Are you starting a small business with limited capital? Take these tips into account.
You’ve got a great idea for a new product or service, or maybe you’ve found a way to take an existing product or service to another level. You’ve crunched the numbers and researched the market landscape and the more time you spend immersed in research, the more promising your idea becomes. You’re pretty sure you’ve identified a strong area of customer need, and the competition doesn’t scare you.
There’s just one problem: Your start-up capital is limited. Or maybe it just doesn’t exist at all. Most of us aren’t walking around with enough cash in our accounts to start businesses, no matter how profitable our ideas may seem. A new business often requires a license, raw materials, machines and vehicles, a building lease, and maybe a few employees. How can you afford these things before you’ve made your first sale? How can you start a small business with a low investment or none at all?
Setting Up a Small Business
First, you’ll need to apply for a loan at your local bank. To do that, you’ll need a clear business plan, which will demonstrate to your loan officer that you know what you’re doing and the bank stands to make a profit by investing in you. Your business plan should include a clear description of what you intend to sell, an assessment of your competition, and a breakdown of your expenses versus your revenues.
Second, as you get ready to take your business off the ground, you’ll need to find ways to do more with less. If you eventually plan to hire an employee [3] or two, consider doing all of the work yourself [4] as you get started. This may require putting in some long hours, but the harder you work at the beginning, the better chance your business will have for long term survival.
Finally, be very selective about your costs. Don’t cut corners that will compromise your product, but bargain hard for every machine, lease, and vendor contract as you get started. You’ll thank yourself later.
If you’ve been in business for a while, what advice can you offer to hopeful first-time entrepreneurs? Leave your comments below!