Under-capitalization promotes creativity due to necessity being the mother of invention..
My Elders taught me, "any dummy can spend money; it takes real talent to make money stretch "and" grow your business".
I come from an emmigrant and blue-collar background on the non-ITI side; I'm the first person in either side of my family to go to college.
Among us ITI (Indigenous Turtle Islanders), it is not the norm to have graduated high school, so if someone goes to college, that's even more rare.
I worked my way through, and funded not only my degree+, but every one of my businesses "from within". Which means, every one of them was under-capitalized from the start.
My first effort was when I was 5. I could read at 3.5 years; and write (not print) before my 4th birthday. No one pushed me to; in fact, there was some effort to restrain me. Obviously, it didn't work then, just as it hasn't worked since.
When I set my mind to something, it isn't a question of 'if', it's a question of 'when'.
That first business needed no funding.. I copied the handwriting of 6 adults until I could reproduce all 6 styles easily; then I made a little sample book of the 6 handwriting styles and went to the other 26 kids in my kindergarten class with this offer:
"Anyone can have the teacher sign their pictures, but it's really rare to be able to have another little kid do it. For 10 cents a week per kid, I will sign all your pictures, in as many styles as you want." All 26 kids signed up. $2.60 / week for a 5-year-old was BIG money! I knew then my heart belonged in business.
The teacher found out eventually and insisted I apologize to the other kids. I had done nothing wrong, so I refused. She sent me home with a note. First of so many times, my shoes eventually knew the home without me in 'em. ("I showed too much initiative for an Indn kid." But hey - there's no bigotry in the U.S.. Hah! Then and now.)
The mother thought it was interesting and amusing. The foster father did too, but decreed that I would have to apologize. We went around about this for several days. Eventually he decreed that I either apologize of he'd take a strap to my sitter. I said that was coercion; he agreed.
My apology went like this: "Two hundred years ago, most people were like you - they couldn't read or write. People who could read and write, like me, were called 'scribes' and we were respected and paid for our ability to read and write for others. Today, those people are called 'executive secretaries' and big executives all have them.
Until the adults told you I had done something wrong, you thought my ability was pretty neat; and you were right. You let the adults pull the wool over your eyes and convince you I did something wrong when I did nothing wrong. I sold a skill I have that is unique among kids our age.
So I'm sorry you let the adults pull the wool over your eyes, but I'm not sorry for anything I did, because I haven't done anything wrong."
Then I looked at 'the adults' - principal, kindergarten teacher, the 2 parents - folded my arms, and said, "and that's as good as it gets."
The foster father squinted one eye at me and said, "kid, you're going to be a lawyer."
I shot back, "No I'm not.. Lawyering's dirty. I'm going to be in business! Business is fun!"
I've been in business most of my life since. I have had more than one judge tell me I made him feel inferior in his own court, though.. which makes me feel good and I've thanked them and said I thought that was good and that I was pleased I didn't have to take a number, having been the first.
OK - some of us never grow up entirely. That's not necessarily bad - it keeps a person from getting stale.
In re under-capitalization and business since..
My largest effort to date kept me and 17 men working for the best part of 20 years.. Couldn't-a been too bad an idea, then, hm?
If nothing else, it cuts overhead to a minimum; eliminates temptation to overspend (you can't spend what you don't have); and (to repeat) it promotes creativity and determination.
But then, nothing worthwhile was ever accomplished without determination..
Under-capitalization is not for the faint of heart, nor for those who are not quick thinkers and able to restructure some part of their plans almost at the drop of a hat.
People who start businesses on an under-capitalized basis MUST have a Plan B, 'and' a Plan C, and always be both able and willing to change direction in mid-air, so to speak.
You need not be crazy to start out under-capitalized, but you do need rhino hide, the ability to bounce back, and no matter what, determination that you will succeed.
As my Grandmother Pearl taught me, "You can do nearly anything if you want it more than you want your next breath." She was right. Been there, seen that.
Michael Jordan, Harry Truman, and a host of other "successes" became successes BECAUSE they failed dona hey times before, but they learned from their failures and built on them. I have, and you can, too.