SETTING UP A BUSINESS WITH NO INVESTMENTTips and insight into key factors to consider when starting.

$XWKRU�3UR¿OH��-DPLH�5LGGHOO�

A passionate music enthusiast, Jamie Riddell made his name as the far-sighted, entrepreneurial co-founder of UK Digital Marketing Agency Cheeze Ltd. Jamie now writes and consults across a broad range of interests, including web 2.0 and beyond, corporate strategy, branding, technological uptake and adoption, markets, the wise use of social networks, postcards and Pink Floyd.

Jamie is listed in Who’s Who of Young British Entrepreneurs.

In 1999, My partner [now wife] Katherine Jerman and I set up a digital direct marketing agency called Cheeze. It was started in the spare room of our cottage in Suffolk with a £5,000 overdraft. Back then there was no ADSL – The ISDN line was the first in the village. I had left a perfectly good job at

one of the UK’s leading digital agencies in London and we had a five-month-old daughter.

From this humble beginning we grew the agency to be

one of the UK’s leading digital agencies, listed twice in the Sunday Times Tech Track 100 Fastest Growing Companies. In 2007, less than 8 years after founding the agency it was acquired for £10m to become a key

part of the Digital Marketing Group plc. now the one of the UK’s largest digital marketing groups.

Katherine and I have now left the agency to focus on fulfilling other ambitions. I took the opportunity to present

at Social Media Camp and decided to talk about setting

up a business with no investment. The current market we

are in, despite the credit crunch, seems very similar [dare I say, reminiscent] of the dotcom boom & bust. The Internet

is the best of times, the economy is the worst of times. There

is great excitement about the possibilities of the Internet [this

time with proper revenue streams] and this will no doubt

feel like the right time to set up a business but with markets

still in turmoil will there be so much funding around?

So, with Katherine’s input I share ten tips for starting a business without the seeking external investment. These

ideas are borne from experience, which we hope can be

taken on for others to learn from. We have included some insights that may help you understand our experience and why we make these suggestions.

If you like this work, please visit the blog at www.jamieriddell.net for an extended version of this document with personal insight behind the suggestions.

���WLSV�WR�FRQVLGHU�ZKHQ� VWDUWLQJ�ZLWK�QR�LQYHVWPHQW 1. Choose your partners carefully.

If you do plan on starting with other partners, make

sure they share your vision. If you are starting with no investment then you will have to be prepared to make

personal sacrifices. The large salary, company car and

expense account may have to wait. Sometimes the salary may have to wait. If you believe in the business

you have to give it your all, are you sure your partners understand that? Look for people with complimen-

tary skills to widen the business’s capabilities. If you

are good at ideas and networking then you will need someone to focus on the detail. If you are the quiet detail merchant you may want a ‘front of house’ person. Each business and its requirements will be different.

2. The Buck Stops Here – Get used to it.

If you have come from another job, perhaps a large

company it may be a shock to realise that you have

to do everything. If you start with no staff, you will be making the tea, answering the phone, running the

promotions and doing the work. There is no one else to do it so get used to it. Nothing can be beneath you,

and nothing can ever be too much if you wish to succeed.

3. Spend as much time planning for the unforeseen

problems as you do the ’sexy bits’.

When starting a business there is excitement about

what you are going to do. You are going to change the world, make it a better place – become the biggest, the best – there is a fair amount of dreaming when you

start a business which is invaluable. BUT the positive

stuff is the easy bit – so focus on the unforseen’s – the

bits you don’t like doing. On the business plan, spend

more time on the harder bits – what happens if we

don’t get paid on time; where is the next contract coming from? If you can be realistic, think and plan

for the worst scenario as much as you do for the best.

Spending this time will help you deal with the bumps

in the road before they become potholes.

4. Seek a point of difference for your business/

service/product.

Seek a point of difference for your site now matter how small. Given the number of start-ups these days,

there is a strong chance someone is doing something very similar to you. There must be an initial point of

difference when you set out the business (please nod

your head) – but what else sets you apart? Are you the

fastest growing in your sector? This is when entering

awards becomes important -no matter how small the

award is, you can become the ‘award winning’ – can

%DFNJURXQG

you get an award or recognition to put on your site/brand? Something that has greater brand equity than

your new business? Adding such logos and associations

adds perceived weight to your company and will help with the trust and credibility of your brand especially

in those early days.

5. Get the cash flowing.Cash flow, or lack of, is one of the largest killers of

small businesses in the first two years of life, so you

need to find ways to generate cash flow as quickly as

possible. An option can be bank loans or factoring but

both of those will ultimately cut into the bottom line

– no one will give you cash for free. Why don’t you incentivise up front payment [at least partially] for your product or services? We are still in a recession and if you

are in a service industry, no doubt your customers are

going to be claiming poverty and seeking a discount.

So offer them a discount that has an incentive for both parties. With bank interest almost negligible at

the moment, why not offer a discount incentive on prepayment – “Its better than keeping it in the bank”. Prepayment reduces your risk of not getting paid, so there is a value in having that up front, even if you have had to tighten the price a little.

6. Get it in Writing. Always.If you are doing anything for money, make sure you have the terms of the deal in writing and agreed [signed] by both parties. You need a contract to work

and make sure it is your own, not theirs. Investing in a decent legal contract that is tailored for your business

is an essential start up cost. Don’t settle for a website

template version – it is cheap for a reason.

A contract between two parties states who is doing

what, for how much, what is expected and by when.

This immediately removes any issues that may arise from mis-communication or unfulfilled expectation.

It also serves as a legal basis to get paid. If someone

does not want to sign a piece of paper, then you have to ask yourselves why. If they “don’t usually sign contracts” then you should already be walking in the

other direction.

7. Look after the pennies.

Look after the pennies and the pounds will look after themselves. Pay attention to every invoice. Is the sum right, does it have the correct currency? It is shocking

how many invoices are incorrect or not clear. Query them – send them back. Make sure you are only paying

the invoices when they are correct for both parties. This

is not the same as ’sit on your invoices’ – an efficient

accounts department/person is possibly the most valuable

asset a business can have. Paying bills on time and

communicating with other accounts departments when bills are not correct will help you maintain a good

credit period and credit rating which will become

important for cash flow. Dragging your heels with

invoices will just lead to losing your credit status.

8. Act with Confidence.If you are starting your business with no investment

you may be small for a while – you may have small

offices, you may not have many staff. None of these

things are to be ashamed. Yes, there may be larger

competitors out there but don’t let any of that diminish

your confidence. The business is you, and maybe a

few others. You have to act with confidence in everything

you do. If people ask how things are going they need to hear a positive story even if you aren’t feeling too good. These are not lies, just a positive spin on the

situation – remember others won’t be as ‘close to it’ as

you are so they don’t need to hear about the problems.

9. Promote what you know, not just who you are.The opportunities presented by social media and

search give young businesses a great opportunity to

demonstrate their knowledge. What we used to call ‘PR’ has expanded into a much larger landscape of information and knowledge sharing. The tools in which one can share knowledge now range from Twitter to YouTube, Linkedin to Slideshare and Scribd. Success in this arena relies on you sharing what you know, not just who you are. White Papers on a relevant topic to

your business are a great way of demonstrating your

skills and at the same time growing audience the audience of potential customers. It is no accident that this document will appear in various formats on Scribd, Slideshare, the blog (www.jamieriddell.net) and also presented live. Each version will be slightly

different to target the different audience and require-

ments of each channel.

10. Look for ways to ‘make money while you sleep’.A business can really grow if there are revenue

streams available when you are sleeping. Whether that

is selling an online product 24/7 or generating revenue from clicks in the middle of the night, the businesses

that can grow revenue away from time and materials will have the chance to grow quicker. If the core of your business is based on service based hours then

look for ancillary products or solutions that can be offered. Can you write guides for your industry? Can you sell them online?

11. Find a mentor.

It can be a lonely place running a business. Whether

you are the sole founder or you have a number of

people in at the start, you often feel like you are re-inventing the wheel. Finding a mentor who can

help offer a perspective on the overall business, the

wider market and what you are experiencing will greatly help you gain perspective on the situation. A mentor could be a non-executive director who

works on a more formal basis (but will expect some

form of remuneration) or an informal mentor who is at the end of the line for a chat.

12. Don’t forget Lady Luck.

Sometimes luck or fate will have a role to play. You can’t plan for that but you should accept it will

happen. Sometimes it will be bad luck other times it will be good luck. Roll with it.

Writing this has been really enjoyable, running your

own business can be exhilarating. It can be tough, make

no mistake, but we look back with fond memories.

Trying to whittle down the ‘first ten’ points was tough.

So much so we left a lot out. If you liked this, let us know – leave a comment on the blog at www.jamieriddell.net, connect with me on Twitter @jamieriddell or email me Jamie@channeljamie.com

Thanks for reading.