That topic is a question that is often asked. There are over ten thousand related searches to this question on Google every month in the US. It doesn’t take a lot of money to start a business; this is often untrue. You will need to invest money and time in the future to help it grow, but to start, you don’t need to break the bank. We will talk about some of the essentials that you need to avoid, some of the pitfalls that new businesses fall into.
Understand your costs
One aspect of business that many start-ups fail to do is understand what they need to have and what they don’t. Going to a web design company on week one of your business to get a $5000 website designed is one way to expel your cash quickly. If a website is a must-have for you, build your website on a platform like Squarespace or Wix.com with a vision to revisit it once you get more cash flowing through the business. Sit down and work out precisely what you have already and what you need so that you have a decent idea of what your outgoings will be for the first few months.
Use the tools you have
In the current marketplace, there are many ways to promote your business online for free. The only real investment that you need to put in is time. TikTok is an excellent platform for companies to enter as it costs nothing to set up, and you can start creating content using your smartphone; nothing else is needed. As a new business, it is crucial to show the authenticity of being a new business as people will form around and follow you, helping you build an audience that you can work with without needing to pay to build it up. Email marketing is also a very low-costing channel that you can use to generate some interest and conversions. What matters with these channels is the content. You will need to put together some great content to engage new and existing users to build it up.
Keep your eye on the prize
No one sets up a business to fail; they also don’t set up a company to generate $100 per month but what is essential is that you don’t try and run before you can walk. Once you start to create some form of cash into the business, invest those profits into the business to help it grow more. If you try and expand before the company is generating enough profit, you will need to put more of your own money in, creating a problematic circumstance. Building a business with limited funds is possible, but it will take time, so you will need to be patient and let the company do the work for you.
Depending on the business you are starting, you may need to invest some money in equipment, such as tools, printing presses, computers, etc. Some companies only need laptops and a working internet connection to start, so they are incredibly low costing. Ensure that you take all equipment costs into account and make sure that you keep the receipts for tax purposes!
What is your entity?
It could also be a good idea to think about what type of entity you want the business to be. If you’re going to run it as a sole proprietor, you won’t need to register the company with the state, and you won’t need any paperwork to be done. Business deductions can be written off on your tax return. You will have to talk to your local CPA for more information on that. The same can be said for any business losses that can then be deducted from General Partnership. Another choice is registering as an LLC, which would mean that you wouldn’t be personally responsible for any debts or liabilities that the business does build-up, and you can also choose how the IRS taxes your LLC. It does come at a cost and needs to be registered with the state you are working within.
If you are selling goods online, you may not need to put in a large amount of cash to start with. When you find a supplier with the goods you are looking for, you need to ask them if they would be willing to ship them to your customers. Generally, this is referred to as drop shipping. If you have a physical store, you will need to put some money into inventory to hold onto but only buy enough to fill the store. I know that getting the item for 5 cents less per unit seems attractive, but you don’t know if you can sell 2000 units when your store can only hold 100! When you start to sell the items, then buy more. Doing this will keep you within your means and give things a FOMO factor due to low numbers!
The final word
Setting up a business can be a scary process if you haven’t done it before, and it may feel like you are leaping. You don’t need to spend tens of thousands on your business before it starts generating any revenue, but you need to make sure that you have a business plan that covers as many bases as possible. Do your research and test the water with demand before investing heavily into an idea. Otherwise, you can be down before you know it.