There's a mistake that so many entrepreneurs make when it comes to funding, and it's not that hard to avoid.

Jeff Hoffman addresses this topic in today's Freedom Fast Lane episode. The clip is from the Q&A session we had with Jeff when he first spoke at the Capitalism Conference (formerly Freedom Fast Lane Live) back in 2015. We invited him back to kick off this year's conference in Austin, which wraps up today.

In this episode, Jeff explains the clear steps every startup entrepreneur must take in order to determine what—if any—outside funding is needed to make the business successful.

Jeff blames Silicon Valley for creating the idea that entrepreneurs need to get funding as soon as possible. The truth is, most entrepreneurs ignore getting funding from customers by providing value. Instead, they go to bank debt, private equity, venture capital, you name it.

One of the biggest problems with small businesses is overcapitalization. Don't let that happen to you. Instead, follow these steps Jeff recommends to make sure you're ready to pursue funding.

1. Make a list of everything you need to do between now and someday, whenever your goal deadline is, to make your company successful.
2. Circle everything on that list you think you can do without someone else's money.
3. Go do all of those things.

Take it from Jeff—don't get funding until you absolutely need it.