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Start a company in 2009 – Are you nuts? Well, no.

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Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.

RESEARCH TRIANGLE PARK, N.C. - I have been getting a lot of heat lately about writing about stuff that is extremely depressing. People ask me if I could write about some things that are more uplifting. Interestingly enough, bad economic times sometimes makes us think about things in new ways. I have concluded that starting a company in 2009 is a great idea. That’s uplifting, right. Here’s why.

1. Who needs venture capital and angels anyway

It is certainly true that getting venture funding will be really hard in 2009. But, for a start-up, who cares? Venture capital essentially left the start-up world with the dot.com bust, and only moderately returned around 2005, but not at the level it was in 2000. Venture capital firms are substantially focused on companies with revenue traction, not start-ups. When we come out of this economic mess, venture capital may never finance start-ups again.

Also, it will be hard, but not impossible, to raise money from angel investors in 2009. Entrepreneurs will have to have really well thought out business plans and offer a great investment opportunity. However, having a well thought out business is a good thing. An entrepreneur shouldn’t get financing if he or she really don’t have a solid business model.

In addition, hardware technology is cheaper thanks to the continuation of Moore’s Law. Open source has accelerated product development. More effective development tools have become available, reducing the number programmers needed to develop products. All of these things drive down the costs of starting a company.

I bet that there will not be a decline in the number of companies that start in 2009. There should be a substantial increase as unemployed workers start businesses instead of seeking new employment, recognizing that it costs less to start a company today.

2. Reaching potential customers costs less

But wait a minute. This is 2008, not 2000. We have come a long way with internet technology and now know a lot about how to market products and services on the internet. It doesn’t cost as much today to put an effective marketing program in place and the know-how to reach customers via the internet is quite wide-spread. In 2000, marketing required a staff of people and a bevy of consultants to create marketing collateral and a website presence. What is available to the entrepreneur is much different today.

• Search engine marketing has become quite practical and is pervasive.
• Website design techniques have improved the chances of getting visitors.
• Email marketing has become an effective tool.
• Social networks bring more referrals to businesses.
• Increased use of easy-to-use collaboration techniques makes it easier to reach potential customers.
• Increased communications to relevant audiences through blogs and social networks makes it easier to reach potential customers with effective marketing messages.

3. Selling and support costs less too

We also know how to sell and support products and services over the internet without an army of direct sales people.

• The use of tools like Net Meeting and VOIP makes sales calls much less costly.
• Internet technologies make it very effective to demonstrate product capabilities on the company’s website.
• Products can be delivered and paid for online.
• Customers can be supported by lots of online techniques (email, chat, texting, VOIP).

All of these techniques cost far less than creating organizations to provide sales and support services.

Bootstrap your business now!

All said and done, entrepreneurs don’t need as much money to start companies today. The online infrastructure can be deployed easily, faster, effectively and for far less money than ever before. Getting to a cash flow positive position can also come a lot faster than ever before, with enough money to basically pay the salaries of the few employees you need to manage an online business.

So make your New Year’s resolution now to consider starting a company in 2009, using the internet tools and techniques that make that a much more viable and real possibility.

About the author: Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.

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