5 Tips for Starting a Business on a Budget
Are you thinking of starting a business, but only have limited funds to work with? Don’t worry; many companies have been founded on a shoestring budget – sometimes by full-time mums – and have gone on to become hugely successful. Just look at businesses like US food container brand EasyLunchboxes, which was started by Kelly Lester from her kitchen but has since grown to become a $1.5 million per-year venture.
So what’s the best way to get started without breaking the bank? Emily Coltman FCA, Chief Accountant to FreeAgent – who provide the UK’s market-leading online accounting system specifically-designed for small businesses and freelancers – shares her five top tips for starting a business on a budget.
Work from home
If you’re looking to start your first business, the good news is that you’ll almost certainly be able to start with some, if not all, of your business operations based at home. That means that there’s no renting an office or warehouse, or any commute to get there, so you’ll save money on both property and travel costs. And if you’re currently at home taking care of young children you may also be able to fit in your business around those duties – so you won’t necessarily need to pay for extra childcare while you run your venture.
Remember that working from home isn’t a limitation and won’t prevent your business from being successful. When our company FreeAgent was newly formed, all three co-founders worked from their separate homes; two of them in Edinburgh and one in London. Since then, we’ve steadily grown and now have more than 50 staff and over 35,000 customers.
Invest time – not money
In the early stages of a business, you’re unlikely to have much cash to spend – but you may have some extra time on your hands that you won’t necessarily enjoy once your business is more established. So how could you be using this time now to help bring in customers?
First of all, spend some time building a few free marketing tools – like creating a dedicated blog or setting up your social media channels like Linkedin, Facebook and Twitter. But don’t just spend time talking about how amazing your business is. Instead prove how good you are by writing and sharing great quality content to show potential customers that you are an expert in your field.
It doesn’t cost anything to show off your expertise and, if you can engage an audience with some useful content, they’ll be more likely to remember you (and your services) in the future. Just look at businesses like RocknRoll Bride – which has built a successful income channel from its popular, informative blog – if you need some inspiration.
Use your network
Every fledgling business can benefit from a friendly helping hand, so think about whether anyone in your existing network could help you out as you establish your venture. Do you know anyone with the quality professional skills that you need, who would be willing to charge you “mates’ rates” or to come to a barter arrangement? For example, do you know a web designer who can build you a website in exchange for some of your services?
And don’t forget that your network will be invaluable in helping you attract new customers too. Give your friends and professional contacts information about your new business and ask them to spread the word to their own networks.
Be smart when building your infrastructure
You may think you need a state-of-the-art computer or brand new iPad, but the truth is that unless you’ve already got one, you’ll very rarely need something fancy or expensive to start your business with. A second-hand computer that works may do the job just as effectively.
The same goes for the other infrastructure you’ll need to start your business, such as office furniture and equipment. Unless you’re planning on joining a profession that requires the very best kit – such as a photography or video production – it’s unlikely that you’ll need to pay top price for anything.
Instead look at alternative ways to secure your infrastructure, such as second hand websites like Gumtree or specialist recycling services that deal with used office furniture. Any money you end up saving can then be invested elsewhere in your business.
Collect cash quickly
Many new businesses fall into the trap of failing to collect cash from their customers. But although asking people for money is a difficult thing to do – especially when you’re new to business – it’s a vital thing to get right if you want your business to survive.
One way to make sure you don’t have to chase customers who don’t pay is to charge up front for your services – and you could also offer a refund if the client isn’t 100% happy with the work. But if you don’t go for this option, you should also try to make it as easy as possible for customers to pay you.
Invoice promptly, offer the ability to pay by bank transfer or online services like PayPal rather than just with cash or cheque, and chase up late-payers. The last thing you want is to have a bunch of outstanding invoices, as that’s money you could be using to grow your business.
Emily Coltman FCA is Chief Accountant to FreeAgent, who provide the UK’s market-leading online accounting system specifically-designed to meet the needs of small businesses and freelancers. Try it for free at www.freeagent.com