Small
business start-
ups often ask me how they can launch their
business with little or no money. Having started
up four successful businesses myself, and having coached hundreds of
small
business owners, this is what I've learned.
You can't
start
up a
business, even
home based, with no money. If you're not willing to invest in your
dream, why would others want to support you or invest in your products?
However, if you know you have the courage, determination and motivation
to go for it, here are some tips that will help you
start a
business on a very moderate budget.
How much do I need?
* First, make a commitment to set
up your
business the
right way. Once you've chosen a well-researched, profitable niche that
you're passionate about, the tips below will help you understand the
start-
up process. They're meant for micro, solo and home based
business owners and independent service professionals. Those opening a retail store or leasing office space will experience much higher
start
up costs.
* Set
up a
sustainable legal entity that will grow with you. Choosing the right
legal entity will protect you from legal liability and give you the
best tax advantages. You can do this easily for less than $500 if
you're willing to do some of the work yourself. Find the right banking relationship. You'll need a
business account. Since bank fees and services vary widely, shop around and see where you can get free
business checking.
* Find quality, low cost options for your initial marketing materials. At a minimum, you'll need a logo,
business cards and a website--even if you're planning just on online
business.
With the right knowledge and resources, you can get all of this
accomplished for under $2,000. Be cautious however, because you need to
learn how to create a polished branding package and website that will
generate lots of leads and sales. Too many
start
ups pay
for a boring website that gets little or no traffic, or marketing
materials that they outgrow too quickly. It's important to avoid these
costly mistakes.
* Determine how much your marketing
budget will
be for the first six months. Try allocating 5% to 7% of your estimated
first year's gross revenues. The secret is to create a plan that will
give you a return on investment for every penny you spend. You'll only
do that by:
* Figuring out the most direct way to reach your target clients.
Example: say you want to reach new homeowners; putting an ad in the
local paper is way too general. Don't spend on marketing that reaches
too broad an audience.
* Figuring out the most cost effective ways to reach them. Marketing
online is still the best deal around. But there are many highly
effective cost free and low cost offline marketing ideas that really
work.
* Maximizing every marketing dollar and having a strategy that compels
people to take action. People rarely buy until they trust you, so your
marketing goal should be to generate qualified leads. Then you can
convert them into paying clients. Master this and your
business will really grow.
Your initial marketing
budget could
conceivably be under $1,000. If you use it wisely, measure and track
your results, change or eliminate ineffective marketing, and keep
putting a percentage of sales back into your marketing, it'll finance
itself.
* Technology - you'll need to purchase some software and online
services, like web hosting, a data base program, accounting software,
an auto responder and perhaps other industry specific software. Shop
around --lots of software can be purchased for less on E-bay. Buying a
slightly older version is fine to get you started.
Where can I get the money to fund my
start up?
Check out this subject on my blog (
smartrack.net Most funding options involve an element of risk, but taking calculated risks is part of
business ownership. Here are some ideas:
* Home equity loan - Personal savings - Low interest credit cards -
Loans from family and friends (protect the relationship by signing a
contract)
* Credit union or personal bank loans or lines of credit - SBA loans "these are usually for larger amounts" Venture and private investor
funding (you better have a top notch
business plan)
* Prosper.com - a perfect choice for micro loans. (
www.prosper.com
These tips should give you some insight into the basic
small
business
start
up process.
For additional help and a program that offers step-by-step personal
guidance that will save you time, money and struggle, go to
revuptactics.com. There you can download a free e-book, How to Start and Build a Profitable Business in One Year or Less.
