If my Start-up Had No Resource Constraints, I’d be Very Worried

Vikas Joshi
December 29, 2016

Picture this: Your start-up has the opportunity to bag a big order from a top-name client, but you’re not sure you have the resources to fulfil it. Know the feeling? Or how about this: An important customer offers to visit you at your office, and you cringe at them discovering your cramped workplace in the basement of your house. Or imagine finding yourself (yet again) doing the dishes in the office sink, when you should really be rehearsing your sales pitch. Facing resource constraints is the bane of existence for every entrepreneur. Isn't it?

I’ll be honest with you: In the early days of my company, it was no fun for me to face a chronic shortage of people, money, space, and time. In those days, many different emotions shot through my mind: Anxiety, embarrassment, and even hopelessness. I remember wondering: Why does my business have this insatiable hunger for more staff, more cash, bigger workspace, and more time to meet its plan? Is there something wrong going on here? I spent several sleepless nights, getting utterly stressed, wondering if we had what it takes to serve customers well. Often, I would be on the brink of giving up hope, thinking that we were up against the impossible task of keeping up.

Several years fast forward, and now I am convinced there is a wholly different way to look at resource limitations. Now, I have come to believe that if you’re NOT facing any resource constraints, something is not quite right with your start-up. For that matter, if you have enough resources at all times, what you are doing may not even be ‘entrepreneurship.’ This viewpoint finds support in theory as well as practice, and I will present both.

How entrepreneurship scholars view resource shortages

Howard Stevenson, a highly-regarded academic in the field of entrepreneurship who taught at Harvard Business School, described entrepreneurship as the relentless pursuit of opportunity beyond resources currently controlled. You read that right. Entrepreneurs pursue opportunity that is beyond what their resources seem to permit. Likewise, the highly respected corporate strategy guru C.K. Prahlad, famously said, “If your aspirations are not greater than your resources, you’re not an entrepreneur.” There’s a common theme here: What entrepreneurs aspire exceeds their resources.

The notion of seeking to transcend resource limitations is equally relevant for large organisations as well. That’s what we learn from Robert Simons, a professor at Harvard who studied organization design. According to Simons, companies should hold managers accountable for measures that are wider than the resources they control. That forces them to become resourceful in working with others in different departments; to figure out how to solve problems; and to turn opportunities to advantage. He uses the term ‘entrepreneurial gap’ to describe the distance between the span of control and the span of accountability.

How we see entrepreneurs dealing with limited resources in real life

Resource constraints aren’t just typical of very early stage start-ups. One recent example of significant resource challenges encountered by a late-stage start-up is Go Jek, Indonesia’s first Unicorn focused on hyperlocal transport, logistics and payments. The company launched in 2011 with about 20 drivers. It grew steadily for the first couple of years; but growth really took off in 2015. Between May 2015 to June 2016, the company grew about 100 times over. The company ran its operations completely from a technology platform that was obviously not equipped to handle this scale at that time; but that didn’t stop it from expanding. It acquired a couple of tech start-ups in India to help deliver the scale that its platform now needed and also eventually raised $550 million in a round of funding. And while it still faces a number of issues, Go Jek is forging ahead, giving competitors a run for their money.

Based on this and several other examples I’ve seen, the point I’d like to make is that facing resource constraints is not something that a start-up founder needs to be embarrassed about. It is a part and parcel of entrepreneurial life. In fact, it’s a sign that your business is growing! I firmly believe that you should be worried if you have too many resources, not too few!

To sum up, achieving great things with your seemingly meagre resources definitely trumps sitting on a huge pile of funds (whether yours or your investors’) and not having much to show for it. So, whether you’re hiring, speaking to a prospective customer or pitching to an investor, keep your head held high and don’t apologise for that cheap coffee, the cramped conference room, or the free online meeting. Wear it like a badge of honor!