gonna wanna invest in. If the challenge is the reason you need money is because things aren’t going well, then it may be very difficult to get anyone else to give you money. Because they can see exactly how things are going and don’t wanna flush their good money along with your bad money. Other people’s time is just, yes, delegate, hire, outsource. Those are all smart things to do if you’re past the capacity that you can personally take care of your current staff and current can take care of, then yes use more people. That seems pretty obvious.