5 tips for starting a small business on a shoestring budget

Meredith Wood
​October 11, 2017

​Tags: Carbonite

​Your great business idea may have come to you in a flash, but chances are that flash wasn’t accompanied by a lump of startup capital falling neatly into your lap. Too often, we have to make do with a tight budget when starting out in business. But there are ways to make sure that a small reserve doesn’t derail your business before it gets underway.
Here are five strategies for starting a small business on a budget:

1. Do it yourself, cheaply

Your time as a founder is valuable, but you’ll have to take on a lot of tasks to keep costs low.

Luckily, there are a number of free or cheap services that can multiply your effectiveness in the DIY days of your business.

Web hosting, design, and sales can be handled all in one place by using a service like Squarespace, which offers slick templates and an interface you can use to snap together a website with no training in just a few hours. And email marketing platforms like MailChimp can be an effective substitute for a dedicated marketing department early on, letting you keep in contact with potential customers through an easy interface that offers built-in analytics.

Your time as a founder is valuable, but you’ll have to take on a lot of tasks to keep costs low. Your starting cash is well spent on force multipliers that keep you from getting bogged down.

2. Temporary staffing solutions

Of course, there are only so many hours in the day. You’re bound to need some outside help eventually. But you don’t have to jump into hiring full-timers right away. Consider taking advantage of the gig economy by hiring a freelancer as needed.

Make sure that you’re honestly assessing the value of your time: Is five hours spent squinting at a spreadsheet really worth your time and mental energy? Or are you better off hiring a freelancer  through a service like Fiverr who can knock it out in two?

When you factor in the opportunity costs saved, freelancers pay for themselves.

3. Don't sit on inventory

It can be tempting to stock up on inventory when you’re first starting up. After all, you want to have plenty of whatever you’re selling on hand, right? But tying up your ready cash in unsold merchandise puts unnecessary pressure on your cash flow.

Money tied up in inventory, even inventory that you’re sure to sell next week or next month, is money that can’t be spent on unforeseen costs, salaries (including yours), or expansion costs. Plus, inventory incurs storage costs. The longer you sit on it, the higher the chance it could be damaged, lost, or otherwise compromised—all risks you don’t need to take on.

So focus on buying inventory as you sell it. Some small businesses use a tactic called “drop selling,” whereby they wait until they have an order before purchasing the inventory. You should also start analyzing your page views, clicks, and orders as soon as possible. Until you have a data-driven strategy, hold off on buying big.

4. Build an online presence

One of the best ways to build your brand and business is to position yourself for success on the Internet. Fortunately, this is something you can do for free with a little planning and some basic social media savvy. For example, LinkedIn is invaluable for B2B businesses looking to get in front of potential customers, while Facebook, Instagram, and Snapchat are great branding platforms for B2C and/or retail businesses.

You should pay close attention to how search engines like Google rank your company’s website, too. Customers are far likelier to find their way to you if you show up on the first page of SERPs. Optimizing your content for search engines can make it float to the top. There are many ways to do this, but good rules of thumb include embedding relevant links, using popular keywords, and posting new content on a regular basis—possibly another job for a freelancer.

5. Be honest about your needs

If you’re building a business on a shoestring, an honest accounting of your needs will serve you well. Make one list of absolute, immediate necessities and another of things you can do without for now. You can update these lists as needed, but make sure they’re written out.

When deciding which list an expense should be added to, make sure you can articulate exactly how that expense will help grow your business. This exercise helps trim the fat early on and protects your bottom line from unnecessary expenses. Plus, dedicating time and headspace to keeping your priorities in order is a healthy mental habit for every entrepreneur.

Started from the bottom

When starting from modest means, it’s easy to count yourself out early. But if you value your own time, rank your needs, find ways to accomplish tasks affordably, and make sure you build your profile early on, you’ll maximize what you have to work with.

Soon, your shoestring budget will be a fond memory, part of your started-from-the-bottom story—that you can tell from the top.

Want to learn more? Get additional advice on how to manage your small business today.

Meredith Wood is the editor in chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. She is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness and many others.

Source: https://www.carbonite.com/en/cloud-backup/business/resources/carbonite-blog/5-tips-for-starting-a-small-business-on-a-shoestring-budget/