There’s a common misconception that businesses require copious amounts of capital to get started, but this cannot be further from the truth
Businesses like Gymshark and Dominos both started from only a few hundred dollars, and are now multi-million dollar enterprises.
While starting a new business with little capital is challenging, it is not impossible. Savvy entrepreneurs should know that starting a business on a limited budget can work if you are careful with your finances, overheads, inventory and make smart business decisions.
So if you have a great business idea, but only very little capital you’ll need to plan carefully and conserve outgoings wherever you can. Ideally you will be the primary source of labour, and your business model will be adaptable to scale as you grow.
Here are 5 tips for how to start your business on a budget.
1. Start Small
In the beginning stages, your motto should be to conserve, conserve, conserve wherever possible. Some businesses are tempted to rush straight out of the starting blocks and buy a glossy website and eye catching logo. The reality is that whilst you do need those things, both can be achieved on a shoe-string.
For websites there are free website builders with affordable hosting packages, like WordPress, and you can even lessen the cost of incorporating a business by using a free company formation app.
Smart, and small, decisions like these help to keep your overhead, inventory and any labour expenses low. Before you make a decision, ask whether it’s necessary, whether it will help you acquire new customers, and whether it will contribute to your bottom line.
If the decision you are about to make does not actively help you grow your business, skip it.
2. Start Simple
Forming your business can take less than $100 once you have completed the necessary paperwork online. This protects your assets from financial and legal liabilities, which can be a necessary safeguard against negative consequences for new business owners.
Whilst programmes like Fish Tank and The Apprentice make business plans seem the size of theses, they really don’t have to be. A Lean Business Plan is still a legal document and it only spans one page.
This saves you time and also allows you to put the main bulk of your ideas down without getting caught up in five, or ten years ahead – especially if you’re testing a new market or idea and don’t yet have access to that information.
Having the support of a trusted accountant is important, but it’s not a necessary first step. Accounting packages like Xero can help get you started, but if you do need help consider using online accountants, or freelancers.
Your marketing strategies to get your first customers need not be expensive either. Cost-effective ways to promote your business like local marketing in your local vicinity can promote your business just as well as online marketing.
3. Make Your Own Office
Technology giant Apple was started out of a garage, and billion dollar fitness apparel company GymShark was too. Whilst business owners may automatically assume they need to find a physical office, they don’t.
Mail forwarding companies can be set up to act as a virtual address, meaning that business owners can protect their residential address from public records.
If your business will be predominantly working online, or you will be running the production and manufacturing of your products from home but selling online, you can just as easily work out of your home.
This saves you the cost of leasing space, saving you money in the long run by not investing in huge overhead costs.
If your business isn’t a trade, but you are likely to be customer facing and can’t work entirely on the web, you can still work from your home. Instead consider making a separate space for your office, if available, and having a separate entrance. This will appear more professional to clients, and help you separate work from home.
4. Be Thrifty with Marketing
The rise of social networking means that it is now even easier for business owners to get the word out about their business without spending much doing so.
Local marketing, such as printing fliers, or leaving leaflets with other local businesses can help tremendously as people tend to want to support their local businesses. This also helps for keeping your overheads low: It’s unlikely you’ll want to afford regular international importing or exporting costs within your first year of business, so keep it local.
Away from local marketing use social media platforms like Twitter, Facebook, Instagram and LinkedIn. Join groups on those platforms that are similar to your niche or industry to connect with other entrepreneurs, or to test your target market.
Send out samples to friends and family or others online who may have found you and are curious in your business.
A great idea is to start a blog. Blogging can help you drive organic traffic to your website by utilising good SEO techniques. Businesses with blogs tend to generate 126% more leads than competitors too, so it’s well worth creating a blog content calendar and getting into the routine of regular blogging.
5. Use What You Have
Another way that new businesses on a limited budget can save money is by using what they have around them.
Just like working from your garage or other home space, you may already have everything around you that you need to start. This saves you having to fork out expenses to buy new things.
Even better, converting your existing assets to business assets means that you can claim these as expenses, giving you money back from the tax your business will have to pay each year. This can be especially handy when trying to manage the books, as it can significantly reduce your business’s corporation tax.
Those are our top tips. Most of all remember to start small, and keep it thrifty. Use what you have around you to steady your business before you move it to the next level.Last modified: November 18, 2020