In a perfect world, you’d have access to all the money you needed to start your business. Unfortunately, you realize this isn’t true; you only have access to so much money, so it’s imperative you are wise about every purchase you make in your business. Whether you are trying to start an online store or interested in opening a local restaurant, a budget is an absolute must. Without it, you’ll never really know what you can afford to spend, and you’re likely to find yourself drowning in debt you can’t possibly repay.
If you focus on establishing your business on a budget, you won’t have to worry about your finances during the startup phase. Instead, you can focus on growing your business and creating enough runway to sustain yourself for the first few years of operation, all while knowing exactly how much income you need to get a return on your investment. Here are four steps you can take if you’re low on cash but still want to start your own business.
Use What You Have
Rather than dream about what it would be like to have more money, you need to come to grips with the funds you can actually access. Even if it’s only a couple hundred dollars, you can still get started (you just have to be creative).
Get this: the US Small Business Administration shares a great article about how you can start a business with nothing more than a smartphone. You don’t even need a computer; as long as you have a smartphone with access to the internet and a few key apps, you can get the ball rolling.
While it’s true no one can run a business on a smartphone alone forever, you can find ways to stretch every dollar if you get into the habit of thinking outside the box.
Know Your Costs and Save Where You Can
You don’t want to choose a business idea until you have a basic understanding of how much it will cost to launch and continue to keep shop over time. A study conducted by the Ewing Marion Kauffman Foundation notes that the average cost to start a new business is $30,000, but it could be substantially more if you’re trying to break into an industry with a great deal of overhead. On the flip side, an ecommerce store could run you far less.
Once you’ve determined the funds you can access to get things started, you need to take a realistic look at potential expenses in your industry and try to balance your budget as much as possible. Again, it’s important to be creative and cut costs wherever you can as you start out.
Open a Credit Card
If you don’t have immediate access to enough cash to get things moving in the right direction, you may have little choice but to seek outside funds to help establish your business. Although this isn’t the right solution for every entrepreneur, it is something many business owners have to do to pursue their dream.
The nice thing about a credit card is that you don’t have to complete a lengthy loan application process or survive any long waiting periods, since you can receive an approval on the spot. But with the average household juggling roughly $16,000 in credit card debt, you do need to be careful how often you rely on the plastic to get you through.
It’s one thing to have a credit card for unexpected expenses or to get you through the end of a particularly tough month every now and again; it’s another thing entirely to be using it for everything from your morning coffee to custom equipment. If you have little personal debt and a good credit score, this could be an option to help offset business costs, though.
Save by Hiring Interns
One of the biggest expenses associated with a startup is the cost of top-notch talent. Not only does it take money to find the best employees, but then you have to pay to train and retain them, too. You can save a lot of money by hiring interns, as many students are more than willing to work for nothing (or next to nothing) in exchange for college credit and legitimate work experience.
According to the Sam M. Walton College of Business, there are a few simple steps businesses can take when hiring interns to get the most bang for their buck. Once you have the right system in place, you can bring in talent that can take your business to new heights without breaking the bank.
Starting a business on a budget may sound like a daunting task, but it doesn’t have to be the impossible dream it seems to be. Once you review your finances and know how much it will cost to launch your company, it’s easier to make sound financial decisions that will put you position to succeed.
What strategies have you employed to cut costs and start your business on a budget?