Funding is tough to come by. Funding in an economy that is still recovering from a terrible recession is even tougher. According to the Federal Reserve Board, commercial banks have eased the tight lending conditions on small businesses that had begun in early 2007. But while credit has continued to flow and venture capital investment dollars have increased since 2010, the economy has forced many individuals into entrepreneurism, creating more competition for those valuable start-up dollars that will help get your idea off the ground.
There’s a lot you can do to start a small business without relying on funding from third parties. Consider the items you really, truly need to start a new company. For example: Is not having an expensive laptop going to keep you from having a brilliant business idea? Do you need to set up your legal structure before you can produce work? Your ideas, the concept behind which you’re building your new company, are what people will pay for. You don’t need money to start acting on your ideas.
Before you get in your own way, consider these 5 ways to get the assistance you need to grow your company:
Remember, you’ve got something to offer. It may be web design services, it may be an extended network of strong business connections, it may be a prototype that is ready to be tested by beta customers. Leverage it. Use the products and services you bring to the table in order to get the help you need.
2. Use young talent
Note: we are not suggesting that you try to obtain free interns. Federal and state regulators have been cracking down on companies violating the criteria that must be met in order to offer unpaid internships. What we are suggesting is working with young, college-level or entry-level workers who may be interested in volunteering some of their time and skills in exchange for real-world experience, a solid reference, and to build their portfolio or resume.
3. Offer equity
Equity is a sensitive, complex topic. Most individuals who offer up their skills and efforts for equity expect to be part of your business’ future in some capacity. If you offer equity in exchange for services, you not only want this person’s skills, but also their ideas, time, networks, and commitment. It’s important to think of this as a partnership, rather than an exchange of their skills for your future money. Be sure to have an idea of where you want your company to be in the next two, five, or 10 years, and always get your agreement in writing, as it will become important if you do raise venture capital money in the future.
4. Partner with local colleges
More and more colleges are working with corporate partners to bring real-world challenges to their classrooms. Investigate opportunities at your local universities and see if there’s a way to offer your small business as a case study for students to work on and analyze. You’ll benefit from fresh perspectives on your business problems and opportunities, and students can offer recommendations on how you might achieve certain goals.
5. Get your first customer
Depending on what product or service you offer, if you satisfy an important and frustrating need, you may be able to secure a customer immediately upon starting your business. Who are your core customers? Do you have anyone that fits the bill within your professional network or even family or friends? Consider offering a sign-on discount for those customers who are first to try you out, or give them payment terms that allow you to accept only a partial payment up front – anything to get those first few dollars into your account.
Whether you are starting a company on the side, or launching your venture full-time, you don’t need to turn to banks and investors as your first order of business.
What other tips or options would you suggest for getting your startup business launched with little to no money?
Photo source: michaelgholmes.com, davenport.edu