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