Money is an essential ingredient in any startup, I am going to share few must know tricks & tips for lean & mean startup which were also proven during my experience as an Entrepreneur & Startup consultant. I am extremely thankful to Zeke Camusio*, on whose article i have based this.
You don’t need lots of money to start a new business & many of the successful ventures (Ex: Apple, google & MS) have used some of the following tricks to be successful.
You Don’t Need Everything from Day One
• You don’t need to incorporate from day one.
• You don’t need an office.
• You don’t need a new Computer, fax machine, fancy business cards or that desk you really like.
Try to be resourceful, Don’t feel like your business has to look like a “real operating business” from day one. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.
Also all the needed equipment can be procured in the order of real need & not on order of perceived need, never buy an item which is used very rarely, most of the times you can do with sharing stuff ( Say a scanner/printer) with offices nearby.
Have Contractors, part time employees, not full time Employees
This tip is especially important for most of the startups, my own Air cooler manufacturing venture operates on this principle. Having contractors & part time employees has many advantages:
• You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
• They don’t need a desk or office space.
• When work is slow, they get paid less. When there’s a lot of work, they make more money. Try to do that with a full time employee.
Pay for Results
It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals. Incentive & Percentage systems have really worked with me atleast.
Use Relationship Marketing to Your Advantage
This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?
1. Find the people that have access to your audience.
2. Offer them a commission for referring business to you.
3. Let them market your company at no risk to you.
Let’s say you offer city tours in your city. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to thousands of travelers and that’s your target audience. Pay front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.
Be Smart About Your Inventory
These are two great pieces of advice I learned from my mentor:
• Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
• Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.
Do As Much as You Can Yourself
Build your own website, design your own business cards and write your own marketing copy. This won’t look as great as work done by professionals, but it’ll free and fast. Once you’ve sold a few thousand dollars worth of products, you can always re-do your website, business cards and marketing copy using experts.
Barter as Much as You Can
Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.
Leverage Other People’s Businesses
You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.
Good Enough is Good Enough
There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t work with a web-based application that is $5 a month because it doesn’t have all the features they want. They can’t stand using a template for a website; they want a custom-made site. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.
Bonus Tip: Don’t Quit Your Job Yet!
Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there. Several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.
* Reference
http://www.theoutsourcingcompany.com/blog/entrepreneurship/how-to-start-a-business-with-no-money/
