Funding

Bottom up strategies follow the line of least resistance, so, choice is determined more by facts and events than rational decision making. Particularly this applies to funding. Funding cannot be planned or predicted. It either happens or it doesn't and is always obtained on the basis of some understanding of what the business is about and how it is to be conducted.

A conventional business approach will be able to offer up a detailed plan, to let an investor see how their money is to be spent and how they can expect to see the results turn their investment into profit. An entrepreneur using a bottom up strategy hasn't got this option as there is no plan and no way of predicting the course of events. In some way, they are in the same position as the person trying to sell the idea of a spread sheet: as depicted in the story in chapter 11.

The late Sir "Billy" Butlin, who became a multi millionaire by creating the first packaged holidays in the UK just after World War 2, had a dream of building "holiday camps" that provided cheap accommodation around a purpose built entertainment complex. He went to hundreds of different banks throughout the UK, looking for financial backing. They all turned him down until he came to a small bank in a run down suburb of South London: Barclays Bank in Tooting Bec.

The manager of this bank recognised the potential and, probably at the risk of his career, loaned Billy Butlin the money to get his scheme off the ground. A decade later, when the Butlin Holiday Camps had spread all over the UK, Billy Butlin was still using this same small bank to handle the millions of pounds the business was turning over every week. Despite many advantageous offers from larger banks to handle his cash flow, Billy Butlin steadfastly refused to move his account away from the small bank that had given him his initial start.

The point of this story is that if an idea has any real merit, there will be a financial source somewhere that will recognise it. The more possibilities for funding there are, the greater the chances of success. This provides another rule for choosing a business:

16) There must be a variety of different kinds of funding possibilities available.