Taking the plunge to start a small business is no small feat, and one that only gets all the more impressive when you attempt it without any money in the bank.
However, doing so isn’t as impossible as you may think. There are a number of strategies you can follow that will increase your chances of success while mitigating some of the worst risks.
Plan Out the Details
The first thing you absolutely must do is plan out the details. You obviously can’t foresee every possible future development, but having a grasp of all the most likely outcomes is necessary if you want to plan for success. Moreover, make sure that you focus on the initial stages of your business plan more than the dreamy endgame.
It may be fun to fantasize about rolling in cash and having hundreds of employees down the road, but the boring logistics of starting out are far more important.
It’s important to have a good idea of the direction you want to take your business, but you need to make sure that you have the fundamentals down first. For example, your marketing strategy, the source of your funding, and how you’ll survive until the enterprise gets off the ground are all crucial considerations that need to be weighed in advance of everything else.
Play It Safe and Keep a Backup Plan
When first starting out, one of the most important things to remember is to refrain from throwing yourself lock, stock and barrel into your new venture. Don’t quit your job to pursue your dreams just yet, because if anything goes wrong you’ll be in for a very painful fall
It’s unquestionably difficult to juggle a job while putting all the pieces of a new business into place, but proceeding at a slow and steady pace is far preferable to diving in fast and furious with no parachute. Further, the extra income from your job could be just enough to provide that extra push you need to get your business into full working order.
Ensure That Your Idea is Viable
Figuring out whether your idea will really work can be a lot more difficult than it sounds. Sure, it might seem obvious that people will love your new product or service, but you also have to consider how you’ll introduce it to people, if you can make a sustainable business model with it, or if you even have the expertise and resources necessary to make it a reality.
To ensure that your idea is viable, you will need to put in a bit of legwork. You’re going to have competitors, so look into them and see what they’re doing right. There’s nothing wrong with going door-to-door and surveying people either, rather, it’s a tool that can be particularly valuable when you primarily want to operate within a limited geographical area. See if they’re already using the type of product or service you want to provide and try to gauge how satisfied they are with their current producer or provider.
Keep an Eye Open for Free Opportunities
If you’re starting with very little or no money, it can pay huge dividends to seek out opportunities and offers that cost very little or nothing. Going into business with a resourceful mind set may be your key to success as you’ll develop budgeting tactics that will benefit you even once the money starts rolling in.
Additionally, to go into business with the mentality that there’s no such thing as a free lunch can be a little misleading, because there certainly are free helpful resources available with few to no drawbacks out there. You just need to recognize them when you see them.
For an obvious example, do you need a fancy website and advertising to start out? Do you need to hire a designer to get everything set up and operating correctly? Probably not.
These days, a small social media presence with unified branding across Facebook, Twitter, and wherever else you choose will likely be enough. One of the advantages of just starting out is that you don’t have other employees to worry about, so even though you may need to greatly expand these aspects of your business in the future, you can pretty easily manage them solo for now.
Less obviously, there are available grants out there, which provide funds with no strings attached. Governments at all levels are often interested in incentivizing small businesses, so make sure that you check every possibility before throwing in the towel.
It can be pretty difficult to find grants in your area that you qualify for, but it never hurts to search. Even if you don’t qualify for them today, you might once your business has been around for awhile.
Don’t Be Afraid to Take Out a Small Business Loan
One of the best and more obvious ways to secure a large chunk of startup cash is to take out a small business loan. How easy that is, how much you will get, and how favorable your repayment terms will be will all come down to the lender you find, your personal financial history and the state of your business. However, there likely is a feasible option out there for you.
If you’re planning on taking out a business loan, make sure you pick the right tool for the job. Depending on the industry you’re in, there may be private loan options that are more suited to your needs than what is generally offered by banks. For example, car dealers will often opt for financing options that involve the use of their inventory as collateral, whereas farmers generally turn to government-backed loans.
If you’re offered a larger sum than you’re looking for, there’s no need to take it and end up paying more interest over time. At the opposite end of the spectrum, don’t take a smaller loan than you need if you can help it because you’ll end up requiring another loan and have twice the payments to keep track of and potentially miss, leaving you vulnerable to whatever stiff penalties are in the fine print.
Know When to Cut Your Losses and When to Soldier On
If things don’t go as planned, then one of the biggest decisions you’ll have to make will be whether to throw in the towel or soldier through the hard times. It can be difficult to even consider the possibility of cutting your losses and abandoning your creation, but it’s still something you should be prepared for. If that time comes, you’ll want to be able to make decisions based on what’s best for your own future as well as that of your employees and customers.
To this end, be sure to establish a firm idea of where your breaking point is before allowing yourself to get in too deep. As with gambling, you want to go in with a plan that hasn’t been influenced by the intense emotions of the moment.