business start-up, small business, entrepreneur

The single most important asset of the small business is one which most possess: persistence. Year in, year out, come rain, come shine, the company labours on. The quality is admirable, but needs to be used to its full advantage. To make the cause a truly winning one, other attributes are essential - with ingenuity high among them.

Coming up with unconventional ideas, even improvisations, makes the difference between breaking through, plodding on, and maybe breaking down. When it comes to ingenuity in the face of adversity, in fact, you can't beat a truly determined entrepreneur. Especially when starting up, the business probably lacks vital elements: like sales leads, office space, staff, management know-how. All these can be bought, of course. But that demands the most commonly (and seriously) missing ingredient of all: money.

Making do without wealth is where persistence and ingenuity prove themselves. Real-life examples include a wily fellow who won badly needed sales leads by nabbing visitors to the trade fair stands of large competitors. For office space, the neat solution is barter: swapping services rendered for square feet. If you need cheap labour, to make letter-box drops, say, what about making a charitable donation to some educational establishment in exchange for student services?

Even management know-how has been found on the cheap by becoming a guinea-pig for a research project. But money remains the largest, and often killing, problem. Again, there are useful wrinkles. In retailing, have you thought of waiting until Friday to pay bills, after estimating weekend receipts? Generally, try paying bills in person, rather than by post. According to the American magazine Inc., that enabled a hard-up entrepreneur to extend his credit from a week to a full month.

On the other side of the cash hurdle, debt collection, another hard-pressed business billed for payment within 30 days and charged 1.5% interest for every 30 days over the deadline. When trade had become sufficiently solid (which took five years, thus rubbing in the value of persistence), this firm insisted on up-front payments of 25%. That does wonders for the cash flow, and is nice work - if you can get it.

What you need to get most, though, is capital. Often the sums required are small. The businesses studied by Inc. covered an enormous range: sporting goods, waste petroleum services, computer networking, pizza restaurants, distributing skin-care products and gifts, health foods, on-site health programmes for employees, and sandwich shops. They had grown to sales totals ranging from $1 million to $355 million (with two franchise operations weighing in respectively at $164 million and $2.2 billion). But none had raised more than $4,000 in start-up capital.

One woman had started with no equity at all. Her solution was to apply for 17 credit cards, borrowing up to the hilt on all of them. In financing their drive for success, these businesses substituted obstinate, ingenious persistence for the resources they didn't have. The sandwich shop owner, for instance, chose completely the wrong site for his first shop. Rather than give up, he didn't pay his suppliers, who inadvertently financed a second shop in a better location (thus demonstrating a further essential adjunct to persistence, the ability to learn from your own mistakes).

Another man, needing to give the impression of a sizeable business, invented a whole cast of phantom employees and functions. Another went round suggestion boxes, and stuffed them with notes demanding his products. Cutting corners in that style can be taken too far beyond the bounds of absolute honesty. But the entrepreneur is often desperately hard-pressed, drawing no salary, reduced to expedients like raiding dustbins for usable materials, and very possibly using home as office and the family as unpaid help.

The better answer is to ensure that you're adequately financed from the start. But that's easier said than done - and many start-ups compound the problem by reluctance to give away equity. That was the stumbling block for one man who wanted a relative to guarantee a £2,500 bank loan. Then that saving ingenuity came to the rescue. He offered the guarantor a £300 equity reward up-front. That left the business the £2,200 needed for the launch - and everybody lived happily ever after.