Like millions of Americans, you have probably dreamed of owning your own business. And why not? Being a business owner is a big part of the American dream. However, the one thing that stops most would-be entrepreneurs is the lack of funds to get started. But as Tony Robbins says, it’s not resource but resourcefulness which determines whether you will be a success or not. As such, here are some proven tips on how to start a business on a shoestring budget.
Don’t Reinvent the Wheel
Coming up with something completely new takes time and money. Instead of trying to reinvent the wheel, focus on what you know and do it better than anyone else. This might sound simple, but it can be very hard to do. If you want to start a business on a shoestring budget, then you don’t have millions, or even thousands, for research and development. Put your energy into getting a working version of your product or service out to the market and then making improvements as you go.
Sweat it Out
You don’t have deep pockets, but there is one thing you have which is worth more than money – that is time. Granted you can make more money, but it takes a lot of time and energy to make money. As such, you are better served by having a plan to make money and than sweating out every decision along the way.
Don’t just pass the buck to a consultant, get to know the process yourself. This will help you to expand your experience and you might even find ways to do it better. Just remember that you can’t have all the answers and to treat each day as an opportunity to learn something new.
Make the Most of What You Have
Working on a shoestring is not an excuse or a hindrance. Instead, you should see it as an opportunity to make the most of what you have. After all, the real breakthroughs come when you are forced to dig deep and find a better way.
The same goes for the money you have in your bank account. Look at ways to make every dollar do the work of two or three dollars. Doing so will make your company more agile, by extension lowering your risk in business. This will give you a tremendous advantage over your competition, regardless of the industry.
It’s not just money. Another way to start your business on a shoestring budget is by leveraging your relationships. Now, this does not mean you sell your friends and family. After all, they will be some of your early customers no matter what you do.
However, you want to leverage the relationships as the people you know might know key buyers, influencers, distributors, or suppliers. These relationships can help your company to grow faster than it would be able to do on its own.
Take the story of Joy Mangano who launched the Miracle Mop on a shoestring budget. Her big break came when she was able to gain placement on QVC – all thanks to a relationship.
Show Me the Money
You’re starting out with almost nothing in the bank, so why would you want to offer credit to your customers? While there might be special situations where you will need to get creative, in most cases you will want to get paid first. Customer finance is the easiest form of financing out there and you want to make the most of it.
Don’t Get Over Extended
Let’s say you have good credit, one thing you don’t want to do is run out and open several credit lines to fund your business. This can lead to ruin and will quickly undermine your best-laid plans to start your business on a shoestring.
There are two reasons for this. First, the finance costs will sink your cash flow and before you know it most of the money coming in will be going to pay finance costs. Second, businesses are heavy users of credit. This can sink your credit score and will make it very hard to get new credit when you really need it.
A better option is to make sure you keep your excellent credit score and then use this to open trade accounts with your suppliers. In this way, your financing costs are going to the things you need to run your business, not to the banks.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.