Capitalist control

My son has been thinking about starting a business. The problem is that to be a capitalist, you need, well, capital. And he doesn’t have much. But neither did Alan Sugar or Richard Branson when they started, so what is the point?

The difficulty when starting with nothing is that you cannot afford any stock, you certainly can’t afford premises and you definitely can’t develop your own product. The only route is that of a “street trader”, flogging off stuff while you build up your resources. This was broadly how Sugar and Branson got going, but they started young. And it also took several years before they made any real progress.

The big change today is that with the arrival of ecommerce, there is more opportunity to start up with limited assets. For instance, if you sell on eBay, they take care of bringing in buyers, the technical side and payment processing. The downside is the loss of margin, intense price competition and a dangerous reliance on a third party.

Another approach is to get an online store for a low monthly fee – my own company charges just £18 per month for our entry level offering. The downside of this is that you have to go out and attract customers, which involves optimising for search engines or paying Google for clicks. The upside is better margins, less price competition and more control of your own destiny. It’s horses for courses.

If you have capital, you have many choices. If you don’t, ecommerce offers some new options. The old saying still holds true. 'Do you know the golden rule? It’s that the person with the gold makes the rules'.