Any Business’ Start-Up Costs Can be Minimized Using Economical Strategies and Creative Financing
By Priscilla Y. Huff
Many people wish they could start a home business, but believe the costs are too prohibitive. However, as you will read in this feature, there are numerous home ventures that are relatively inexpensive to set up. Generally, businesses with the lowest start-up costs are those that provide services to individuals and/or other enterprises as opposed to those that produce products; but any business’ start-up costs can be minimized using economical strategies and creative financing.
Take a moment to consider 15+ cost-cutting measures that may enable you to launch your entrepreneurial idea much sooner than you ever thought possible.
Experts say the success of new businesses is directly connected to the amount of research their owners conduct before ever getting their first customer and that it often takes as long as six months to a year before their business is ready to open. Your first steps in building a new business should be to:
1. Visit local public and college libraries. Explore their free information for business ideas, market research, and related books and publications. Most have Internet access enabling you to use your home computer to search their holdings for information relevant to your venture. Libraries’ reference sections also have business sourcebooks such as the Thomas Register of Manufacturers, directories, and additional data sources.
2. Create a business plan for Free. Counselors of the Senior Core of Retired Executives (SCORE) will help you write one for free. Your home business choice will depend on your background, experience, preference, and most importantly, if you can determine that a potential market (paying customers) exists. A well-written business plan can reveal the profit probability of your proposed venture by presenting a break-even analysis and additional financial projections. You may love your business idea, but without a substantial number of customers who are willing to pay for your products or services at the prices needed to make your business profitable, it cannot succeed.
3. Prepare a budget. Using your business plan’s concrete figures, a budget can project future receipts and expenditures and be an important spending guide to ensure your business will be making more money than it will be spending. Review your budget regularly to make sure your cash flow stays positive. Free budget templates to help you with these figures are available at http://www.vertex42.com/ExcelTemplates/business-budget.html.
4. Practice the “1/10th Rule,” developed by successful entrepreneur, Sue Harris. She made a list of all her start-up expenses, totaled them, and slashed everything by 90 percent. “Think of these words in starting your business: smaller, cheaper, resale, handmade, and used,” says Harris. Use this guideline to help your business stay out of debt and give it a better chance of succeeding on its own.
Home Office Setup
5. Build your own furniture and storage spaces. For example, you can create a desk and filing space that cost as little as $25, by using a 2′ x 6′ white sheet of laminated wood held up by 2-drawer file cabinets. Purchase only the essentials and visit other home-based entrepreneurs’ offices for design ideas and tips. Invest some of those saved dollars into purchasing quality equipment and technology.
6. Search the Internet for home office items. Visit online communities, auction sites, and online discount retailers. Some of the more popular sites to find good deals on everything from office furniture to electronics include Bulldog Office Products, Inc., www.shopbulldog.com; www.overstock.com; eBay.com and its partner www.half.ebay.com; and www.craigslist.com, a worldwide virtual community.
7. Join with other home business owners to purchase office supplies in bulk to qualify for discounts. Patronize office supply stores and computer manufacturers that give “reward” coupons and discounts to faithful customers. Compare prices with mail order, office products companies such as Penny-Wise, Quill, or Viking who offer periodic specials and free home delivery if you order over a certain dollar amount, saving you time and gas money.
8. Use pre-printed letterhead, business cards and brochures found in most office supply stores until your business is better established and you know exactly what you want printed on your sales materials. Even some dollar stores sell professional-looking stationery and supplies that can be customized with basic word processing software. You can also get discounts from local printers if you and other home business owners synchronize your printing needs for brochures, flyers, and other promotional materials.
9. Attend various business groups’ free get-togethers, before paying expensive membership fees, to decide which ones are the most beneficial for your business. One professional organizer says she attended the invitational meetings of several groups before joining one and now receives over 20 percent of her clients from the leads and referrals of her association’s members.
10. Pay down or eliminate as much personal debt as possible to lower your living expenses and save money for your business’ start-up and future expenses. Having good credit and money to put towards your startup will increase your chances for qualifying for a future business loan if you should need one, and usually at a lower interest rate. The less money you need to meet living and business expenditures, the longer you will be able to sustain your new venture until its profits can support you.
11. Moonlight or sell some assets to bring in extra start-up funds. Take stock of your collectibles and good, used items and sell them at on- or off-line auctions or in your favorite classified ads newspaper. This may also help you eliminate clutter and gain more home office space.
Help & Support
12. Join an e-mail list group related to your industry or interests for money-saving resources, tips, and information. Take advantage of the free articles, resources and even online courses from sites like those of the U.S. Small Business Administration, entrepreneurial foundations such as the Edward Lowe Foundation and the Kauffman Foundation, and companies like Hewlett Packard that offers an ongoing schedule of free, home-office related courses.
13. Barter with other home business owners for products and/or services (check with your tax professional about reporting such transactions). Sometimes you can also trade or rent, at reasonable prices, office space from other business owners by the day or even by the hour if you need to meet with an important client. The Office Business Center Association International (OBC), for example, offers an array of business services and offices on an as-needed agreement to entrepreneurs worldwide. Local business organizations also often have free meeting spaces available for members.
14. Share the costs of babysitters or nannies. Take turns hosting play groups with neighborhood home business owners, to help care for one another’s children or other family members, while freeing up uninterrupted business time for one another.
Your Business Launch
15. Look for publicity opportunities to launch your business. One of the best ways to promote your business is with a well-written press release. If you accompany the release with a photo of you and your product or service “in action,” helping at a nonprofit organization’s or town’s special event, or speaking at a meeting of a local organization, you will increase the chances of having your release published. Add a title to your press release to relate to current news, and you are more likely to attract media interviews and the notice of potential customers, all for free. Some good sites for publicity tips include www.prsecrets.com; www.publicityhound.com; and www.yudkin.com/pubfaq.htm.
16. Test-market your business by operating it on the side, while keeping your day job to support yourself and your fledgling venture. Encourage customer feedback to perfect your business’ offerings to your clients’ satisfaction and to help you determine prices that are both competitive and profitable for you.
17. Sit down with your bookkeeper and accountant on a regular basis to monitor your cash flow and expenses. These financial experts can recommend the best bookkeeping systems for your business, keep you up-to-date with tax responsibilities, and help you operate your business frugally and profitably.
Use these and other money-saving methods to get your venture started sooner and to sustain your business longer until your home business dream becomes a profitable reality. Now turn to page 20 for “100+ Low Cost Businesses: Directory Tables with Complete Business Details.” HBM
Priscilla Y. Huff (email@example.com) is the author of 101 Best Home-Based Businesses for Women, 3rd ed., and The Self-Employed Woman’s Guide to Launching a Home-Based Business.