Occasionally, you hear proverbial rags to riches stories emerge from the business world. “This plucky entrepreneur built a global empire from their basement with $10,” for example. But what those stories often fail to detail are the small steps along the way – the lucky breaks, setbacks, invaluable resources and faithful investors.
No one starts a business from nothing, entirely in a vacuum. Every up-and-coming entrepreneur that hopes to build a growing business without significant starting capital needs to possess two critical resources: 1) a fantastic idea and 2) the courage and creative thinking to ask for help in unconventional places.
In this article, let’s expand upon the two points above. Let’s walk through the process of conceptualizing a business to set yourself up for success. Then, let’s explore a few ways to fund an upstart, including conventional financing methods and a new way to finance your business through a “proximity as a service” platform like REEF.
You don’t have to wait for your life savings to match the size of your ambitions. If you believe you’re sitting on a million-dollar idea, now’s the time to get up. Follow the straightforward steps below to get started.
First Steps: Concepts and Business Plans
Every successful business starts with a humble idea. During the conceptualization phase, don’t feel the need to reinvent the wheel completely. Often, the most attractive ideas tweak the formulae of existing ideas.
For instance, you can start by analyzing what relevant consumers’ value – speed, luxury, modern aesthetics, comfort and ethical practices, among other preferences. (See: “Holbrook’s Typology of Consumer Value” for more insights). Then, look at how you can apply these values to existing concepts to create new, exciting ideas.
Let’s take the example of a taco truck. It already ticks a few value boxes (speed and comfort, namely), but there’s room for expansion. What if a taco truck went all-in on luxury – with ingredients like gold leaf, wagyu beef and sous-vide lobster. Or the taco truck could target modern aesthetics, creating a stark black tortilla with blue corn and squid ink. All of a sudden, you’ve given an existing concept an angle, something out of the ordinary to pique consumers’ attention.
Of course, the above is just a single example of the process in motion (perhaps not even a good idea). It will be up to you to formulate an intriguing idea based on your expertise and interests.
Next, you can write your business plan. This plan is a formal written document containing your goals for the business, a timeline for achieving those goals, and strategies you intend to deploy to meet your goals. It’s a necessary document if you hope to secure financing from traditional institutions.
Business plans can be intimidating to the uninitiated, but, thankfully, government orgs like the Small Business Administration offer helpful, thorough resources.
The Contemporary Approach to Launching a Business
You don’t need to jump through formal hoops to launch a business, nor do you need to vacate your life’s savings to get it off the ground.
Consider pitching your idea to a “Proximity as a Service ”platform. The leading platform in this space is REEF Technology, mentioned in the introduction. They turn open urban spaces, like parking lots, into community hubs by filling them with modular applications like delivery kitchens, retail hubs, micro-healthcare clinics and more. If you live in a city, chances are you’ve seen their logo around town.
Partnership with REEF requires little to no capital investment, and they set your business up for success by giving you access to a vast network of locations, as well as turnkey solutions for delivery, preparation and fulfillment. If you’re an entrepreneur with a fantastic idea but little upfront capital, it’s an empowering approach to take.
Traditional Approaches to Financing
With your business plan and concept, you can also access traditional financing options. Beyond asking your loved ones for money, or raising capital through crowd sourcing, you can turn to banks, government grants and angel investors for start-up cash. Here are your options:
- Small Business Loans: Banks offer business loans that can get you started. These loans function as a debt incurred by your business, and therefore should be approached cautiously. High interest rates can throttle your growth potential (and may even stop your business before it has a chance to start). But if you are confident that your projected profits can cover the credit, loans are still a fine option.
- Grants: Governments offer several grants and financing opportunities for small businesses. Do your research on what’s available through your local government.
- Angel Investors: Angel investors are wealthy people who provide seed money and/or ongoing financial backing to entrepreneurs. In return, they look for their money back within seven years plus an IRR of 20-40%.
Each of these financing approaches comes with its set of caveats and cautions, but each has worked for several money-tight entrepreneurs in the past. As always, do your own research on financing methods to learn more.
Armed with a great idea and a solid plan of action, you can get your business off the ground. Consider a “proximity as a service” platform like REEF and/or follow traditional financing routes to make your idea a reality.