When most of us hear the term “startup,” we imagine the latest and upcoming businesses in Silicon Valley battling for financing from investor firms. However, not all new companies need a couple of millions of dollars to get their business started. As a matter of fact, as stated by Small Business Administration (SBA), a lot of small companies can get off the ground for as little as $4,000. Such micro-brands are usually home-based individual enterprises that need small, upfront funding.
Franchises are also excellent alternatives. Although a general franchise requires bigger funding, you can start a home-based franchise for as little as $800-$4,500. If you believe you have the perfect business idea, but don’t know to get it off the ground on a small budget, read on about the following tips.
Work From Your Home
One of the largest overhead costs for any new company owner is leasing a location. This means you can save a lot of cash upfront since you don’t have to fund that long-term expense. For brands that are based on online presence, this becomes much simpler to do from your house — you can run your company online and have Zoom meetings for collaboration or for checking in with your workers or clients.
This hands-on, down-to-earth strategy for starting a company is perfect for anyone who doesn’t have a lot of cash to invest upfront. You can expand your business and reach a break-even position much faster since you aren’t stalled by large starting expenses and the responsibility of leasing commercial locations.
Even if you aren’t starting an Internet-based business, you can still run your company right from your house. However, you should think about having another entrance for your home office in order to have a better life-work balance. Moreover, with a separate entrance and office, your business will look more credible and professional when your customers drop in.
At the beginning of your business venture, you shouldn’t spend a lot of upfronts if you don’t need to. Yes, it’s tempting to spend a few thousand bucks on a great site or brand design. However, when you’re running a business, you’ll have to adapt a lot along the way. You should keep your inventory, operating, and labor costs small.
Think about every buck. Make it count. Before spending a single dime, ask yourself — “Will this investment improve my bottom line? Will it help my business find new customers?” If your investment isn’t helping you expand your company, avoid making it. Moreover, you should try out your idea to make sure there’s actually a product/market fit for it.
Product/market fit means that there are people (or market) for your product or service. To find it, analyze what you are developing, who needs it desperately, and what kind of business model you’ll go with in order to distribute it.
For instance, with an LLC, you can adopt a tax status of the partnership, sole proprietorship, as well as S and C corporation. Just remember that researching your business model depends on the state you’re in. You wouldn’t search for how to get an LLC in Ohio if you’re from Wisconsin, would you?
Other methods for exploring product/market fit include creating focus groups based on your target audience and discovering what their problems and needs are, and using Internet survey apps for collecting feedback.
When you’re on a low budget, you likely won’t invest a lot in your business marketing efforts. However, this is the perfect situation for leveraging your personal and business connections in order to spread the word. Go creative. Explore social media like LinkedIn, Instagram, Facebook, and Twitter as much as you can.
Contact your network and explore whether anyone could be interested in ordering your service or product. This can also provide valuable starting feedback around your price and possible demand.
Explore ways to gain media coverage. For example, HARO, or Help a Reporter Out, is a free-to-use platform that joins journalists with industry professionals. You can use it to present your business to journalists, bloggers, and other media people.
Another avenue is to create a blog. Blogging is an excellent way for your business to gain crucial exposure. Today, more than ever, everyone is online. Companies with blogs often have a lot easier time in lead generation than those without one. Your business blog will let you stand out and make you into a thought leader, all while attracting valuable organic traffic for your website.
In addition, email advertising remains one of the most cost-effective avenues for promoting your business. Once you gather prospects’ email addresses on your site, you can then foster a relationship with them through valuable email content. However, if your copywriting skills aren’t up to match, you should hire a professional copywriter for this.
Go With Your Own Tools
It is possible that you already have the equipment you need to start your company. Moreover, your personal equipment is much easier to convert into a business asset. It also becomes a tax-deductible when you do this.
What equipment? You can use your smartphone, laptop, or anything else you often use to run your new brand. If you still aren’t sure about this, you should read about tax deduction for small companies or find an expert.
Buy Your Products at a Wholesaler
If your business model is based on selling products, you should search for wholesalers that are open to helping new companies start. Moreover, try finding those vendors who don’t have a problem with drafting a budget together with you. They have more experience with budgeting, and it’s always good for your business when a professional help you out.
If you want to find vendors, you should go to trade shows (they usually hang out there) or directly visit a distributor for your products.
However, due diligence is required. Not all vendors all the same. Do the research. Ask for the names and phone numbers of the sales representative’s other customers and give ‘em a call before you proceed with the purchase. It’s not just that you’re defending your capital. You want to find those who can set your business on a path to success.