Inside Small Business | Small Business & Home Business Marketing

Funding

LW: I think something most small business owners are worried about taking longer is getting capital and somehow funding their company. How is it that you went about getting the capital that you needed?

Brian: We kind of planned out what we would need as far as getting started and thankfully as a consultant your capital needs are fairly small. We tried to make sure that we didn't go overboard on a lot of things, so our capital needs were actually pretty small. We were less than about $30,000 as far as start up capital. And that was an amount that was something that between the four partners that started the company we were able to basically just bring that to the table and start the company.

LW: Were your estimates of how much capital you needed correct? How did you know how much to plan on as far as funding?

Brian: We actually were pretty correct and accurate with it. But again, I think probably our success factor in that was trying not to be overly extravagant with what we needed to do. Just a couple of examples, as far as office space, it's really easy to say the first thing we need to do is go out and get an office. Then you need a copier and a coffee machine and a bunch of conference tables and chairs and desks and pretty soon you've spent 60 grand and you haven't even sold anything yet. So from that perspective, we went to a hotel office where you can basically rent an office space and it's just a mailbox with a receptionist. That was about 200 bucks a month and something that gave us a business presence and capability, but because we are a consulting company we don't need office space. We are actually at our clients locations. So we didn't have to budget for much in those ways. So to answer your question I think we were pretty accurate with our capital forecast, and we did have enough to make the start. We certainly didn't make a huge splash with a lot of advertising and a big presence. But I think that was useful because it let us learn our way into how to operate our business.

LW: And were there things you needed money for that you didn't think of when you were first planning?

Brian: I think probably one of our funnier stories is when we didn't think we needed to get computer equipment or anything like that because each of us all had home computer equipment and laptops and things like that. We actually ran into a situation where one of our first client meetings, my laptop died and one of our other partners' laptops died literally within the same day. So we actually had to borrow someone's laptop just so we didn't look stupid in front of the client. I don't know if you've seen those commercials where it's like "The client's here, let me borrow your pen." It was kind of like that. "The client's here, let me borrow your laptop."

LW: How horrible! Apparently that was something you didn't realize.

Brian: Yeah.

LW: So if you were getting funding for your company all over again, is there anything you would change?

Brian: I don't think I would at this point. We did talk about doing some things where we would allow ourselves the opportunity to pay ourselves a salary while we were doing business development. I think this is still one of the things we still struggle with a little bit today. I'm still involved in consulting delivery at the same time that we're trying to grow the business and perform the business development activities. And that's something that has put us on what I would call a slow growth cycle. We don't really mind that at this point and I think that's actually been useful for us because we've been able to grow slowly and learn the business at our own pace. But the thing that I think would be different is if we had gone to a venture capital company or gone to some other funding source, where instead of providing just enough for operating expenses we would have also provided ourselves with an income stream that we could use. So that way all of us would focus on business development exclusively and not have to go into the consulting delivery business as well. It does take away from the time you would spend growing the business, marketing the business, and doing some of the things that would help move it forward. So I think from that perspective I probably would have done that a little differently. We would have more capital available so we could spend more time in non-revenue generation activities that are actually better for growing the business.

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