Let’s face it, the truth is that most people start a business to make money. But the reality is to do this you need to have a strict budget and stick to it. This means that they intend to take the money that they have and try to grow it into an even larger sum. The previous sentence was written with “for profit” businesses in mind.
Do you know what it feels like to have a big old dream and literally no money to finance it?
I do not feel sorry for you at all because I consider you one of the lucky ones. Yes, you read that correctly. For those of you who started there and have risen to success, you should be proud of yourselves and one another. It is an incredible accomplishment to overcome obstacles such as those, instead of just becoming a victim to them.
I am a huge advocate of ‘starting where you are.’ To clarify this, I would rather see someone start a business today with what they have instead of putting it off for the hope of future resources. Time, money and the support of others are never guaranteed so holding out for any or all of them is a fool’s pursuit. You are not a fool, so don’t think and act like one.
Starting a business with a ‘shoestring’ budget requires a very high level of focus and a real sense of urgency. Once the money is gone, it’s gone so you are forced to spend it wisely. I recommend only spending it on products and services that are absolutely critical to the operation of your business. Examples of essential may include things like licensing and insurance. A new Mac or a custom suit are not on this list.
I have five tips to help you start your business on a tiny budget:
1. Sell products and services before you have them.
Give me an opportunity to explain myself here. If you can get a customer commitment for a product or service that you want to offer, this approach will reduce any costs associated with unneeded overhead. This is an ‘on demand’ approach and it can be helpful when trying to test your concept with your targeted clients. Although this will not be ideal forever, it certainly has a place in the early days of a lean startup.
If you don’t have any money, you cannot expect to hire and retain a team. This means that you need to do everything yourself in the beginning. I did everything for months until I could afford to bring on my first team member. It’s good to get a basic understanding of all facets of your business, but you don’t need to be an expert. You need to be good enough to get by. This shouldn’t be a long-term solution unless you enjoy putting limits on your own success.
3. Be willing to put the hours in.
There is no replacement for hard work and it’s exhausting to watch all of the people that are still searching for the elevator to success. Sometimes 4 hours a day is not enough. Sometimes 12 hours a day is not enough. The way I see it, you have two clear options in these scenarios. First, you can assume the fetal position and insert your thumb into your mouth while whimpering, but only if that works for you. Secondly, you can roll up your sleeves and make things happen.
4. Embrace the side hustle.
I just finished writing a blog on this same topic. If it is possible to start your new gig while holding down a full-time job, do it. If you drain everything your new business makes as soon as it makes it, you will fail and go out of business. I love the idea of the side hustle because you can reinvest everything that your business makes back into it. This is great for the reoccurring expenses, tax write-offs, eliminating debts, and financially incubating the venture as long as you can.
5. Purchase everything on cash or use debit.
If you have a tiny budget, racking up debt will destroy you. Try buying everything that you need on cash. If you can’t afford something, make do without it. A man walked on the moon so I am confident that you can make this work. It will be a slow process at first, but for many of us, it is the only option that we have.
Have you ever started a business with less than $1,000? Check out this podcast that I did with Brian Scudamore on Episode #36 and listen how he built a 250 million dollar empire with $700!
I would like to hear your own real-life story of how you started your own business with a ‘shoestring’ budget. Post it in the comments and thanks for reading.