How to Start a Business When Money is Tight
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Starting a business doesn’t have to be expensive. You can launch your company on the cheap with the right strategy and bootstrapping entrepreneurial knowledge.?
If you think you need a ton of money to launch your business idea, you are not alone.?
“A lack of funding is by far the most common reason Americans [do not start] a business,” Zapier reported, adding, “63 percent said that is what stopped them from pursuing it.”
You can, however, start a business before you have funding in place.?
“Most businesses are started lean and mean, and that is especially true for women and the BIPOC community,” said Grayce & Co and Build Like a Woman founder Kathleen Griffith. So, you have to bootstrap.
“I think it is [also] important to know that 70% of small businesses are owned and operated by a single person without investors and 90% of women-owned businesses have no employees. Most micro-businesses start with less than $3,000 and I believe it is possible to do it with even less than that.”
CEO and co-founder of SUMA Wealth Beatriz Acevedo said it is easier to start a business now because we live in a digital world.
“Having a phone lets you start a business with no money,” Acevedo said. “Micro-entrepreneurs that are pre-selling things they still haven't fulfilled or doing a service [they] are good at need don’t really need capital to be able to start something.?
“There is always a way to get capital into what you want to build bigger and then you can take a second step. But whether it is a skill [or] something you are selling, we have social media [to promote it]. It has never been easier to do a very quick product market test fit with what you are doing.”
I chatted with Acevedo, Griffith and WeAreNoCode co-founder Christian Peverelli to learn more about how to launch a business when money is tight.?
How to Begin to Start a Business With Limited Money
Start by using the digital space to launch, manage, and promote your business.
“Online tools have never been more accessible or inexpensive to get started for establishing that business,” Griffith said. “I would suggest someone does six things: First, register your LLC online with a provider like LegalZoom. From there, launch their digital shingle, their website, via Squarespace.
“Step three is to design their logo or branding with an online platform like Canva. Step four is to announce their company across all social media platforms. Step five is to start target outreach, basically who you are selling your product or service to. I use LinkedIn for that. Step six would be project management. You can use Smartsheet or something like Slack. You can do all of that for less than a thousand dollars in aggregate. These tools are relatively inexpensive and absolutely accessible.”
Also, take advantage of free business resources.?
“The SBA has a lot, particularly if you are a woman or a person of color,” Acevedo said. “So, I would encourage people to first look into resources that they have in their cities or nationwide.”?
“For example, where I'm based in Los Angeles, there is a lot of help for small business owners, micro-entrepreneurs for help with websites and setting up your social media. Not only will they give you free training on best ways to utilize their platforms for you to conduct your business, but sometimes they also have grants.”
Acevedo also mentioned certain states/cities have programs that will provide you with interns they fund.?
“In LA, we have something called Higher Youth LA,” Acevedo said. “The city and the government pay interns to work for you. It is a win-win situation because these tend to be kids who need that experience of getting into the workforce at a younger age.?
“They are very skilled when it comes to social media, content creation, and building audiences for you. There are programs nationwide that will pay those interns for you. There are so many resources before people give up before starting, but you need to have that fire, that hunger, that hustle of like, ‘I'm going to do this no matter what.’”
Keep Costs as Low as Possible
Center your business around your customers’ needs and strategize using the lean methodology to avoid overspending.
“The number one reason why startups fail is because they build things that the market doesn't need,” Peverelli said. “So unless we contextualize this technical side and use the lean methodology, it doesn't matter whether we know how to code or not, there is a really high likelihood that we're gonna fail.”?
The lean methodology has been used in Silicon Valley over the past 50 years to launch startups, Peverelli said. It is rooted in the concept of taking your business to market with limited resources and without building the entire product out.?
“The problem is most people have a great idea,” Peverelli said. “They build it, go to market, realize people aren't using it or people aren't willing to pay for it and then have to learn about the market and unbuild, rebuild until they build the right thing. Usually they run out of money on the way.”
Thus, it is important to avoid “injecting capital” into your business too soon, Griffith said.?
“If they have a product business before they even have orders, now you are sitting on inventory and you have burned the limited cash that you have,” Griffith said. “So, I suggest you hold off until you actually have orders, and then you can focus on fulfillment.”
Determine how you can conduct business activities for less as well. Try using a friend’s conference room if possible instead of paying for a rental space, Griffith said. Also, visit local schools that have majors in your industry to attract interns who are willing to work for college credit.?
Exchange your products for services too. “If I have a beauty product, for example, I could give that in exchange for a label design,” Griffith said. “Or, if I have a strategy consultancy, I could give a session in exchange for PR. The less you have, the more you have to gain. So it is all upside when you are starting from that lean, mean place.”
It is also essential to manage your time when launching a business.
“One of the biggest expenses entrepreneurs don't consider when they are building startups is your biggest cost [will be] how long it takes you to do something,” Peverelli said. “You have to pay rent, car, insurance, all these different things. Often, people don't want to pay for the support, for coaching, but [then they] end up taking one or two years?[to accomplish goals].?
“It is always the same story. $30,000 spent to build something no one is really using. So, launch with the right methodology and [don’t hire] expensive developers, designers, copywriters, marketers. When it comes to the technical side, you can leverage No Code platforms like Web Flow, Bubble Platforms…that [allow] you to build things visually.“
Also, seek help, Acevedo and Peverelli said. Network with other entrepreneurs and business gurus and ask them what resources they swear by.?
Don’t Quit Your Day Job Immediately When You Start a Business
One of the mistakes entrepreneurs make is letting go of their main source of income too soon when launching their businesses.
Instead, launch your business, understand success doesn’t always happen overnight and keep working your full-time or part-time job until your side hustle business equates to a full-time salary.?
“If you have the privilege to work your side hustle at night, on weekends, [or] you can have younger interns get it going while you at your day job [do it],” Acevedo said. “Sometimes people don't have that privilege. I became an entrepreneur when I lost my job and we have seen it with the pandemic, primarily Black and Latina women lost their jobs 50% at a faster rate than anyone else.
“And they have had the hardest time getting rehired. So they have become micro-entrepreneurs by default. It is not something they dreamt about. If you have the privilege to have a job, continue to have that security and source of revenue. Start working on what you are passionate about and have a plan.”
Starting a business when money is tight is doable. The important thing is to begin.? Identify and utilize free resources, network with seasoned entrepreneurs to find out about more low-cost solutions for your business needs, and use social media to market and promote your business.
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How to Start a Business When Money Is Tight