Some of the biggest and most famous companies in the world were started by people, often young people, working out of bedrooms and their parents’ garages because their company budget was zero. In fact this approach has become something of a legend in California’s silicon valley and it is still alive and well today, arguably even more so with the arrival of the internet. Here are some tips for starting a business when you have little to no money.
- Start with what you have
If lack of funds is a stumbling block and financing is either not possible or not desirable, then consider starting a business based on what you already have even if it’s not actually your dream. For example you could clear out your unwanted possessions to raise some cash or use skills you already have to provide a service with minimal upfront cost, which can give you valuable experience at running a business as well as provide the financing you need for what you actually want to do. It’s even better if this starter business could provide a lead into your dream, but even if it doesn’t if it gets you the finance you need, it will have served its purpose.
- Remember new is not necessarily best
New items of any description generally carry a premium. Pre-owned and/or reconditioned items, by contrast, can often do everything you need them to do at a much lower cost or even for free. Keep you eye on places where people list items which are free to pick up (e.g. Gumtree and Freegle/Freecycle as well as local internet groups).
- Bring back the art of bartering
In today’s digital society, it’s easy to forget that once upon a time bartering was standard practice. It’s still around, make use of it whenever you can. Trading skills & time can save you money and bring you into contact with partners that will be an asset to you in the future.
- Think in terms of access for use rather than ownership
For items which you use a lot, over the long term ownership may well work out more economical than hiring them. In the early days however, renting/hiring/leasing what you need can minimize upfront costs, leaving your ready cash available for other purposes. Whether it’s office space, transport or even computer software, getting access on some form of pay-as-you-go or subscription basis can help keep cash flowing in that tricky start-up period.
- Focus on the essential and ignore tempting distractions
Upselling is a technique every salesperson should know and every customer should be alert to. Boiled down to its essentials, it aims to make you spend more than you intended to. Upselling is often done in small increments which are easier for customers to accept, particularly if they make logical sense, e.g. buying batteries with a device which needs them, even if the batteries are cheaper elsewhere, because it saves the customer the effort of making another purchase. Therefore when you make your purchases, take the time to think them through and be clear about what you actually need and what would be genuine nice-to-haves before you start dealing with sales people or computer software which is designed to tempt you from your money.
- Learn how to invoice properly
It’s fantastic if you can get your money upfront, but many businesses are pretty much obliged to accept payment after the product or service is delivered. There are basically three key points to successful invoicing.
- Make sure invoices are actually issued. With everything else you probably have to do, it’s easy to forget.
- Make sure that the invoice includes a date by which payment is due as well as the necessary payment details. Depending on your business, you may have to accept that at least some of the time you will be working to your client’s payment schedule rather than the one you’d prefer.
- Have a system in place which allows you to chase up late payments promptly. A lot of the time this is due to other people being busy, but that won’t help your cash flow so you need to be on top of it.