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Looking
for a giant venture-capital firm or philanthropist to bankroll your business
idea? Get real! But don't let a lack of funding stop you from pursuing your
dream. You can start a business that actually makes money, even in this
tough economy. "Fixating on some outside source of capital is a great way to
make launching the business someone else's responsibility," says Robert
Tuchman, successful entrepreneur and author of Young Guns (Amacom, May 1,
2009). "You don't want to do that," he assures.
Here
are eight steps you do want to bet on:
1. Start with self-financing.
Use your own savings.Cash in that pile of
birthday gift bonds. Start with as little seed money as necessary and plow
revenue from sales right back into the business. Instead of wasting time
searching for funding, spend it on finding customers and delivering great
results. If you can't swing it alone, consider asking family and friends for
a loan. Even if loved ones are financially comfortable and eager to help,
tread lightly. Don't risk ruining your most valuable relationships.
2. Borrow, but with caution.
Credit card accounts and banks can still be
good sources of money when starting a business. Just be sure to talk to a
reliable financial advisor first. Shop around for the cheapest options and
lowest interest rate terms. At all costs, avoid taking on the burden of
unnecessary debt.
3. Do business from home.
Save money on renting office space by doing
business out of your own living space. Install a separate phone line or
purchase a cell phone for business use only. Print your own letterhead and
business cards. Your clients will never suspect that "Suite 12B" is really
apartment 12B.
4. Don't delegate all the grunt work.
When they started their company in
Burlington, Vermont, back in the 1970s, Ben Cohen and Jerry Greenfield
really did scoop a lot of ice cream themselves, by hand, and really did make
a lot of deliveries to local stores from the back of a battered Volkswagen.
Even if you're the founder and boss, when you're just getting a business off
the ground, be willing and ready to do most of the work yourself.
5. Know when to show a loss.
From day one, account for everything and
anything that represents a legal expense related to the business, from the
cab fare or car toll to meet with a prospect to the lunch tab. When you're
starting a company, it's natural to want to feel as if you're making money.
Still, it often pays more to list every individual expense and take the
loss, because your tax obligation might be a lot lower as a result.
6. Invest in right software.
Try to do the numbers on your own. But don't
reinvent the wheel. Pick a proven software program -- such as Peachtree or Quickbooks -- that will allow you to keep track of what's going on in your
business. If you dread the idea of entering numbers into a computer,
delegate this job to someone you can trust. Then make sure he or she follows
through.
7. Stay on top of your numbers.
Establish a budget for your business from
day one. Create monthly financial reports to gauge how you are doing, the
reality versus your projections. Devote a set amount of time each week to
reviewing the numbers. These disciplines will help you make sound decisions,
both short-term operation and long-term strategic, and use your resources
wisely. If you struggle with crunching numbers or staying organized,
consider contracting an experienced bookkeeper to come in once a week. Or,
if you can afford it, add a part-time accounts payable specialist to your
team. To get started, stop by www.GoodAccountants.com, a free service that will help you connect with good
candidates.
8. Hire inexperienced people with lots of passion.
Take a risk on hungry,
energetic young people who might be willing to work for less money than
experienced professionals. Enthusiasm and a positive attitude will do more
for your company than any other attribute in an employee. Look first and
foremost for people who "get" your vision and who are truly motivated. Walt
Disney made a habit of hiring recent art college graduates whose attitudes
he liked -- and then trained them in the skills he needed to develop as
animators. That pragmatic practice can work magic for your company, too.
Adapted from YOUNG GUNS: The Fearless Entrepreneur's Guide to Chasing
Your Dreams and Breaking Out on Your Own by Robert Tuchman (AMACOM, May 1,
2009; $21.95 Hardcover, ISBN: 978-8144-1070-7)
March 2009
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