7 Ways to Launch a Business With Little To No Start Up Capital
by Brian Hazelgren
1. Find Strategic Partners
You will want to spend a little time figuring out what your business’s niche or specialty is, and develop a strategic alliance with an already existing company that your business can complement. For example, a life coach can work with a small business coach and align his or herself with a partner to enhance packages for potential clients. Finding ways to partner with an existing company by adding a product or service that is complimentary to their customer base, you can literally grow your business faster, and at the same time help out the growth of another company. When you find the synergy between what you offer, and what your strategic partner offers, you will end up with an sales force not on your payroll, who will be out there promoting your company and your products. In the end as you succeed, so do they.
2. Outsource Your Work to Others
Many times I hear from entrepreneurs who are looking for capital, and find it hard to raise $50,000 to fund start up costs for manufacturing a product. As an entrepreneur you will need to constantly look for ways to reduce or even eliminate the need for up-front capital by outsourcing your products on a per-use basis. You can do this by waiting until an order comes in and use that money to make the product. Until the cash and orders start coming in more frequently, this method can be used for as long as you need it to get you through the “short on cash” times. I have had to do this with a golf product bundle because the up-front costs were way too high to just jump in and hand over $50,000 until we actually knew that there was the demand that our market research showed. One additional thing to remember when outsourcing is that there are many companies, even well known brands, that don’t physically manufacture the products that bear their name. Think of the cereal isle in your local grocery store with “store brand” cereal products. The grocery store chain does not manufacture these cereals. The cereal is actually outsourced by a third party vendor.
3. Group or Crowd Funding
Group funding websites such as Crowdtilt.com, Kickstarter.com, and Chipin.com have created quite a buzz in the small business “Mom and Pop” market. These sites provide a platform for entrepreneurs to reach out to an online community and raise funds for their business. You don’t have to give up control of your company to raise $100,000, and you don’t have to take on partners that you may wish you hadn’t. This is a pretty cool way to raise small amounts of money from many people, and it can add up to quite a bit in a short period of time. In most cases you will set a mark of how much you need, and until you actually reach that number in donations, no one will be billed the amount they committed to. Once the number is reached, then the funds are released to you.
4. Offer A Service
A great way to start a business with little to no cash flow is to open a service-oriented company. Business coaches, insurance agents, attorneys, consultants and product & service brokers have little need for office space in the beginning stages of their business, and even less need for manufacturing products. This allows them the freedom of not having to spend their money on rent, furniture, office equipment, telephones, computers, etc. They can launch the company and wait until later to invest into office space and other equipment. Remember the power of intellectual capital and experience that you possess, and that is really what your clients/customers are paying you for. Between the knowledge and experience that you and your team possess, that is expertise that can be shared with others, and these types of services will allow you to grow a successful business. Do you have knowledge or expertise in a certain industry that you can sell to others and provide value? If so, you can launch your business today and start telling others about the great service you provide.
5. Create a Foundation
How many times have you thought about doing good things in your local market, or even nationwide, and helping out others in a charitable way? If you are like most small business owners, they have either thought about donating some of their resources to a charitable cause, or in many cases have actually gone out and started their own foundation. Doing good in your local community means that you are giving back to a charitable cause with your time, money, products, and services. Here’s an idea: start your own foundation and raise money for your favorite cause, only in this case you control how you work withother companies to raise funds and awareness. You will need to register your charity with your state as doing business as a charitable cause, and you will need to apply to the IRS using one of its forms of exemption. The most popular form is Form 1023 Application for Recognition for Exemption. It does take some time to fill it out, and there is an $850 fee associated with turning it in to the IRS, but it will easily pay for itself, and you will be doing good things that can impact many lives.
6. Angel Investors
Take some time and think about all of the people you know of, or have some kind of connection to, that can help you start your business. There are many people who are actively looking for deals they can be involved with, because they were in your shoes at one point, when they didn’t have any money. Now that they have a little success under their belt, angel investors love to help small businesses get launched and even expand into new markets. There are local angel investor groups in your area that you can pitch your idea to. There are national angel investor groups that also pool their money, and look to invest their capital into deals. These types of groups are actively looking to connect with entrepreneurs to find the next hot idea or next high impact business that they can be involved with. As I will always preach, make sure you have a solid business plan that you can send, or give to them. At a minimum, you will need an Executive Summary that you can email to them to get the ball rolling. Angel Investors will want to see what you have developed in writing before they will commit any capital to your project. Also, check out my books The Complete Book of Business Plans; Tactical Entrepreneur; or Your First Business Plan. You will have all of the information you will ever need to write a powerful and persuasive business plan.
7. Take Full Advantage of Social Media
With all of the options that exist today with Social Media, you will want to take full advantage of social media sites that can help you connect with a large group of people to help promote your product and services. The big ones of course are Facebook, Twitter, Linked In, You Tube, Digg, and several others. Just so you don’t get lost in the sea of social media sites, here is a great overview of the 50 Top Social Media Sites for Business (http://www.focus.com/fyi/50-social-sites-every-business-needs-presence/). Also, tools like XeeMe, Nimble, or Gist can help you manage multiple accounts on multiple platforms. There is no doubt that social media sites can drive business, and they are great ways to connect with many more groups outside of your own network. On the flipside, take extra care to make sure you keep people happy who do business with you, or follow you, because just as they will promote you to their friends and other connections when they like you…just imagine the damage they can cause if you don’t take care of them.
For more information about Brian, go to Facebook: Facebook/BrianHazelgren and GO*VETS Foundation; Twitter: @brianhazelgren; websites: www.brianhazelgren.com; www.govetsfoundation.org; www.e3factor.com