Do you think about start up business, but availability of capital is your hindrance? A small budget should not prevent you from creating the business of your dreams. You do not need a rich friend or family member to start up your successful business. Instead, by employing a bit of financial savvy and resourcefulness, you can start up the business for a much lesser amount of money than you think. In this article, you will find 5 tips on how to effectively use your small budget and start up your own business.
- Start the Business with What You Already Own
When you first create a start-up, it is crucial to take into account what is at your disposal. Consider factors such as:
- Tangible resources (what you own and have access to)
- Knowledge (what you know)
- Experience (what you’ve done in the past)
- Skills (What you can do)
Thinking deeply about what you have at your disposal is a valuable aspect when you want to start up a business on a budget. At times, you will find that you already own the resources, hence you can convert them into business assets and use them to your advantage. This includes resources such as computers, mobile phones, and other things you may need when starting up a business.
- Generate Strategic Business Ideas
Whereas it is simple to develop a business idea, creating a strategic one is difficult. When you think about starting up a business, it is important to explore various business ideas before selecting the final idea that you will go ahead with. This will minimize risk and increase your chances of success. Here is the process of ensuring that your startup becomes successful, valuable, and profitable.
- Provide solutions that potential clients would appreciate. Identify areas where there are existing solutions, but you can provide better solutions than competitors. This could regard cost, innovation or efficiency.
- Be cheaper as compared to other businesses. When choosing a business start-up, it is crucial to identify the areas where you can offer reasonable savings to customers as compared to your competitors.
- Create a start-up that will be viable even in future. How would your start-up be like in future? Considering the future enables you to identify the new niches and markets that could arise in future.
When generating business ideas, do not limit yourself just to one idea. Instead, pick a couple of them and compare which ones that fit within your budget, and are viable.
- Develop a Business Plan
Once you’ve identified your main ideas for the start-up, it is time to create a proper business plan. A business plan helps you to plan your start-up in a well-structured manner, and allows you to business objectives and how they’ll be achieved. A business plan also allows potential partners or investors to better understand your business and how you plan to actualize it.
Preparing a business plan is not an easy task, but it helps you sort out your thoughts: thus, you can figure out how your start-up could fit within your budget, and where you’ll require assistance. When preparing it, outline clear objectives to be achieved in a realistic timeline, and detail how you will get there.
- Start the Business as Sole Proprietorship
Sole proprietorship entails an individual owning and running the whole entity. It is a suitable business structure for one-person businesses, and the individual is entitled to all the profits and losses generated by the business entity. In addition, the individual is also liable for the start-up’s debts or incurred losses.
Forming a corporation is expensive, and needs regular filings with the state. Therefore, when you choose to start up a business, it is important to start off as a sole owner. This is because it is free to create, and is actually the zero-cost operating structure that you can use to start up your business. Once the business has grown enough, you can choose to incorporate it so that it becomes a separate entity.
- Invest only What You can Afford to Lose
When starting up a business, it is important to pump into the business only what you can afford to lose. When you do so, you reduce stress in managing and controlling it, and you maintain flexibility in the entity. On the other hand, when you only invest where you expect a certain return from the business, chances are high that you might never start up the business you have always dreamed of. A good example of this scenario is where individual A refuses to quit his job until he gets the opportunity he predicts will yield more. On the other hand, individual B invests time and money in a project that she thinks will be worth the time and money invested in regardless of whether she will get more from the business than she currently earns. The chances of individual B failing are higher than those of individual A.
Types of Businesses to Start on a Budget
- Performance-based business. This business requires entrepreneurs who have a creative skill and can market the skill to a wider audience.
- Consultancy business. This business may require a handyman, computer, sewing machine or a dressmaker. With effective marketing, this business can be particularly cost-effective.
- Service business. This business requires an entrepreneur to use their skill on others with considerably low upfront investment.