Inside Entrepreneurship: No money, no credit, no staff -- but there is help

Q: I have a resource directory Web site that is not generating any income yet. The conundrum exists that I need to hire people to develop and expand the Web site services, but I have no money to pay them. I have the plans on paper that I would like to pursue, but I have no idea how to go about it.

Nannette B., Wellesley Hills, Mass.

A: No money, no credit, no equipment, no experience, no staff and no connections tend to top the list of what entrepreneurs say they are missing at the start of their enterprises. This can be unnerving. For all the optimism entrepreneurs have about their long-term visionary prospects, there is a tendency for startup entrepreneurs to become too disheartened by their perceived startup inadequacies.

According to a recent study by the Office of Advocacy of the U.S. Small Business Administration, entrepreneurs who actively sought funds for their startups were more likely to open a business than those who continued to sit on their dreams.

Another way to look at these results is entrepreneurs who overcome startup problems acknowledge their weaknesses in a practical way. Then they carefully craft out highly creative low-cost or no-cost ways that steadily close these early resource gaps. Through persistence and hard work, they do find a way.

Here are some ideas to consider:

Interim assistance. The metropolitan Boston area is home to a large number of community colleges, colleges and prestigious graduate schools. Many of these institutions help place interns in entrepreneurship, marketing, accounting and Web site development in surrounding businesses and nonprofit organizations, or they have small- business development centers on campus. You may also find professors who would be willing to get into student research assignments.

Tap retired or laid-off professionals. You can find highly experienced managers to serve as founding board members, advisory board members or first staff members. Recently laid-off workers who can live off of severance resources may be willing to work at no cash cost until more permanent funding is in place. The trick here is to actively network and accept only professionals who match the business skill needs of your startup organization.

Trading equity for services. "Sweat equity" is what consultants, founders and first staff members earn for providing services to a young company without cash compensation. If your company does well in the marketplace, the value of your company's equity may far exceed the value of salary compensation. If you choose this option, spend some time learning how to minimize the "phantom" income tax consequences of granting nonliquid securities to your startup team.

Venture funding. Fortunately you live in an active area for angel and venture capital financing. Start attending local angel events, including the MIT Enterprise Forum, to learn more about investor expectations.

Search engine optimization. You say that your basic service is up and running, yet not producing revenues. Why not? If your business plan is reliant on site advertising revenues, you'll need to demonstrate some positive momentum to attract startup advocates and capital. Subscribe to SearchNews from SearchWrite.com, an excellent free newsletter about traffic building trends and tactics.

Partnerships. I believe in the concept of piggybacking onto more established organizations to reduce startup administration, funding, traffic generation and marketing requirements. Is there a company or Web site that can use your tools or directory?

The trick to bootstrapping a startup organization is being clear about organization priorities. Because there are only so many hours in your day, work on the "must have" resources before the "nice to have" resources. You can do it.