Amazing, yet true, most people that go into business fail within 12 months. Unfortunately, most failures are blamed on lack of capital. Not enough capital can really hurt a business, yet most businesses fail due to the inability of getting customers. I always tell people to start modestly. Go slowly. Don’t risk a lot of capital. See if people want what you have to offer before you go and bet the farm.
Here’s what I suggest:
- Run ads to see if people will buy your product even if you don’t yet have your product in hand. You can always get product. Getting customers is the tough part.
- Try to set up joint ventures first. Go to people who already have customers, ask them if they will introduce you to their customers and then pay them a fee on each sale. Better yet, use their sales people to sell your product and pay the lion’s share of the commission to them. The advantage of this is obvious; no risk in capital for advertising and overhead.
- If you need office space, you may consider using someone else’s existing office. You avoid start-up costs, and most all established businesses have more space than they really need. I’ve always wondered why someone would open a garage to fix cars when they could just as easily offer nighttime service in someone’s existing garage. Or, why you would invest in dry cleaning equipment (it usually runs in excess of one hundred thousand to start a dry cleaning operation) when you could strike a deal to use someone else’s facility. Why don’t people that want to start a printing company work at night at an existing printer? Get the picture? Opportunities are everywhere. Deal-makers are few and far between. Anyone can spend money. It’s a lot better to operate from existing assets.
These three steps should help you to reduce risk in any start-up venture. Remember always fit a product to a market. If people want what you have to sell, a big part of the battle is over. Test everything you do to see which approaches bring you the best return on your efforts. Test headlines, guarantees, bonuses, packaging, etc. Remember that minor differences can result in big gains in profits.