Each year, millions of aspiring entrepreneurs around the globe make the decision to start their own ventures. The majority of these new ventures are lifestyle or ­necessity-­driven businesses, as much as 90% by some estimates.1 Funding will come primarily from the founders themselves, supplemented by family and friends, the aptly named “3F” funding source.

Lifestyle or ­necessity-­driven ventures are less likely to face high ­start-­up capital requirements. Many will be service based, typically employ only the founder or a small number of employees, and remain small. New ventures that can generate early sales and free cash flow (e.g., cash left over after expenses are paid) are not likely to require any external investment. ...

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