Lean, mean startup machine
Greetings!
As of late, several students and (and other random folk) asked me about how to start a business on a shoe string budget. Below, find some tips on how to do this. Caveat- shoe-string startups work best for service based businesses. If you are starting a business that has a product or a brick and mortar location, you will need to think about how you will be able to fund your initial vision.
Starting a business does not have to be an entirely costly pursuit, particularly if the business is service based and dependent on YOU (the founder) providing personal services to clients. Welcome to the lean-mean startup. If you have the entrepreneurial itch, you are ready to WORK, and have $2,000 (most-likely less) in the bank, here is how you can use your money to launch your dreams.
- Make use of free business counseling, workshops, 1-on-1 technical assistance. Entrepreneurship is all the rage and there are numerous nonprofits, foundations, government agencies, trade associations and chambers of commerce that are providing free and low cost services to entrepreneurs. You can get help in area of your business (business plan writing, entity formation, filling out financing applications, HR advising, marketing, etc) for free if not close to it. In addition, SCORE.org provides free one on one business counseling with expert entrepreneurs and state bar associations often run Pro-Bono legal programs for small businesses. Cost: $0
- Make use of your local college/university: Most colleges and universities have business schools and affiliated centers for business learning. Some professors may be open to using your business as a case study for their class. College and graduate students are great sources of help. You provide intern credit, they provide helpful support and supplement their learning in the process. Be mindful about the work you have the students doing and make sure you don’t run afoul of the labor-work laws in your jurisdiction. Cost: $0
- Create a simple website: Web presence is important. The fancy website can come later. Use http://wordpress.com, start a blog and turn it into your website. For $15.00, you can purchase your URL and redirect it to your wordpress.com site. WordPress is very user friendly and using the templates, you can build something easy yet effective on your own. Cost $15
- Make use of low-cost business tools: Tools such as http://freshbooks.com (invoicing – $19.95/mo), http://constantcontact.com (email marketing $15.00), http://outright.com (financial software $19.95/mo), http://genbook.com (online scheduling $19.95/mo), http://myfax.com (virtual fax $10.00/mo), http://freeconferencecall.com (telecommunications most plans are free $0), Skype (video conference and low cost long distance calling), and http://googlevoice.com (business phone line $0- but you can buy calling credits). Cost in month 1: about $70-$100 depending on the plans you choose.
- Speaking of Google: Make use of the host of tools available for business. Google docs, Google voice, Google calendar, etc allow you to automate and sync much of your small business for free (at least in the beginning) Cost: $0
- Business Cards: For starting up purposes, go to you local office supply store, purchase the Avery Two-Side printable Clean Edge Business Cards. Log onto avery.com/templates, design your cards and print them out yourself. Do this until you have the resources to create your complete branding package. Cost: $15.00 for the paper, $0-$20 depending on where you print. Do this until you have the resources to create your complete branding package. Or you can crowd source your logo with websites like http://99designs.com which lets graphic designers bid on your project and create logos/brand identity according to your budget.
- Pay for small business legal advice if you cannot get pro-bono legal services: http://legalzoom.com is great but if you can swing it- paying for an hour or so of a lawyer’s time may prove to be one of the best thing you do for your new business. Not only will you get advice about the best entity to form, a lawyer who has a financial background may be able to give you advice on how to set up your financials. Cost: $150-$400 for the initial consultation only.
- Form, Register and License Your Business: If you are serious about launching, make sure your business entity is registered and licensed with the State (and sometimes the local government as well). Cost: $150-$550+ depending on where you are and what you are doing). Make sure you also register for your tax certificates Cost: free. Get a separate EIN number (Form SS-4) from http://irs.gov -Free.
- Open a Business Bank Account: Only use the bank that will give you a free business checking account and requires no minimum deposit and balance amounts. Consider that this bank will be your partner in business and make sure you can work with them. Also work with the bank that clears your deposits in 1-3 business days instead of 5-7 business days (cashflow management is critical to your business).
- Open a Business savings account: and link it to your business checking account. Deposit at least $100 and use this as your overdraft. The $34+ you save in NSF fees will be worth having this small chunk of change tucked away.
Keep in mind that these are just some of the basics, and with such a low start-up budget you will have to start generating revenue quickly (especially if this is sole source of income) and other expenses will arise (like the need for business insurance). With the right amount of energy, gumption and support- you are only a few zeros from creating the business of your dreams.
Anyone out there started a business on a shoe-string budget? Please share!
