VCs are willing to put in big money if they believe they’ll get big money back quickly. That means things can get tricky for small business owners who need capital, but aren’t quite the right size to attract venture capitalists. After a plethora of meetings with potential investors that invariably ends with a “no”, most business owners begin to feel discouraged—but don’t get too down.
There are steps you can take when forming your business to make the most of the capital you already have, determine the areas where you can save, and grow a business—without VC funding.
- Find Complementary Business Partners & Co-Founders
Above all else, when starting a business, look for partner or co-founder that shares your vision and has a particular skill set that complements your own. With any new small business, there’s bound to be some overlap in responsibilities. That said, each founder and partner should have a part of the business that they specialize in and have responsibility over
Find someone that fits a particular key role of your business (a software engineer business partner, a creative designer business partner, a lawyer business partner, etc.). Starting out this way will keep costs low as you don’t have to pay someone external to complete the task / project. Having different skill sets will also bring different perspectives to your business.
“Business leaders should never bank their success on obtaining VC funding and you need to create a road map to thrive without it.”
- Network, Network & Network
Don’t be afraid to reach out to your network of professional contacts, and even friends and family. You never know what you’ll learn from the people you reach out to. The goal is to get insight and perspective from people who may have more business experience or savvy than you. Finding mentors and advisors that are familiar with your business industry are especially valuable.
- Spend Time To Create A Business Plan
A new business venture is exciting and you will be anxious to jump in feet first. Pump the brakes and take your time to create a comprehensive business plan complete with a SWOT and competitive analysis.
It seems obvious but working through every detail of your business plan will ensure you set a solid foundation from which you can build upon. Additionally, it may uncover or unlock other opportunities for the business you had not initially envisioned. Also, having a business plan will ensure all your ducks are in a row when the time comes to pitch to investors.
- Keep Close Tabs on Expenses
This is key for any business, but especially so for business leaders who are just starting out and funding operations themselves. A great way to learn the finances of a business is to stay frugal at the beginning. It teaches you to spend every cent wisely and keep detailed records. This will allow you allocate capital wisely – should you spend on marketing or hire someone in operations?
The salary you and your co-founders take also falls under the umbrella of keeping a close eye on your expenses. As exciting as it is to determine and take your own salary, be careful. Think about how much you really need and consider reinvesting some of your salary back into the business.
- DIY Operations
Put time and work into making sure that you business, although small, runs like a well-oiled machine. Focus on the nuts and bolts, and setting yourself up to be able to snowball your successes. Great marketing, accounting, and HR practices should be a fundamental core of your business that will help propel your growth and success later.
Until you have the resources to hire a team, you’ll have to tackle most of these fundamental principles by yourself. Getting your hands dirty in different areas of the business will help later when you’re ready to organize job duties and start building out your team.
- Build a Great Team
Building a great team is easy to say but very difficult to do. It’s important to recruit team member should believe in your vision and be all-in on your mission. Take time to detail out an interview process and how to onboard/train new employees. Remember, that at the earliest stage of your company, you will want to hire individuals with domain expertise but that can also multi-task. So make sure to hire people who are hungry and dynamic—and who you also like to be around.
Business leaders should never bank their success on obtaining VC funding and you need to create a road map to thrive without it. With careful preparation, market research, solid operations, and careful spending, you can grow your business into a success.