Contrary to popular belief, starting a business doesn't have to have a hefty price tag. Here are some ways to start small.
"If you are not a risk taker, you should get the hell out of business". - Ray Kroc, Founder of McDonald’s
You plan on starting a business, but are not sure how much money you will need for it. On top of that, you are not sure where you will get it in order to start your own business.
Business, without a doubt, is a risky endeavor and therefore, only a fraction of people are ready to invest their effort and time in a new venture. Irrespective of how small or big your investment you make in your business, it could all end up in smoke if things don’t go right.
Most people under the impression that it requires million-dollar worth of investment to start a business will never try to start one.
Do you have the courage in you to start your own business? Is there an idea in the back of your mind constantly telling you to give it a try?
Are you holding back just because you don’t have enough investment or you believe you don’t have the leadership qualities that are required to start a business? Here are some points that should help you start a business despite a small investment.
Proper Business Planning
It does not matter how much money you have to start your own business; it’s how you use the money. You could make heaps of gold go to waste or establish an empire from a dime.
Sean Hackney, co-owner and co-founder of Roaring Lion Energy Drink, recalls that the success behind his company was in his planning. In his own words, he said, “We’ve grown the business from a $62,000 investment to the No. 2 energy drink in bars and nightclubs.” He said it was his decision to write down his plan that has made him the co-founder of a company worth $6.2 million. “I had a lot of stuff in my head that needed to be put on paper”, he says.
Joi Ito, MIT’s MediaLabs director, talks about planning by saying that it’s “planning” that matters and not the “plan.” Some people might think he does not want new business people to plan but in fact, he wants them to keep planning rather than sticking to a rigid plan. In a nutshell, planning is crucial to any business’s success.
Arrangement of Loan for Business Capital
Have you thought about how you will approach the investment for your business? Have you done some work on which people you will be approaching to get the money you need to start your own business?
The most important to keep in mind here is that you have to raise the money you need to start your business without compromises and then some extra in the backup. You cannot afford to put in all your life savings into business because such a risk could destroy you financially. If necessary, getting a personal loan could help you take the first step to starting your business.
In the words of the CEO of New Resource Bank, Vincent Siciliano, “One critical decision factor no matter if you’re seeking a $5,000 loan or a $5 million loan is your personal credit score. All lenders will care about this metric if someone doesn’t, be wary. Do you think your credit score’s standing is good enough to obtain a loan for your business?
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Cutting Down on Unnecessary Expenses
Business is not all about focusing on making great profits. An even more important aspect of a business is cutting down on costs. You could take advantage of modern technology to make your business startup an affordable endeavor.
Traveling, transport and dining are some expenses where you could act thrifty and keep funds available for your business to run. It’s unfortunate but true that small businesses tend to be more extravagant with their unnecessary expenses than big businesses. For example, small businesses are spending nearly 37 percent more money on just air travel in every three months than big businesses.
Every quarter small businesses would spend $832 and $736 on airfare and lodging compared to $732 and $608 by big business respectively. Small businesses are spending even more on dining, ground transportation and car rental according to the statistics. How much unnecessary money do you think you will be spending at the end of the year if all such expenses are taken into account?
Doing Marketing Intelligently
Marketing is important for any business but it also proves to be the area where most of your money goes whether you are a startup or an established business. It does not matter how much money you have available for your business; you have to keep a good part of it fixed for marketing. The most successful companies in 2014 spend around 10.2 percent of their revenue on marketing according to Gartner Research Study. As per 2014 CMO survey business with revenue ranging below $25 million were spending 11 percent of it on their marketing.
The company that grew the fastest i.e. Salesforce, in the last couple of years has literally spent 53 percent of its revenue on marketing and sales. With such huge investment in marketing sales, SalesForce was able to boost its revenue by 33 percent every year.
However, the important thing here is to have the right tools that can determine which marketing efforts are benefitting you the most and which ones are not that useful for you. With affordable online marketing techniques, you could always save great money on marketing too.