Are You Waiting For Capital To Launch Your Startup?

by Anand Srinivasan, founder of LeadJoint.com

Almost each one of us reading this blog has a business idea that we are convinced can be the next big thing. The hustlers among us have also validated their idea through prototypes and pop-surveys. What stops a majority from moving ahead to the execution stage is funding. Most businesses – online or offline, need seed capital to get established and without access to these funds, launching a business can seem like an improbable dream.

That does not have to be the case however. For one, you do not always need money to start a business. Secondly, funding does not have to come from external investors. Unless your business idea is to launch an oil rig, you do not need huge capital investments. Founders need to work on a ‘compartmentalization strategy’ that breaks down their business dream into small components that can be smaller business ideas by themselves. By compartmenalizing your business idea, you can identify smaller components that can be launched with your own savings.

For instance, let us assume that you want to launch an Uber-like on-demand app for commercial trucks. To do this, you will need to invest money in hiring programmers who can build and maintain the app. You will also need an advertising budget and sales/marketing professionals who can make that happen. That seems like a lot of capital. But if you break down this idea, you can identify a smaller business component where customers can request a truck and this notification can be sent out to all commercial truck owners in the city. This component can be implemented using existing newsletter services many of which also have a free tier. You may also charge truck owners a monthly fee for being subscribed to this newsletter. This way, you can focus your initial days of business in building the marketplace instead of developing an app that costs money.

A lot of successful businesses today were founded as a smaller component of what they became eventually. Amazon was an online book shop, Mattel started as a seller of picture frames and Phil Knight (founder of Nike) started his business selling athletic gear from the trunk of his car. Most of these businesses that have their turnover in billions today were started on a capital of less than $1000.

Sometimes, even the smaller component you want to kick-start your startup with can require capital investment and this does not have to come from a seed investor. Many aspiring entrepreneurs waste away precious time reaching out to investment firms with their undeveloped idea only to realize that these investments do not happen in the absence of validated traction. It is always possible to find alternate ways to sustain yourself till you gain business traction.

Here are a few ways to do it:

Have a day job.

This is the most effective way to get started on your idea. You do not have to be in your venture full-time. Thousands of entrepreneurs around the world worked on their idea on the sides for months before taking it full-time. When you have a sustainable source of income, you are under less pressure to show results which also means you could continue to persevere for months without getting desperate.

Find marketing opportunities that does not cost money.

Entrepreneurs often believe that the only way to find traction is by advertising your business. That does not have to be the case. There are a number of ways to find marketing opportunities that do not need investment. Paul Graham has an excellent article on this topic.

Find a cofounder.

In the early stages of business, sweat equity can often be a good substitute for cash. If you cannot afford recruiting a developer who can build the service for you, an alternate is to pitch your idea to smart developers who can serve as your cofounder and earn an equity in lieu for their work. Finding a cofounder is hard work and does not happen easily. However, if you are committed to your business, it is a better idea to seek a cofounder than an investor to build your product and take them to the market.

 

Anand Srinivasan is the founder of LeadJoint.com, an online lead generation tool for digital marketing agencies. He is also a part-time marketing consultant and has previously worked with some of the most promising Indian startups.

from Young Upstarts http://ift.tt/20z6Ev5 via website design phoenix