Each year, venture capital firms in the U.S. invest tens-of-billions of dollars in promising tech sector companies, identifying startups with high growth potential, and infusing capital to underwrite product development, marketing, and production capabilities. But what about the promising companies that don’t receive venture capital funding? Is it possible for them to flourish in an industry that values fast growth and rapid returns?
With the right approach, the answer is “yes.” Here are three strategies that can enable startup companies to succeed, even without outside funding:
1. Be an industry innovator. One of the advantages access to capital can confer is the ability to set a product apart in a crowded marketplace. Startups without significant capital reserves can gain the same advantage by building their company around an entirely new concept. It doesn’t have to be a product no one has ever seen before—it could be a new approach to delivering an existing product.
My company, Zenni Optical, was the first ecommerce business that succeeded in selling prescription glasses online. We launched back in 2003 when ecommerce was just gaining traction, and at the time, virtually no one thought selling prescription glasses over the Internet was feasible. Since we took an innovative approach, it was easier for us to stand out in the marketplace—even in an industry with many competitors.
2. Keep overhead low. So many startups are launched in garages that it has become an industry cliché—and for good reason. When a company is just starting out, income is likely to be non-existent as the founders build the brand from the ground-up. The founder’s garage can offer great temporary housing during this time—for free.
Like many startups before it, Zenni Optical was launched in a garage—one that luckily had high ceilings to accommodate product storage and fulfillment activities! By using that space to avoid facility purchase or rental costs, we were able to keep our overhead low and invest more in the company and product development.
3. Focus on customers. Virtually every company at least pays lip service to the idea that customers come first, but when you’re starting a new company with a limited or non-existent marketing budget, it’s more important than ever to keep customers satisfied. For companies without a hefty marketing budget, word-of-mouth advertising is often the only pathway to success.
Zenni Optical was able to find success early on without a marketing budget by offering customers a completely new way to purchase prescription glasses and by overturning established industry practices. We gave customers the high quality products they need at a price they could afford (a complete pair of glasses starting at $6.95 instead of $300), and thanks to word-of-mouth marketing, our company grew exponentially.
To successfully launch and grow a startup business, entrepreneurs need a great product idea, a strategy to keep overhead costs under control, and an unwavering commitment to customers. Of course, it helps to have venture capital backing for development and outreach, but it is possible for companies to succeed without outside funding.
Zenni Optical was founded in 2003, and today we’re making and selling approximately 7,000 pairs of prescription glasses every day and have a thriving global customer base. As our story demonstrates, with the right concept and approach, it’s still possible to bootstrap your way to success.