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How do I get started with little or no money? – Part 2

By Dr. Henrietta Onwuegbuzie
23 May 2018   |   4:20 am
The next question that comes to mind is how do I produce a solution without money? The answer is simple. Use what you have to get what you want. We all have something...

The next question that comes to mind is how do I produce a solution without money? The answer is simple. Use what you have to get what you want. We all have something, an idea, a skill, a laptop, a roof over our heads, a pencil, pen and paper. Any of these are sufficient to start. The most important ingredient is that what you wish to offer through your business meets a need or solves a problem. Let’s take an example: You want to go into dry-cleaning, but you don’t have the money to buy the machines or the reputation to attract customers. How do you crack this? First, you try to find the gap in the services currently provided by existing dry-cleaners. You ask what need do customers have that drycleaners do not currently offer?

Most drycleaners offer similar services, -they dry-clean or launder clothes and make clothing amendments, when requested. However, though they wash heavy linen such as duvets, curtains and carpets when they are brought to them, none of them offer the service of taking down and re-installing the curtains or removing the carpets and laying them back in place. Nevertheless, the real pain point with such items is the trouble it takes to take down curtains for washing and re-installing them afterwards, or to remove carpets from under heavy furniture and lay them back again after cleaning.

This is a service many middle and upper-class homes will appreciate and willingly pay for. Having identified this need and verified it by asking around to have an idea of what people will be willing to pay, the next thing to do is to find a dry-cleaner that does a good job and is willing to partner with you. The agreement should be such that you get a discount/commission on each item or job you bring them. On the other hand, you are the one who receives the payment for uninstalling and re-installing curtains, carpets, duvets and other heavy items, for cleaning.

The partnership is helpful at the beginning because a known brand inspires credibility, but eventually, when the market knows you, you can begin to use your own brand. On the other hand, you also advertise inexpensively on Instagram, twitter, Linked in and Facebook. You could also print a few fliers for distribution to targeted audience you know would need this service, such as bankers, those who work in telecoms and oil companies. Another strategy could be to offer the service to friends and family and if you do a good job, you get referrals and gradually increase your customer base. Eventually, you can save up enough money to buy the machines and start your own dry-cleaning facility.

In this process, it is very important to execute the first few jobs very well, to ensure good referrals. Even if you need to hire hands, let them know they only get paid after the client has made payment. Over-time, you can attempt to offer this service to companies or housing Estates, in the form of a retainership (upfront payment for services to be rendered for an agreed period, usually a year). The retainership will allow company staff feel safe to pay in advance for your services to be rendered either quarterly or bi-annually. This arrangement provides cash inflows in bulk that may be eventually used to backward integrate into owning your own dry-cleaning and laundry equipment. This is an example of how someone with little or no funds, can eventually become a big player in an industry with giants and relatively stiff competition.

The described business model, may be to other industries. For instance, one could enter the construction industry by going to building sites and offering to supply good quality materials of whatever they currently need. The next step would be to find existing building material suppliers to get the goods from, at a dealers discounted rate, such that you make a margin on each sale. Eventually, one can accumulate the funds and backward integrate to own stock for onward sale. This brokerage model is commonly used on Instagram.

The point here is that you don’t necessarily need a lot of money to go into business. The two key ingredients are the solution and the right business model. Once you start and begin to experience growing demand, it is easier to attract funding. Next week we will discuss the importance of starting small, while thinking big and other critical success factors that mitigate against business failure.

Dr Henrietta Onwuegbuzie is a globally certified Management Consultant and a Senior Lecturer in Entrepreneurship at Lagos Business School