Guest Post: 10 Tips for Running a Business on a Shoestring Budget
It is a dream of many to start their own business someday. Most want the freedom to run the business as they like, and not have to deal with a "boss" any longer. The main problem is the funding. Rarely are people blessed with just having a large pile of cash sitting around, waiting to be used to start a business. In fact, the majority of businesses are started on a shoestring budget, and often in economic downturns. While money certainly helps stuff move along, without some basic management principles the business has a much higher chance to fail. Here are 10 tips to help get your business started.
1. Research the Market: This one cannot be stressed enough. If you want to succeed, before you even launch the business make sure you have thoroughly researched the industry and competition. Be wary of entering heavily established markets, or any area that requires extensive infrastructure investments. Not only will you find funding tough, the overhead alone can put most businesses out before they even get started.
2. Keep Your Day Job: This is a big one. If you already have a job, do not quit to start your new venture. The cash coming in from that job can help pay the bills for at least a few months while you get your business off the ground. Please make sure you check with moonlighting rules at your workplace prior to starting anything - no one likes to get fired.
3. Start Out Of Your Home: The biggest expense in the beginning is overhead. While it might seem nice to have an office, think long and hard whether it is necessary in the beginning. Most of the time it can be eliminated until the business is bringing in some revenue to cover the cost.
4. Funding: This one can be tough for startups. If at all possible, avoid going to a bank for funding. If you are prepared to put in a substantial amount, a lot of times you can get matching funding as a loan. Beware though, most startup loans will be full recourse - meaning you are personally pledging to pay back the funds should the business fail. If at all possible, find private funding sources on your own.
5. Marketing: The internet is a great resource, and can really help when it comes to marketing. Start up a few blogs about your company and its products, and make sure you have a nice looking website. If it makes sense, create flyers or other brochures yourself - there is tons of low priced or free software that can get the job done. Make sure you really put some effort into social networking, especially related to your local area.
6. Cash Flow: Most people ignore this one. Basically you need enough cash coming in to pay for basic elements in your business, such as inventory. Timing of cash flows is an issue too - it does you no good to have receivables due in 20 days but a bill to pay today for goods with no money to do so. Maintaining a positive cash flow is vital - without it you will be out of business in short order.
7. Productivity: In the beginning especially, it is likely that you will wear every hat in the business, from accountant to sales. It is vital to schedule your time wisely, and really do not let any part fall by the wayside. It is easy to put off accounting for later, but without accurate books you have no idea the status of your business.
8. Inventory: Avoid taking much inventory at all in the beginning. If you are selling a product, consider drop shipping to customers if you are using the internet to market. This avoids you having to purchase and hold inventory. For physical businesses, make sure you concentrate your efforts on a narrow scope in the beginning, and do not try to be everything to everyone in terms of inventory.
9. Heed Advice: Model yourself after others you know who are successful in business. They can be a treasure trove of information - provided you actually put that information to work. While each business is unique, the fundamentals on how a business runs are universal. Listen to others and put the advice they give into practice.
10. Do Not Expand Too Fast: This can be a hard one. Once you start seeing some fruits from your labor, it is easy to get carried away and move too far too fast. Keep your eye on your beginnings - the faster you expand, the higher the overhead. Many businesses have failed who do not accurately gauge demand for their products, and/or expand faster than cash flow can keep up. While these tips do not cover everything you should remember when looking to start a business on a shoestring, they are a good start. The hardest part is actually taking action and giving your dream a chance. Do not get discouraged if your first venture fails. Many of the great successes in the business world came out of an initial failure. By following a few guidelines you will put the odds in your favor, and should the venture not work out, you can dust yourself off and try again.
David works at one of the leading Australian reviews websites. His writing helps people to compare credit cards by thoroughly reviewing a range of financial products including many top credit cards for businesses located in Australia.
