|: The J-curve Business Model! Just frickin’ avoid this at all costs…seriously. I’ve been there and have the scars and disabilities now as a result of the numerous J-curve businesses I’ve been a part of!|
Unfortunately, most new business ideas I see these days require a BIG lump of cash upfront to get it going. I don’t mind normally if this cash is going to be used for productive things, like ad spend.
But if it’s to buy pointless things that don’t move the needle like a big fancy office and silly furniture and fat salaries…then it puts me off.
I’m not joking when I say that if I ever invest in a business, I like to see realistic costs of setting up the business and then the marketing budget to be at least 80% of the whole capital raise. And I’m not the only Angel Investor that thinks that!
So if someone is looking for £100k investment, I need to see that £20k is going towards necessary things like staff etc and £80k for pure ad spend!
If it was the inverse, the business would never launch and gain traction in a time-efficient manner.
A restaurant, bar or club tend to be the prime J-curve culprits these days. These bizzes need a hefty upfront CAPEX (Capital Expenditure) and can take years before hitting profitability and break even. It better be a bloody good venue and concept if you’re going to raise capital for that!
I’ve seen the set up a few J-curve businesses myself. Some with ok results and some with proper war stories.
For example, One chap bought a small tech company in Norwich in 2016 and was going to use the tech and brainpower in that company to launch a Virtual Reality Arcade in Norwich. The goal was to get the VR Arcade to modest profitability so that it actually funded my secret agenda for that business, which was to start creating lots of VR content and tech. I basically needed geeks and nerds! I’m a geek and nerd myself, but he needed far smarter ones than myself!
It was going to be a fun adventure until his business partner (who had 25% of the company) brazenly stole £75k from him ! She literally changed the passwords on the online bank account and tried to do a runner! The cheek of it! Even worse was that she then proceeded to use £15k of my money to pay for her legal fees when we pursued her!
But long story short, the whole point of this is simply an attempt to veer you away from J-curve businesses! Please heed this!
Heed it until you’re a shrewd business practitioner at the very least and with lots of capital behind you!
Just pop in your name and email, Ill get the guide over to you
As a bonus , if you would like a free review of your website give me your company url and Ill send you an audit report.