Starting a business can be, quite rightly, a little daunting. One of the main fears about starting a business is the money you need to invest into it. However, many micro-businesses can get started for as little as $3000 or less while home-based franchises can be started for as little as $1000-5000, according to Forbes.
On top of this, according to the Financial Times, the UK has been voted one of the best countries in the world to set up a small business. If you’re still on the fence about going at it alone or want a little bit of help along the way you could consider working with a business mentor.
The rest of this blog will explore the ways you can keep within the slim budget you have set for your small business and possibly even a couple tips that may drastically reduce the budget you initially had in mind.
1. Think Practically
As you know, thinking practically should apply to everything you do in business. Although it may seem like obvious advice, you’ll be surprised and pleased, at the money it can save you.
For example, asking questions to yourself like, do you need to buy state of the art equipment when starting out, or can you work off second hand equipment or even manually in some areas? Taking this down even to the micro level, such as whether you need to get your new Apple computer rather than taking the effort to find a cheaper alternative with similar processing power, will save you lots of money in the long run.
Taking advantage of free online survey tools such as SurveyMonkey can also be very helpful for establishing whether or not you have a target market. You will be able to create surveys which pinpoint your audience’s needs and which ask them what their main points are. Not only will this help in the creation process of your product but also be a form of marketing in itself.
Another practical way to spot where you may be overspending is by making a list of all the start up costs before you start your business. This will highlight items you may be losing capital on and allow you to research for better and cheaper alternatives. In-depth business planning is a critical part of the business process as a whole and, as you see here, supports a business venture in at least one way – saving money. However, it is far more useful than just saving money.
Use of effective planning, throughout the creation process of your business and beyond, will give you an understanding of your business that will allow you to make intelligent business decisions across the board. You can get planning advice through help from Top 10 Business Plan Questions – a helpful start to creating a plan.
Often, you won’t need to pay everything up front. You can often postpone costs or, in the case of equipment, rent it. Although, as is often the case with renting, you will be paying more money in the long run, it will allow you to set up the foundations of your business without the financial fear generated by paying in lump sums. With this foundation your business will be able to grow rather than bankrupting itself at its inception.
A great way of postponing costs is to keep your small business very internet oriented at the beginning. This will completely reduce any costs for physical structures such as buildings and utilities.
2. Use Social Media
When starting a business on a budget, social media is your friend. It is cheap – virtually free in nearly all cases – and effective in giving your business the publicity it needs to gain a market. Social media platforms such as Twitter, Facebook and Linkedin allow you to advertise your product cheaply. A great example of this is the UK business Gymshark which pioneered the use of cheap Instagram influencers.
According to Social Republic, Gymshark helped begin the trend “look good while working out” which skyrocketed: there were 100 million posts using the hashtag ‘fitness’ on Instagram. Whether or not you are starting a brand, Gymshark serves as an example of the power of social media and the vast market you will be given access to while using it.
Naturally, you are unlikely to have the 3.2 million followers Gymshark currently has when starting your business, but even a small number of contacts can be very useful when starting your business on a budget. You branch out to your contacts on various social media sites by talking to them or asking a few whether they would want to pre-order your product.
There are many product review sites on Youtube, for example, which, in front of their own large following, will rate and review your product. This will start the cycle of customer feedback and product reform which helps streamline your product to fit a niche in the market.
3. Keep it Simple
When you create your company or small business, keep it simple. Streamlining the creation process using apps like MachFast makes building a company less time consuming and cheaper. MachFast will especially help in reducing broker fees, which can get very expensive, by searching for broker fees across various sectors. This will save thousands of pounds for users and save you the hassle of spending hours searching for cheaper fees yourself. In fact, you can set up a whole company in under 10 minutes using MachFast.
Look to see which business type will be best for you financially. For example whether you want to be a sole trader or a limited company. Sole Trade vs. Limited Company: Top 10 Considerations is a very useful blog on this exact issue.
Consider whether you will need employees. When starting your business on a budget, try considering free-lancers or virtual assistants before looking at full time employees. Furthermore, ask yourself whether you can automate any of the processes of an employee. Do you need an accountant right away or can you rely on using other accounting software such as QuickBooks?
4. Get Partners
An easy way to instantly cut the costs of starting a business is getting a partner. This will increase your manpower, reduce the stress on you and give you another perspective on your business idea. A second pair eyes can often help your business find new niches to fill in the market and even reform your product.
However, finding the right partner is critical. Take time to find the right partner and make sure that they will fit your needs. What will they bring to the business? Growing a business takes a long time and will you be able to work alongside your partner for the whole time? Understanding how your partner is going to work for you is also important and you should work with a lawyer to create a contract that outlines the terms and conditions of your partnership before working together.
5. Apply for a Grant
In the UK there are hundreds of grants for small businesses. Although the application process can certainly be arduous, it will be worth it if you win the reward. Afterall, you are being given money.
Even before the application process, you should do some planning to find the right grants for you. Some of the small business grants will have specific requirements and others will favour certain types of small businesses. With effective research, you are more likely to win grant money and save a long application process that could produce no reward. Here is a list (with descriptions) of a couple hundred grants in the UK that may help you acquire the funding for your business.
Crowdfunding is when you, a small business or person, ask the general public for donations. Crowdfunding does not require repayment and relies on the generosity of the public and their belief in what your business has to offer.
Websites such as Kickstarter are a popular source for crowdfunding. According to Forbes, inXile Entertainment managed to raise $8.6 million over three campaigns on Kickstarter. This was a very effective business strategy: it was mostly online, therefore little to pay along the lines of rent, and video game backers are a vocal crowd online, giving much feedback. As a result inXile came out with a good product with a design encouraged by the market they were trying to please. inXile serves as a company that highlights to small business owners on a budget how effective crowdfunding can be, not just as a source of capital for the company, but as a method for creating a product that your market will enjoy.
Was this helpful? Are you looking for more advice on starting a business? If so, check out our other blogs designed to help small business owners and creators like you.
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