SETTING UP A BUSINESS WITH NO INVESTMENT

Tips and insight into key factors to consider when starting.

Author Profle: Jamie Riddell
A passionate music enthusiast, Jamie
Riddell made his name as the far-sighted,
entrepreneurial co-founder of UK Digital
Marketing Agency Cheeze Ltd. Jamie now
writes and consults across a broad range
of interests, including web 2.0 and beyond,
corporate strategy, branding, technological
uptake and adoption, markets, the wise use
of social networks, postcards and Pink Floyd.
Jamie is listed in Whos Who of Young
British Entrepreneurs.
In 1999, My partner [now wife] Katherine Jerman
and I set up a digital direct marketing agency called
Cheeze. It was started in the spare room of our
cottage in Suffolk with a 5,000 overdraft. Back
then there was no ADSL The ISDN line was the
frst in the village. I had left a perfectly good job at
one of the UKs leading digital agencies in London
and we had a fve-month-old daughter.
From this humble beginning we grew the agency to be
one of the UKs leading digital agencies, listed twice
in the Sunday Times Tech Track 100 Fastest Growing
Companies. In 2007, less than 8 years after founding
the agency it was acquired for 10m to become a key
part of the Digital Marketing Group plc. now the one
of the UKs largest digital marketing groups.
Katherine and I have now left the agency to focus on
fulflling other ambitions. I took the opportunity to present
at Social Media Camp and decided to talk about setting
up a business with no investment. The current market we
are in, despite the credit crunch, seems very similar [dare I
say, reminiscent] of the dotcom boom & bust. The Internet
is the best of times, the economy is the worst of times. There
is great excitement about the possibilities of the Internet [this
time with proper revenue streams] and this will no doubt
feel like the right time to set up a business but with markets
still in turmoil will there be so much funding around?
So, with Katherines input I share ten tips for starting a
business without the seeking external investment. These
ideas are borne from experience, which we hope can be
taken on for others to learn from. We have included some
insights that may help you understand our experience
and why we make these suggestions.
If you like this work, please visit the blog at www.
jamieriddell.net for an extended version of this document
with personal insight behind the suggestions.
12 tips to consider when
starting with no investment
1. Choose your partners carefully.
If you do plan on starting with other partners, make
sure they share your vision. If you are starting with no
investment then you will have to be prepared to make
personal sacrifces. The large salary, company car and
expense account may have to wait. Sometimes the
salary may have to wait. If you believe in the business
you have to give it your all, are you sure your partners
understand that? Look for people with complimen-
tary skills to widen the businesss capabilities. If you
are good at ideas and networking then you will need
someone to focus on the detail. If you are the quiet
detail merchant you may want a front of house person.
Each business and its requirements will be different.
2. The Buck Stops Here Get used to it.
If you have come from another job, perhaps a large
company it may be a shock to realise that you have
to do everything. If you start with no staff, you will
be making the tea, answering the phone, running the
promotions and doing the work. There is no one else
to do it so get used to it. Nothing can be beneath you,
and nothing can ever be too much if you wish to succeed.
3. Spend as much time planning for the unforeseen
problems as you do the sexy bits.
When starting a business there is excitement about
what you are going to do. You are going to change the
world, make it a better place become the biggest,
the best there is a fair amount of dreaming when you
start a business which is invaluable. BUT the positive
stuff is the easy bit so focus on the unforseens the
bits you dont like doing. On the business plan, spend
more time on the harder bits what happens if we
dont get paid on time; where is the next contract
coming from? If you can be realistic, think and plan
for the worst scenario as much as you do for the best.
Spending this time will help you deal with the bumps
in the road before they become potholes.
4. Seek a point of difference for your business/
service/product.
Seek a point of difference for your site now matter
how small. Given the number of start-ups these days,
there is a strong chance someone is doing something
very similar to you. There must be an initial point of
difference when you set out the business (please nod
your head) but what else sets you apart? Are you the
fastest growing in your sector? This is when entering
awards becomes important -no matter how small the
award is, you can become the award winning can
Background
you get an award or recognition to put on your site/
brand? Something that has greater brand equity than
your new business? Adding such logos and associations
adds perceived weight to your company and will help
with the trust and credibility of your brand especially
in those early days.
5. Get the cash fowing.
Cash fow, or lack of, is one of the largest killers of
small businesses in the frst two years of life, so you
need to fnd ways to generate cash fow as quickly as
possible. An option can be bank loans or factoring but
both of those will ultimately cut into the bottom line
no one will give you cash for free. Why dont you
incentivise up front payment [at least partially] for your
product or services? We are still in a recession and if you
are in a service industry, no doubt your customers are
going to be claiming poverty and seeking a discount.
So offer them a discount that has an incentive for
both parties. With bank interest almost negligible at
the moment, why not offer a discount incentive on
prepayment Its better than keeping it in the bank.
Prepayment reduces your risk of not getting paid,
so there is a value in having that up front, even if
you have had to tighten the price a little.
6. Get it in Writing. Always.
If you are doing anything for money, make sure you
have the terms of the deal in writing and agreed
[signed] by both parties. You need a contract to work
and make sure it is your own, not theirs. Investing in a
decent legal contract that is tailored for your business
is an essential start up cost. Dont settle for a website
template version it is cheap for a reason.
A contract between two parties states who is doing
what, for how much, what is expected and by when.
This immediately removes any issues that may arise
from mis-communication or unfulflled expectation.
It also serves as a legal basis to get paid. If someone
does not want to sign a piece of paper, then you have
to ask yourselves why. If they dont usually sign
contracts then you should already be walking in the
other direction.
7. Look after the pennies.
Look after the pennies and the pounds will look after
themselves. Pay attention to every invoice. Is the sum
right, does it have the correct currency? It is shocking
how many invoices are incorrect or not clear. Query
them send them back. Make sure you are only paying
the invoices when they are correct for both parties. This
is not the same as sit on your invoices an effcient
accounts department/person is possibly the most valuable
asset a business can have. Paying bills on time and
communicating with other accounts departments when
bills are not correct will help you maintain a good
credit period and credit rating which will become
important for cash fow. Dragging your heels with
invoices will just lead to losing your credit status.
8. Act with Confdence.
If you are starting your business with no investment
you may be small for a while you may have small
offces, you may not have many staff. None of these
things are to be ashamed. Yes, there may be larger
competitors out there but dont let any of that diminish
your confdence. The business is you, and maybe a
few others. You have to act with confdence in everything
you do. If people ask how things are going they need
to hear a positive story even if you arent feeling too
good. These are not lies, just a positive spin on the
situation remember others wont be as close to it as
you are so they dont need to hear about the problems.
9. Promote what you know, not just who you are.
The opportunities presented by social media and
search give young businesses a great opportunity to
demonstrate their knowledge. What we used to call
PR has expanded into a much larger landscape of
information and knowledge sharing. The tools in which
one can share knowledge now range from Twitter to
YouTube, Linkedin to Slideshare and Scribd. Success
in this arena relies on you sharing what you know, not
just who you are. White Papers on a relevant topic to
your business are a great way of demonstrating your
skills and at the same time growing audience the
audience of potential customers. It is no accident
that this document will appear in various formats on
Scribd, Slideshare, the blog (www.jamieriddell.net)
and also presented live. Each version will be slightly
different to target the different audience and require-
ments of each channel.
10. Look for ways to make money while you sleep.
A business can really grow if there are revenue
streams available when you are sleeping. Whether that
is selling an online product 24/7 or generating revenue
from clicks in the middle of the night, the businesses
that can grow revenue away from time and materials
will have the chance to grow quicker. If the core of
your business is based on service based hours then
look for ancillary products or solutions that can be
offered. Can you write guides for your industry?
Can you sell them online?
11. Find a mentor.
It can be a lonely place running a business. Whether
you are the sole founder or you have a number of
people in at the start, you often feel like you are
re-inventing the wheel. Finding a mentor who can
help offer a perspective on the overall business, the
wider market and what you are experiencing will
greatly help you gain perspective on the situation.
A mentor could be a non-executive director who
works on a more formal basis (but will expect some
form of remuneration) or an informal mentor who
is at the end of the line for a chat.
12. Dont forget Lady Luck.
Sometimes luck or fate will have a role to play.
You cant plan for that but you should accept it will
happen. Sometimes it will be bad luck other times
it will be good luck. Roll with it.
Writing this has been really enjoyable, running your
own business can be exhilarating. It can be tough, make
no mistake, but we look back with fond memories.
Trying to whittle down the frst ten points was tough.
So much so we left a lot out. If you liked this,
let us know leave a comment on the blog at
www.jamieriddell.net, connect with me on Twitter
@jamieriddell or email me [email protected]
Thanks for reading.