How to Start a Business on the Cheap
English: A Wells Fargo bank on College Avenue in Berkeley. This branch office is typical of older Wells Fargo facilities in inner-city areas in the state of California. (Photo credit: Wikipedia)
There were many urban legends for starting a business in the Internet bubble days of the late 90’s. Back then, entrepreneurs could seemingly write a business plan on a napkin and angel investors would give them $1M to launch that business. As an angel investor in the early 2000’s, these entrepreneurs always told me that all they need is a $1M to get started!
More than a decade later, entrepreneurs now brag about how little money it took to launch their business. Eric Ries, with his book, The Lean StartUp spawned a new generation of entrepreneurs who are now doing it for less. Business frugality has become the new black. A Wells Fargosurvey stated that the average small business owner started their company with $10,000. This amount can be far less if the entrepreneur is starting a services-based business. Experience shows that actually having too much money in a business launch can be wasteful. It can lead to lazy and ultimately stupid business decisions.
Starting a business does not need to cost a lot of cash. Be cheap since most of this money typically comes from owner savings. Here are 3 tips to start a business for less:
- or Elance. Here, companies bid for your creative design and writing projects that save money.
- Use free or inexpensive software for your web site and business. Use a free platform likeWordPress as a website platform. There are thousands of templates available to customize the site for a specific business brand. Use a free product called Highrise as a customer relationship management system. Google Drive can be used for collaboration of office documents.
- Work virtually and hire freelancers. Never rent office space unless the business must have a retail presence. Hire freelance workers (see #1) so company expenses match revenue as it is earned.
Most importantly, entrepreneurs need to stop looking for friends or investors to fund their business. This can be done “the old fashion way” by finding customers to buy products immediately! There is no better funding for a business than paying customers.
Top three tips for a $100 startup to get off the ground?
1. Turn your general idea into a specific idea. What’s the product or service? Who is going to buy it? How will you get paid? Again, be as specific as possible.
2. Don’t wait to get going. Aim for 30 days or less to actual startup time. Do whatever it takes to make that happen — get a free website from WordPress.com, sign up for a PayPal account if you don’t have one, and put your offer out to the world even if you don’t think everything is 100% ready.
3. Tell everyone you know about what you’re doing. Don’t spam people, but do contact your friends to say, “Hey, I’m doing this thing — want to help? Can you spread the word?”
4. A bonus, fourth tip: after the offer is out and you get initial feedback, commit to a process of continuous improvement. Every day, identify 1-2 actions you can take to further develop the project. Even if they’re small actions, the process will help you focus on being proactive instead of constantly responding to things.
Dan Schawbel is the New York Times best-selling author of Promote Yourself. Subscribe to his free monthly newsletter for more insights.