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Starting up a business with no funding and succeeding
 

Starting up a business with no funding and succeeding

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I founded one of the UK's leading Digital Marketing Agencies in 1999 with my partner Katherine Jerman. We started it with a £5,000 overdraft in 1999 and sold the business in 2007 for £10,000,000. ...

I founded one of the UK's leading Digital Marketing Agencies in 1999 with my partner Katherine Jerman. We started it with a £5,000 overdraft in 1999 and sold the business in 2007 for £10,000,000.

In this paper we share some of the initial tips we suggest are founding principles for launching and growing without outside investment. All these tips are from experience. If you would like to see more background to the reasons why we suggest these tips, please see http://www.jamieriddell.net/2009/12/...

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    Starting up a business with no funding and succeeding Starting up a business with no funding and succeeding Document Transcript

    • SETTING UP A BUSINESS WITH NO INVESTMENT Tips and insight into key factors to consider when starting. 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.
    • 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 first in the village. I had left a perfectly good job at one of the UK’s leading digital agencies in London and we had a five-month-old daughter. From this humble beginning we grew the agency to be one of the UK’s 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 UK’s largest digital marketing groups. Katherine and I have now left the agency to focus on fulfilling 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 Katherine’s 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. 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 sacrifices. 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 complimentary skills to widen the business’s 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 unforseen’s – the bits you don’t like doing. On the business plan, spend more time on the harder bits – what happens if we don’t 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
    • 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 flowing. Cash flow, or lack of, is one of the largest killers of small businesses in the first two years of life, so you need to find ways to generate cash flow 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 don’t 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. Don’t 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 unfulfilled 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 “don’t 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 efficient 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 flow. Dragging your heels with invoices will just lead to losing your credit status. 8. Act with Confidence. If you are starting your business with no investment you may be small for a while – you may have small offices, you may not have many staff. None of these things are to be ashamed. Yes, there may be larger competitors out there but don’t let any of that diminish your confidence. The business is you, and maybe a few others. You have to act with confidence in everything you do. If people ask how things are going they need to hear a positive story even if you aren’t feeling too good. These are not lies, just a positive spin on the situation – remember others won’t be as ‘close to it’ as you are so they don’t 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 requirements 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. Don’t forget Lady Luck. Sometimes luck or fate will have a role to play. You can’t 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 ‘first 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 Jamie@channeljamie.com Thanks for reading.