This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Ryan Kohler, CEO of iApplicants, a provider of software that tracks job candidates and helps small and medium-sized businesses with hiring, says the sooner entrepreneurs start pitching their start-up ideas the better.
What's your advice on strategies for making a start-up profitable?
The key with any start-up, especially with software and Web-based start-ups, is to prove your concept is viable as quickly as possible. Instead of focusing on business cards and letterheads, you should get out and pitch your idea to potential clients, even if it is nothing more than an idea. Stop worrying about someone stealing it, and start talking about it with everyone you meet. The more time spent selling the concept, the quicker you can develop necessary features to make a successful product. Plus, this approach will ensure you don't waste time building features that prospective clients don't care about.
What can a start-up business do when funding is scarce?
Bootstrapping is key, even when your business has funds from profits or investors. Just because you have cash in the bank doesn't mean you don't need to carefully weigh how you spend money. If funding is scarce, you must look for alternative and creative ways to grow and market your business without up-front costs. Generating customers through commission-based channels is a great way to drive sales on a tight budget. For instance, iApplicants started with a reseller channel that allowed us to quickly get access to clients, without acquisition costs. Also, affiliate, or referral partners, are another great channel. Now that we are in a more direct sales model, iApplicants focuses on search engine optimization, which has allowed us to quickly grow during the recession.
What are some other money-saving tips?
You don't want to be so cheap that it hurts your growth, but when you are a boot-strapped business, you have to take the road less traveled. Don't make decisions based on what your competitors or funded start-ups are doing; focus on your own business and what you actually need to grow. This means less fancy office space that includes Internet and power with the rent, and buying used desks and furniture. Conduct meetings over the phone or Web-share so you don't have to travel. We focused early on using contractors and work-from-home, part-time employees. Although the hourly cost was higher, it provided us with more experienced individuals.
How much debt should a new business take on?
Every business is different, and some require significant amounts of cash to get started. Web-based businesses can often be started and developed for next to nothing — if you are creative. Because iApplicants has never taken outside investment money, we have always ensured that our focus was on generating revenue as quickly as possible so that we could fund our growth through the business instead of debt. Time and again, I've seen cash infusions cause entrepreneurs to lose a bit of their hustle. It makes them less hungry to get out and make sales and more apt to spend time in meetings and being busy with the least important parts of their businesses. An entrepreneur should always start and end with sales.
Twitter@DawnHouseTrib Ryan Kohler, CEO