Start A Business On A Shoestring: 10 Vital Tips
Of course, the ideal scenario is to start a business with enough money to enable you to move more aggressively and expand your business faster. But even if you do not have money, that should not prevent you from starting your own business. If you have great idea and a viable business plan, you can use Other People’s Money (OPM) to start a business. Or if you do not have access to OPM, you better learn how to tighten your belt and bootstrap your fledgling business. Remember, while you may not be spending money, you still have to pay with something your time and energy.
Start A Business On A Shoestring
Below are 10 rules that you need to follow to successfully launch a business with very little cash:
1. Think twice before borrowing.
Debt is death to any business trying to get on its feet. After all, you want your own business to give you an additional source of income, if not the main paycheck. You do not need another bill to pay.
As much as you want to be optimistic about your venture, there is always the possibility that your business can fail and you don’t want to owe everyone in town. Not to mention that if your business can not pay back its debt than you and your family will pay the ultimate price.
2. Be lean and mean.
If you have limited capital, set aside any thoughts of a fancy store or moving right into that new office building. Instead, start a home-based business and explore the advantages of using your home as an office and the internet as your store front. Or if you must be “out there” selling your products, rent a small section at a flea market or fair. You may consider renting at the mall only when you see money coming in.
As a business owner on a budget, you do not have the luxury of wasting supplies, making unnecessary long-distance calls, and spending office money without a thought. Now every expense comes from your own pocket.
3. Selecting A Shoestring Business
You can save tons of money if you select a business based on equipment that you already own. For example, consider starting a photography business if you already have your camera and photography gear. You may want to start a daycare business if you already have enough space in your house rather than spending money at the start of the business constructing new rooms in your house. If you must buy equipment, do so only when you have already landed your first account. Otherwise, consider renting it for the moment.
Your choice of business will spell the difference between making your business a success on a shoestring budget or not. Some businesses, such as a file storage facility, require enormous capitalization. Other businesses, like a wedding coordination business or a computer consulting business can be started on a thin budget. Choose a business that can be started even with little capital.
4. Make sure that there is demand for your business.
If you do not have enough resources, you have little room for trial and error. Your business can only survive if it generates enough demand to sustain it. Be sure that the business you are about to start can give the results that you desire. Otherwise, you may even lose the very few resources that you have.
You can start by doing research in your area on other companies who supply similar products or services. Then once you have located a few, you will need to study all price points. There is absolutely no reason to offer services or products that don’t have sound financial backing. If the prices are so low that you cannot find a way to come out ahead after all cost, then move on to something more profitable.
5. Look Big.
Many home business entrepreneurs are faced with the dilemma: “Should I tell my customers that I work alone from my kitchen” or “Should I pretend that I am running a well-oiled machine?”
In most businesses, your success hinges on how customers perceive your venture. Letting customers know that you a one-person home business may be the kiss of death. Customers prefer dealing with a business that shows professionalism and ability to deliver what it promises qualities often associated with large businesses. This does not mean that you need to lie when asked, but I am insinuating that you should not advertise this aspect of your growing business. It is natural and expected that every successful business started just as a one man show and grow from there.
Looking big does not necessarily mean spending tons of money. You can start with sharp looking business cards and stationery. If you have a web site, you can create one that looks just like one of the big boys. Your phones must be answered professionally as possible, making sure that no dogs can be heard on the background.
6. Be creative.
You will only survive as a shoestringer if you are able to use your wit and creativity to extend the meager resources that you have. As you start your business, you need to think ways to get things done, as cheaply and efficiently as possible. The less cash you spend, the better. After all, splurging on one aspect of your business say, buying a top of the line laptop computer may leave you with nothing to market your business.
You need to be creative and resourceful in finding ways of stretching your thin budget. Need a business card?
A) Use Sonetel for your new professional phone number. They will also allow you to forward your new line to your cell phone along with many other features for only $5-30 per month.
B) VistaPrint or Overnight Prints offers business card prices next to nothing.
C) If you need a web site go to WordPress.com purchase hosting and they will provide free easy to use templates. WordPress templates are the best thing you can do for your business. They will allow you to become an expert in your field, write articles and make a bold modern statement.
D) For task that you do not have time or the skills to do, visit Fiverr.com and check out what people are offering for only $5 dollars. This is also a great place to have graphics done for your new business, business cards etc.
E) If you are in need of supplies, office furniture or equipment be sure to check out; Craigslist, eBay, yard sales and second hand stores. Don’t be afraid of posting a Wanted ad for those things you just cannot seem to find.
F) Think about naming your company or web domain area specific. This will allow you to cut your internet marketing cost by at least 75%. FYI google and other search engines pull sites based on this order.
1. Domain name
2. Titles and Tags
For example: if your domain was named www.SpokaneOrganicCandles.com you would be naturally come up on a search for “organic candles in Spokane”. However, if you domain was www.Kellyand SamOrganics.com then it is not real likely that you will come up unless you are paying for ad clicks. If this is not an option for you, then you better get started writing hundreds of keyword rich articles or setting up a hefty ad click account.
G) Social media is where every business or individual person gets their voice. With enough practice and quality information, you could have just as many attentive viewers as a small TV or radio station. Now what could you do with thousands of friends listening to every words, Tweet or Facebook post you make? I will let you dream this answer up….
H) When the cash isn’t there and you’re still in need, find another way around it. Many new business owners think they need everything perfect in order to perform the task. This just isn’t true. Where there is a will there is a way and you may need to find a way to do without!
One reality of having little cash is that you have little recourse in doing things. You do not have the luxury of a 30-man Web design team, or a battalion of sales people to sell your products. You have to force yourself to learn new things, and find ways to bring in the buck. If you want to survive, you need to rise above being a cash-dependent entrepreneur to a wit-dependent businessperson.
7. Run your business with a passion.
Starting a business is hard, doubly so if you have a limited capital. It is like going to a battle full of heart but with little ammunition. It doesn’t mean that you can’t win, but you have to act smartly, maximize your resources, and go after your goal with a burning passion. If you are passionate in what you do, you tend to work harder and go that extra mile. After all, you need to put in more time and effort to compensate for the lack of capital.
In your clothing business, for example, you will have to do the designing, sewing, finding and selling to buyers, and writing the press release to market the business. If you lack passion, you will not have the strength or the patience to do all these, and more. Passion will help you sustain your enthusiasm and energy to do what is required to get the business off and running. It is what sets successful shoestringer apart from other start-up entrepreneurs.
8. Your customers are your gold mine.
You may not have the resources to aggressively seek out new customers. Nor do you have the deep wallet to offer grandiose customer loyalty programs. But if you take care of your customers really, really well, then your customers will take care of you. Customers go back to businesses that offer them quality and timely service, help them make informed choices and make their lives easier.
Every business owner knows that the customer is king. If you do not have the money to easily acquire new business, you will make sure that you always roll out the red carpet for those that you already have.
9. Think cash!
As a shoestringer, you do not have money. You do not have the luxury of waiting for 60 or 90 days before you can get paid for services that have already been rendered or products already provided. You need cash, and you need it now.
Therefore, you must always make sure that your business generates cash fairly quickly. Select a business where you get paid quickly in cash. If your work will take time to complete, get a partial payment at the start. Often this will be enough to pay for the job’s expenses.”
One strategy to make sure that you have cash is to avoid or limit inventory. Inventory means that your cash is held up in your items. Purchase only what you can sell. Avoid overstocking items particularly slow moving ones. Unless you can move inventory quickly, do not tie up your money on excess inventory.
10. Keep the money rolling.
As soon as your business starts earning, make sure that you keep a certain percentage of the profits for the growth of your business. Avoid using your earnings for your personal use. There are many shoestring entrepreneurs who go on a personal shopping spree after receiving their first check, without any regard for the next inventory requirements, PR and marketing campaigns, or new equipment to purchase.
You may allocate a certain portion of your income as your salary, which you can then use for whatever purposes. The rest should be placed in your business account. Your business needs all the resources it can get for it to reach the next level. If you regularly plow back the money to your business, you are then in a better position to expand and grow the business.