You have had a great business idea and are convinced you can make it work, but you have a limited budget to get your business off the ground and running. Having to juggle existing financial commitments such as a mortgage or personal bank loans could put a squeeze on your business plans. A growing number of entrepreneurs use creative thinking and careful planning to get businesses off the ground with the smallest budgets.
Making your business fit your finances
Starting your business on the smallest of budgets means you will have to work even harder to ensure your business doesn’t implode from a lack of funds.
Even if you don’t have lots of finances on your side, you probably have something that many established businesses don’t have, and that’s time. If you have some time on your hands, you can start to build income and cash flow from your hard work.
Keep in mind that the easiest businesses to get off the ground with a limited budget don’t require plenty of resources or initial outlay. These are generally service-based businesses, such as teaching or other types of consulting. You may only need to purchase a business outfit, some stationery, and business cards to start bringing in clients.
For product-based businesses or manufacturing, it’s still possible to build a successful business with a limited budget. Still, you will need to direct every dollar where it matters and be prepared to stick with it for as long as necessary for you to break even.
Suppose your business idea requires a large initial outlay that swallows most of your budget. In that case, you will most likely find that no amount of careful financial management could save your business from going under.
Minimising costs and eliminating expenses
It goes without saying that if you are on a limited budget, you will need to direct your spending where it has the most significant impact on your business. Here are some tips to make your money go further.
- Utilise free business support – Business support or advice doesn’t always need to cost a fortune – there are plenty of ways to get help and build your business knowledge for free. Try using the Internet to research success stories in your chosen industry and find out if there are any government-funded business mentoring services you could access. You could also approach your friends and family or industry associations to put you in touch with someone in your industry who could share their knowledge with you.
- Do it yourself – If you have a limited design budget for an expensive-looking website or are not sure how to design your advertising material, consider learning how to do it yourself. You might be able to attend a low-cost or free course on how to use design software or use different kinds of Internet resources to teach yourself. Almost any business-related task can be completed by yourself, depending on how much time you have. If you are an artist, you could take charge of the process by processing orders, interacting with customers, and creating the packaging and artwork for delivery. You might find that customers appreciate the personal touch of interacting with the person who created their artwork.
- Work from home or lease a low-cost premise – If you are running an online store or don’t need to meet clients at your own premises, working from home can be an option worth pursuing. If you need to have a physical office, leasing one in a shared office or splitting the lease on a property with another business is a common way to minimise costs. Shared office spaces will often have shared amenities such as meeting rooms and coffee break areas, which are great for meeting with clients.
- Only order what you need – Avoid the temptation to order large quantities of stock from suppliers in anticipation of large orders. Having less stock means you will save on storage costs and help reduce the risk of theft or damage. If you are an online retailer, you may be able to organise for your stock to be promptly dispatched to you when orders are placed, meaning you can’t get overstocked. The downside is that you might not get items at a lower price, lowering your margins, and this could mean it will take longer for customers to receive orders.
- Minimise fixed costs – The more fixed costs you have, the more financially tied down you will be. Some fixed costs like electricity and telephone line rental can’t be avoided, but other costs such as transport costs or office supplies can vary from month to month. Think carefully before financially committing to any services that may not be necessary, such as expensive mobile data plans or a private PO Box.
- Use free or cloud-based software – Rather than paying for software bundles, download software off the Internet instead. Various websites offer free word processing software, accounting platforms, and budgeting tools, either as a limited-time trial or completely free. There are also low-cost or free cloud-based versions of many commonly used programs. Cloud-based programs are stored on the Internet, so they don’t require as much physical space or processing speed as programs stored on your computer’s hard drive.
- Use social media as a marketing tool – Creating a Facebook or Twitter account is free and provides you with a platform you can use to market your business to a vast audience worldwide. To gain customers and generate sales through social media, you will need to have a large online presence, which takes time. Facebook also has a low-cost paid advertising feature you can use to drive potential customers to your pages. Social media pages could also be used as a free substitute for a website until you have enough money to create your own.
- Sell on online auction sites – Online auction sites are a good way of getting your product to a big audience without creating an expensive website or paying for advertising. Be aware that most sites will take a small commission fee for each sale that you make that will need to factor into your pricing decisions.
Directing profits back into your business
It may have taken a lot of determination and hard work, but you are finally making sales. It’s very tempting to spend the money on some new equipment or even on yourself as a reward for your persistence. Avoid buying new equipment or technology unless it will make a massive difference to your business by improving productivity or operational capacity. It’s generally the best idea to put the money straight back into growing the cornerstone of your business – either by purchasing additional stock or growing your client list if you are a service-based business.
Know when to spend
Like any start-up business, there will be times when you will need to make big decisions, such as expansion opportunities or new markets. You might need to spend most of your savings or even consider borrowing to take advantage of new opportunities that arise.
For example, you may be stocking a product from a supplier that is selling great, and you find out that another supplier can sell you the same product for a fraction of the price, provided you purchase 2000 units. Even though it will require a significant outlay of capital, it might provide your business with the big break you’ve been looking for.
Get in touch with us today If you would like to find out more about how to make a limited budget stretch further. Join the Conversation…