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Planning series: sources of capital

Whether you are large or small, starting a new initiative implies risk. Sure, you can draw a slug of capital down, and allocate it to a project. There are problems with that. Some perfectly good projects die for lack of capital, some die from having too much - without scarcity, there is often a lack of focus. So this post is about alternative sources of capital, the kind you can draw on to build new things from idea to the point you have enough data to build a proper business case, and get the capital you really need.

  • Time - yours, and the time of another who also wants in on the new idea. Collaboration brings leverage, a solid critique of yours ideas, and perspective - provided you are collaborating with some one who perceives themselves as your equal, who won't be too scared to share their ideas, and is not a clone of you. Working with others, while annoying at times, also means your idea has to pass its first crucial test: will someone else believe in it? The key is to pinch a bit of time - a regular patch of time, and make yourself accountable to someone to keep that time for your new project. Staff are often seconded for a period at no cost - you just have to have a good pitch.
  • Business partners - Advisers might best think in terms referral sources, other advisers, dealer groups, or adjacent disciplines in financial services. Somewhere, the solution you are developing will provide benefits to someone who is not in your business. Call them, set up an appointment in January or February, and then you will have taken an important first step.
  • Capital in kind - people are sometimes more prepared to extend services to a new project than they are to deploy cash. Share your idea, then negotiate a free period for the service you need while you get set up. To be fair to all concerned, put a sunset date on the arrangement, to spare embarrassment if things stretch out.
  • Build once: tack your requirements on to the build process for another project. Often this will be seen as an added benefit, with small marginal cost. People like options. So thinking ahead, especially with IT requirements, can help you to pinch a little resource where needed.
  • Clients - some of your clients will be delighted to help out. Typically, they like to be invited to qualitative sessions to discuss new ideas, or to join closed groups to test alpha versions of services, or even just look over wordings and graphics at the end of a meeting with you.

But remember, don't be dick and abuse the privilege. Belief may overcome accounting for a while, but only a short while. The consequences for asking for too much can be a sharply worded email, or a consumer revolt. Sooner or later, everyone has to get paid. If your project isn't viable without a lot of free stuff, then it isn't viable.


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