One often hears that without sound capital to back you up you cannot build or run a business. Well, money does make the world go round so it is no surprise that any business venture will need it too. But that does not mean that one has to always go in for the big guns and borrow loads of money to make it work. In fact, in such turbulent economies one has to be even more careful about borrowing money and increasing one’s debts. Though borrowing and lending has long been associated with business, the stakes are much higher now that there is fierce competition everywhere, from local as well as global competitors. You don’t want to end up losing the shirt on your back just because you were not careful with the money.
So instead of going for the age old ways to raise money like bank loans or dealing with the loan brokers one has to look for more innovative ways to build up the capital.
Sell your service – This is one method that hasn’t been tried out much but can make a great impact on one’s business. Instead of borrowing money from moneylenders and banks, borrow them from your clients. Surprised? Well, it’s a perfectly doable plan that needs good planning and presentation, high quality delivery and a good channel in place. Go to a few (say 5-10) of your best customers and tell them that you will give them a discount if they sign up for six months of services and pays upfront. They will get a discount which is good for their bottom line and you will get an instant influx of cash that will help your business stand on its two legs – a win-win for all. All you have to do is ensure a steady delivery with high quality assurance for these months so that your clients feel that their trust has been well-placed.
Build up a social following – Seek an investor has been a practiced way to look for capital but it has never been so difficult to convince them than it is now. The popular ABC series ‘Shark Tank’ is one good example to understand this phenomenon. It shows hundreds of entrepreneurs coming in with very innovative concepts to woo the investors but very few actually make it. One persistent thread here is how one markets the business and the brand which will determine its future and very existence. One way to ensure steady and increasing brand popularity is by building on one’s social presence. When managed well a social profile can go viral in no time at all and immediately increase the social following and volume of one’s sales. This is the kind of volume that will impress an investor by showing them veritable proof of ROI.
Bootstrap with personal capital – Last but not the least is the bootstrapping technique which, while not a new one, has gained a new momentum in recent times. Today, it means using a bit of personal finances and utilizing a whole lot of existing resources to build up a business. This means that one will grow at a steady pace and yet have no debts hanging over them like the Sword of Damocles. Once the initial period crosses, this makes for the sturdiest business models that are most attractive for investors as they show less risk and more innovation.
Gary Takacs is the founder of The CEO University is a US-based, CEO and Executive Peer Group Organization that creates opportunities for accelerated business growth and personal development through CEO Peer Group Meetings that are CEO-led, one-to-one mentoring focused on unique business and personal challenges, and purposeful learning events.