In today’s tech business culture there is a preconception that you need to get the backing of angel investors or VCs in order to create a successful start-up. Doing so might give you immediate money in the bank, but you could end up relinquishing a larger share of your business than you’d ideally like to.
But you can start a successful business without funding. I’m the founder of Trackpal, a B2B software start-up. I launched Trackpal from scratch four years ago and now have paying clients across the globe. Based on my experience, here are six key factors in starting a successful B2B software business without needing funding.
1. Spot a business problem that you can solve, personally
If, in the course of your working life, you spot a problem you can personally solve through software – either better than anyone else or because nobody else is currently doing it – then you have a potential business on your hands that has the capability to grow without outside financial assistance. Even a seemingly incidental problem can in fact be a large business opportunity.
I came from an engineering background but ended up working in software development for a digital marketing agency. This gave me a unique perspective on the work the agency was doing. I started my company to solve a small but recurring problem that digital marketing agencies had with their regular data collection and performance reporting for their clients. It’s a relatively minor part of their overall work but it’s an absolutely necessary one, and it needs to be done at least once a month as quickly and simply as possible.
2. Build it small and build it fast
I had a prototype complete after a few months, but it wasn’t ready for large-scale use because it was slow, buggy and probably a bit annoying to use. My early clients – who signed up fully aware that it was a work-in-progress – helped me figure out what we needed to become and how to make it better.
They accepted this situation because we still met their needs better than any other offering on the market. Getting them involved in shaping the software so that it worked exactly as they wanted also helped mitigate any of its early failings.
3. Make it workable as a one-person team
If you start as a one-person company then you keep your overheads low. You avoid typical outgoings such as salaries, office space, office infrastructure (such as multiple telephones and computers) and even professional service providers, such as accountants. Keeping things skinny means you can exist with just one or two clients at first.
4. Have enough money to live on
Make sure you’ve got just enough money in the bank to tide you over during those initial months when the income you’re making from your business is small. Alternatively, secure a bit of consultancy work in your field that you can do alongside your start-up venture. It meant I was working a few evenings and weekends, but it also gave me a sense of financial security and the ability to keep developing my company.
5. Grow the team at the pace of the business
If you want to start a business without funding, then you need to accept that you can only grow as fast as the revenue. Once I had got to the point where I could afford external support I enlisted the help of good freelancers. This keeps your outgoings flexible and it also helps you to learn the best way to work with other people, making the transition to employing full-time staff easier when the time comes.
6. Be good to people
Treating your staff and your clients well is important to any business’s reputation and ultimately its success. However, if you start a business without funding then messing this up is going to bite you harder than most. If there’s no money to fall back on then losing a client might even mean you can’t continue because you don’t have enough income to make ends meet.
And losing staff is costly as well. It means you can’t complete work as quickly as you previously could, which affects the quality of service you can offer to clients. What’s more, finding and recruiting people also has a time implication, and possibly a cost implication as well. If you hire sensibly and treat your staff well they will become amazing assets that you can rely on.
Afterword. What Next?
And what of the future? By starting a B2B software business without funding you can definitely make a decent income without too much risk attached. And if you make it work by yourself initially then you’ll be in a stronger negotiating position should you decide the time is right to seek investment a little further down the line. You can possibly make a decent exit too, should you receive an attractive offer and decide to sell your business on. Until that point, at least you’ll have remained in control of your business and its finances for as long as feels right for you.