Are you wanting to start a business this year, but don’t have capital to put into it yet? The good news is, you’re not the only one asking this question.
You may have heard grand stories about entrepreneurs starting their businesses out of their garage, or with only a couple of bucks in their pocket. While these things do happen, it’s not without a bit of strategy as well as determination.
Here, we’ll talk through four steps of how to start, market, and finance your new small business, even if you’re starting from the drawing board. These are the 4 steps:
1. Start Small with a Minimum Viable Product for your Business
If you’re starting your small business with little to no capital, you aren’t going to want to start out the gate with a whole fabulous line of products, or start out with your dream restaurant. That’ll come later.
What you want to do first, is come up with your MVP. Not Most Valuable Player, but your Minimum Viable Product. What can you produce that’ll take minimal input, but can serve as a launching pad for your business idea?
Some businesses choose to form their whole business plan around their MVP. It’s their flagship beer, their iconic cookie, the bandana that launches their fashion empire.
One example of this is Rolling Pepperoni, a bakery located in Pittsburgh. Owner Katt Schuler wanted to build a social enterprise that would spread awareness of the stories of her home region, rural Appalachia, in Pittsburgh. So, she chose an iconic pastry of the area, the pepperoni roll, as her MVP to launch her business!
Since starting out by producing just the one product in the basement of a pizza shop in Oakland, Katt was able to grow her business into what it is now - her own bakery, and her products in locations all throughout Pittsburgh! Part of this growth was also made possible with Rolling Pepperoni’s Honeycomb crowdfunding campaign, which raised $46,750 from 73 investors.
2. Look for Inexpensive Small Business Marketing Options
Once you’ve got your MVP, you need to find a way to tell your community about it. Thankfully, marketing for small businesses doesn’t have to be a money pit, and with a few strategies you can easily and cheaply promote your new business.
Social media can be a great, free way to promote your business! You just need to be strategic about building your network, creating and promoting engaging content, and organically growing your following. The more people attracted organically to your social media, the more people who are likely to give you their business.
Another great way of marketing your business is by collaborating with other small business owners, who are maybe a little further on their journey than you are. If you connect with a business that has the space for you to do a pop-up, that would be a great way of getting your face and product out there into the community - and benefits both you and the business you’re partnering with.
Also, don’t underestimate the power of word of mouth. Collaborating with others, choosing venues to sell that require face-to-face interaction such as farmer’s markets, and creating a stellar product and customer experience are all things you can do for incredibly cheap - or even as free as a smile and a friendly word. By giving a great experience, you can better ensure that everyone you come in contact with will talk about your business to their friends, giving you more exposure.
3. Develop a Low-Cost Business Plan
If you’ve followed those two steps, congratulations, you’re well on your way to completing this next one: nailing down your business plan.
Why do you need a business plan if you’re just starting out, or if you don’t have the money to even start thinking about how you’re going to run and grow your business? Well, there are several reasons.
A business plan is often going to be the first thing investors look for when you start looking for capital to finance your new small business. It breaks down the essentials of how you plan to make money - who’s going to do what, where you’ll do it, how you’ll do it, and so on.
Investors want to know how you plan to use the funds they’ll invest in your business, so having a detailed and clear business plan will help you raise the money you need to scale the business that you’re starting from nothing.
4. Seek Out Capital for your Small Business - Banks or Crowdfunding?
Even if you’re starting out your business with as little as a few boxes of cookies or whatever your minimum viable product ends up being, eventually you are going to need money to scale up your business.
For small businesses, there are several different options out there for capital. One of the most common ways small business owners go is looking for a bank loan. However, if you’re just starting out, and don’t already have capital invested in your business, bank loans can be a bit difficult to get.
Crowdfunding is another great place to start raising capital for your small business. If you’ve got a great idea, and you can communicate how great it is to your social network and your community, you can get them to help finance your dream!
There are several different kinds of crowdfunding, such as gift crowdfunding like GoFundMe, reward crowdfunding like Kickstarter, or debt crowdfunding like Honeycomb. Each of these has their own set of pros and cons.
Debt, or loan, crowdfunding is a great option for small businesses that are just starting out for several reasons. First of all, it gets you money. That’s the goal! However, especially for new businesses, crowdfunding can also help grow the business beyond just the capital.
Crowdfunding can help strengthen your customer relationships by turning your customers into advocates for your business. If they invest in you, they’re obviously going to want to see you succeed, and will promote your business to their own circles (did we hear someone say word-of-mouth?)
It also can get your small business in front of potential investors and customers who otherwise might not have known about the business if not for the campaign. At Honeycomb Credit, our network of investors are investing in small businesses for a reason - they want to see their neighborhoods thrive. So, if they learn about your business through the Honeycomb campaign and are impressed enough, they could potentially become new customers!
Find on Average 60% Revenue Growth in your Business After Crowdfunding with Honeycomb
One final note is that debt crowdfunding through Honeycomb has a proven track record of launching businesses into their next level of growth. Our platform has an 80% success rate, compared with the 23% of other crowdfunders like Kickstarter.
Additionally, on average, small businesses that crowdfund their growth with us have seen a 60% year-over-year increase in revenue. How’s that for making something out of nothing?
Starting from the bottom? Well, we’re here for you.
You’ve got an amazing idea that you know will catch on in your neighborhood - you just need the resources to make it a reality! Hopefully, these tips will set you up for success, and when you’re ready to scale up your business and make some capital gains, Honeycomb Credit can help you crowdfund that move!
Learn more about Honeycomb Credit crowdfunded small business loans at www.honeycombcredit.com/grow, and fill out the form below for more information!