Finding capital to launch your business might be the hardest part of entrepreneurship. An examination of census data shows that black-owned businesses have very low levels of startup capital relative to white-owned businesses and these differences persist across all major industries.
But don’t let that dissuade you. There are a plethora of organizations, universities, and companies that provide pro bono or professional services at a reduced fee, ranging from accounting to information technology and from human resource management to marketing. When such services are free, this practice is often referred to as skills-based volunteering.
“When you are capacity constrained thinking outside of the box in terms of pro bono services and volunteer support is a really smart and effective way to add capacity to your organization without adding to your expense line,†says Cheryl Dorsey, president of Echoing Green, a New York-based social venture fund that provides capital to support social entrepreneurs.
When Felix Lloyd was looking for backing for his startup, he turned to Echoing Green, which had provided financial support for a former employer. Lloyd, a former educator, needed funding for an online game that would help high school students develop financial literacy and math skills. As an Echoing Green fellow he received consulting services and startup capital to help launch Skill-Life Inc.
Echoing Green also reimbursed Lloyd for healthcare expenses, paid him $60,000 over a two year period, and matched him up with free and reduced cost legal services.
“Echoing Green provided my company with critical legal support, branding expertise, and an extensive professional network while challenging me to think and act strategically in building my business,â€Â Lloyd says.
Another entrepreneur introduced Lloyd to AlphaLab, a Pittsburgh-based small business accelerator. An accelerator generally includes a group of investors who help expedite the start-up or expansion of a company. In exchange for 3% equity in his company, AlphaLab provided Lloyd with six months of free office space in Pittsburgh, access to software consultants, and $25,000 from AlphaLab’s parent company Innovation Works.
So far, an estimated $400,000 in money and services has been invested into
Skill-Life. Of that only $10,000 came from Lloyd’s personal funds. Although he has never had to take out a bank loan, 27% of Skill-Life equity will be distributed among investors and employees. He owns 43% of the equity and his wife owns 30%.His first client, a Pittsburgh public radio station, paid Lloyd $3,000 to give 600 students access to CentsCity, his online game that launched this month. Lloyd’s accomplishment can be duplicated. If your business budget won’t stretch far enough, use these three steps as a road map to finding and efficiently utilizing pro bono and skills-based volunteer services.
Do your homework. Not every pro bono provider is going to be the right fit for your start up. “The single most important thing that we are looking for are people that have a clear picture of what they need and how our skills will fit with their needs to develop,†says Gaute Ellingsen, an MBA student and vice president of clients at the Small Business Consulting Program at Columbia Business School.
Doing research on what kind of services each kind of pro bono organizations offers will pay off because it will enable you to tailor your requests to what is most beneficial to you and also to the priorities that the pro bono organizations have.
Network, network, network. Existing relationships (with investors, supporters, or friends) can open doors to different pro bono services.
Through an acquaintance, Lloyd learned that Pittsburgh had a strong technology community. At AlphaLab Lloyd shared ideas with his peers and he gained exposure to the breadth of Pittsburgh’s entrepreneurial, investment, and software expertise.
It was through these interactions that he was recommended to advisors and more free office space at Idea Foundry, another non profit in the city that specializes in launching information technology and engineering related enterprises.
Check with your local university’s business school for resources and possible skill-based volunteer organizations. Lloyd used the Technology Collaborative at the Tepper School of Business at Carnegie Mellon University and sought free services at the Small Business Development Center, a Small Business Administration program housed at Duquesne University. Students at the universities did market research for him without charge and helped him create cash flow projections.
Demonstrate an ability to produce results. Organizations and individuals that offer skills-based volunteering want to be certain that they are not wasting their time and resources. Demonstrate your talent by building a strong Website and public face, says Echoing Green’s Dorsey.
“We have to have some sense that the entrepreneur can execute an idea because essentially ideas are a dime a dozen,†she says.
However, she also emphasizes that a charismatic personality is just as important as a strong business plan.
Resources:
Many universities have clinics to assist entrepreneurs. Check your area university’s business school for services.
Here are just a few:
Small Business Consulting Program at Columbia Business School
The Small Business Development Center at Duquesne University
Tepper School of Business at Carnegie Mellon University
Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School
The Small Business / Non-Profit Clinic at the University of Utah S.J. Quinney College of Law