By: Jennifer Hice
on Thursday, June 30, 2011
Driven entrepreneurs with innovative ideas are the raw materials used to create the foundation upon which any successful business is built. However, much like anything under construction, progress is dependent on more than just passion. Building a business takes time, hard work, outside resources and most importantly, cash money! While there are no set blueprints to follow when constructing a viable business plan, there are several practical strategies one can leverage in order to stretch existing resources, save capital and ultimately realize financial success.
The old adage, "necessity is the mother of invention," comes to mind when contemplating ways in which small business owners can approach important financial decisions. In other words, difficult situations often have the ability to inspire creative solutions. Unless a wealthy investor is on board to fund the process, most entrepreneurs rely heavily on personal savings, contributions from friends and family, as well as any available lines of credit to generate the cash flow necessary to launch a business. For these reasons, it is vitally important for startup companies to make smart and inventive financial decisions in order to get the most “bang for their buck.”
When venture capital is readily available, wasteful and poorly-planned spending habits can easily develop. A new business cannot survive the actions of an owner with a ‘spare no expense’ mentality unless that owner has access to deep pockets and a bottomless budget. Making financially savvy decisions can help budding businesses quickly become successful startups. With that said, what are some ways in which small business owners can make their “champagne dreams” come true on a “beer budget?”
Very few businesses hit the mark right out of the gate. Starting a business with little to no money requires that owners tread lightly and walk a financial tight rope. While the lack of capital presents its own set of challenges, it does prompt startups to be creative in their growth process. To save money, owners often refrain from drawing a salary in the first few years of business, they strive to keep overhead and expenses low and they take full advantage of every available resource. For example, say you just started your own photography company. You recently offered to barter your services in an effort to help further launch and market your business. In exchange for providing your photography services at the wedding of a local web designer, he agreed to build and host your company’s new website. This trade was mutually beneficial and saved you valuable time and money.
Unfortunately, we live in a wasteful society with a throw-away mentality. We often use things once or twice, consider them to be old or out-dated and then we dispose of them. Business owners on a budget need to embrace the phrase, “waste not, want not.” In order to stretch a dollar, it is very important for small businesses to make wise use of their resources. Think about setting up your office space; you can either buy a new desk at a high-end furniture company, or you can turn to social media, Craig’s List or Goodwill in order to find a much less expensive used one.
Another strategy fledgling business can adopt involves being smart when hiring staff. Until your company is generating positive cash flow, it would behoove you to keep your team small. Supporting payroll for an oversized team could drain your budget faster than any other line item expense. Also, consider reaching out to local schools in order to find interns. Hard working and talented college students, as well as recent grads make phenomenal staff members who work for very little or even no money. They are also eager to gain much needed job experience. Consider that you own a landscaping business. You hire your son, who recently graduated from the local state college and is looking for part-time work as he starts his career search. You also hire his best friend, who is a business major currently in his last year in the school. Both are interested in learning how you handle the company’s general ledger, how you manage your employees, how you seek out new accounts and the like. You hire them both as Account Managers for the summer and they work for free. It’s a win-win. You have gained two new employees, both of whom you trust to complete multiple job functions and both young men will now have valuable business experience to add to their resumes.
Business owners on a budget are constantly searching for ways in which they can better develop their startup concept while simultaneously stretching capital. When surviving the fledging stages of development, it is important to strike a balance between where to cut and where to spend, based on the needs of the business and amount of available funds. For example, after finally opening the doors to your new coffee shop, the only to feature authentic Cuban coffee, you still remain in immediate competition with the local Starbucks. Without a doubt, your budget needs to include the expense of providing free wireless internet to your patrons, given that the lack of such a “perk” could truly harm your business. However, you certainly don’t need to front the cost of employing five baristas all day, when you can easily provide exceptional service with only two on hand at all times, while you work the register. You make the necessary adjustments to account for the shift in expenses and are still able to remain on budget.
Up to 81% Return in 1 Hour
New & Simple Options Trading Platform.
No Fees. Start Trading Now!
In fact, bootstrapping your business is extremely beneficial, regardless of how much capital you have at your disposal. Both common sense and the ability to make informed decisions are valuable traits of any budding business owner and will go a long way in the successful launch of any startup. So, regardless of whether or not you have access to outside capital, now is the time to take your big idea and turn it into a big, budget-friendly, business venture!