How to Grow a Business (With Little Cash)

In today’s world, stretching your dollar is an important concept, especially for entrepreneurs. While securing funding to expand your fledgling business is important, it’s also key to know the various ways you can grow your business with little capital investment. For small businesses, focusing on your intangible assets can be a way to increase your legitimacy and grow your clientele, all for little money.

What are Intangible Assets?

Many new entrepreneurs hold the notion that business is all about making a useful product in order to bring in the cash. While a bad product or service can definitely lead to the demise of a start-up, social constraints can also play an important role in its success. What are social constraints? They are things like legitimacy and reputation—ideas which might not be based in “rational” concepts like the quality of your product, but which still affect people’s desire to patronize your business.

Strategies for Nurturing Your Intangible Assets

As a new start-up business, by definition you’re going to lack legitimacy. Legitimacy comes to a business after it’s been established for a while and has a track record of success. There are ways to increase how legitimate your new firm seems to customers, however; even if it’s fairly new age-wise.

Follow Existing Models: This might sound like anathema to new entrepreneurs. “I don’t want to mimic old firms,” you say, “I want to stand out!” Research into the success of start ups has shown that in some instances, though, following the existing big hitters—at least symbolically—can help reassure customers and stakeholders that you’re a legitimate player in the industry. Things like hiring a receptionist and maintaining titles are two simple ways you can reassure clients that you’re a legitimate entity. While your receptionist might be your teenage daughter, and your “Chief Financial Officer” might be your buddy who actually has an equal role in the company as you, it might be worth it to take these symbolic steps.
Associate With High Status Businesses: Another thing young businesses can do to gain an air of legitimacy is to “rub shoulders” with bigger players in the industry. While it sounds a bit transparent, when younger firms are associated with more established ones, the legitimacy of the older business actually does rub off on them. Clients then associate the younger business with the same level of prestige.
Gain High Status Clients: Securing a demanding, high-status client can be a double-edged sword for a new business; the client might then have the air of bossing around the new company or having power over them. Gaining a high-status client will also almost certainly increase the prestige surrounding your business, however, and help accelerate your rise up the legitimacy ladder.
Associate With Appropriate Locations: It pays to have an office, or at least an address, in a location that associates your business with other big-name firms like it. Just as a tech firm wants to be in Silicon Valley and a movie production company needs to be in Los Angeles, think about where it might make sense for your business address to be located.

Sources:

How Can Start Ups Grow? (2005) Harvard Business School.