These are five strategies I have used to grow a startup without outside investors or venture capital.
You should not let the lack of financial capital stop you from starting or growing your startup.
When I started out, I reached out to a local restaurant owner and offered by Branding and Graphic design services. She also needed a website but was not willing to pay my fees. My goal was to build apps and games but I started out with consulting. That first deal brought in about $1,500. The next one brought about $3,000.
Even though I was having to share the money with my friend who is a designer, it gave me the boost I needed. I did this for about 2 years before I got tired of low paid consulting and freelancing.
Now that my business is established, I still use Consulting as one of my main drivers of growth. Some forms of consulting are joint ventures where I don’t have to do much work. If consulting distracts you from working on the core of your business, then stop.
I would also recommend high paid consulting, coaching or advisory services. Today I can charge $10,000 per month helping one client. I reserve 2 hours a month per client. The 2 hours are for one on one consulting even though I probably prepare up to 3 hours for the meeting. The higher value the client is and the more value you are giving them, the higher your fees can be.
Using leverage to grow your startup
By leverage, I mean using someone else’s resources. For example, a friend of mine runs a gaming company. He is non-technical and has a full-time job at a big corporation.
To grow his startup, he hires developers based on a revenue and equity share arrangement. He handles the marketing, sales, finances and other non-technical aspects. His partners get equity and get paid whenever they get revenue from the apps.
The debt based models you can use
If you have close to 100% surety that you can return a 4 to 10x return on investment, then private equity is a viable option. This is basically giving part of your business to someone in exchange for money or resources.
Some software development shops do this. They will build your app, distribute it and sell it for a piece of the company. This works out for some founders. Just make sure both parties understand what the expectations are.
Joint ventures and using someone else’s resources
For example, you can use a factory after closing hours in exchange for equity. This way you don’t have the upfront costs of buying machinery. Fashion brands do this all the time.
Creating information products
Another revenue source that few people know about is information products. Special reports, eBooks, manuals, etc.
You could even say Coudal Ventures’ Field Notes is an example of this. Moz and Hubspot have both tried these approaches as well. Businesses like Infusionsoft have workshops and seminars that bring in good money. Most importantly, it creates goodwill in your marketplace. The little known secret about information products is that your market will perceive you as an authority if they keep coming to you for knowledge. If you seek recognition, respect and authority, follow this tip.
The ways I have described that help you grow a startup without outside investors or venture capital are;
- Joint Ventures:Using other people’s resources
- Using Debt
- Creating information products
I would advise that you focus on one approach for at least 3 months. I started off with consulting, then I used joint ventures before I created my own information products. Looking back, I would have used Leverage, Joint Ventures and Information products if I had understood how to use them.
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