Recent times have made things tough on everyone. The economy has forced many companies to downsize or even close their doors creating a flood of talent in the job market. For companies that are growing and hiring, this has created great opportunities. Some recently “unemployed” professionals, however, have taken this opportunity to go out on their own and start their new businesses.
Even when times are good and funding is readily available, it is wise to tighten your belt and stay as lean and mean as possible. Here are some tips to ensure that you don’t burn through your available capital and achieve profitability sooner.
- Business Plan: Have one. Even if you are not striking out on the fundraising path, this is a good exercise for understanding your goals, defining budgets, creating cash flow projects, and know what it will take to get to an eventual exit strategy. This process will also force you to know your competition and the costs that will be involved in gaining market share. Set goals and milestones. I do not recommend spending months on this, however. There will be a time when more planning won’t get you to the next level, execution will.
- Your website: Naturally, the kind of website you need depends on your business. However, the availability of open source technology and advanced templates have made website development more cost-effective. You still must make the investment and be willing to spend at least a few thousand dollars. You will be judged by the appearance of your website, that is certain. So take ownership of the process and find a firm willing to understand your business goals. Make sure you communicate the exact functionalities you require upfront to avoid additional costs down the road. Also, make sure the firm knows SEO and will build a website that is search engine friendly and adheres to basic SEO site architecture guidelines. Otherwise, you may incur more costs later when investing in SEO.
- Resources: If you are used to working for a large corporation where you did not have to worry about expenses, then you need to put your start-up cap on. Try to avoid too much credit card spending for unnecessary start-up expenses. You probably don’t need office space right out of the gate. Keep overhead as low as possible – it may be uncomfortable for a while but that’s what it takes to earn your stripes in the start-up world.
- Hiring: Don’t over hire. Only hire the people you really need and be willing to wear most of the hats at the beginning. Most business owners start out as the CEO, accountant, marketing director, receptionist, and sales director! You will be working long hours so don’t think you need to outsource everything right away. This is also the time where you learn all of these functions which will make you a better leader later on. If you land a big account early on, be careful about hiring people just to service one client. This is tough because you must have the ability to provide a great service or product, but can’t over hire just to support them. Consider hiring additional help on an hourly or part-time basis. Freelance workers can be a good resource too. Also, consider hiring free of hourly rate interns from local colleges. Interns can be an amazing resource if you hire the right ones. These people can become great potential hires after they graduate!
- Marketing: Internet marketing is probably the most realistic and cost-effective way to go other than guerilla marketing and basic grass routes marketing. You may not be able to afford search engine optimization right away, so consider social media marketing to drive traffic and awareness to your site. This is also a great way to start building your brand and communicating with potential customers. Set up Facebook, Twitter, and possibly YouTube accounts and get after it!
If you are in fact heading out on the fundraising path, be ready to meet with at least 30 VCs or angels. As we all know, funding is tough to come by and even angel investors are trying to stay more liquid. Don’t just go for the investment partner willing to get involved. You will need a partner with experience in your field and one that shares similar passions. You will be spending a lot of time with them so make sure you actually like them! The interview should go both ways.