How To Create A Low Cost Business Start Up
There are many businesses we can start these days that don’t have a high out of pocket expense. Many service-based businesses are able to start small and basic and then scale as able. Sitting down with a plan and limited budget is actually a blessing in disguise.
When you have a job and are wanting to start your business in your after hours, the first place to start is with your why. Why do you want to own a business? What is it going to provide that your job can not? How do you want to be different from the competition? Getting these foundational questions answered will help set your course. Some businesses call this their mission statement. Knowing your mission statement will guide you as you grow your skill set, define what kinds of people are going to be your customers, and what services or products you will offer.
When starting a service-based business, you will spend many months learning your trade, building up your knowledge, expertise and practicing with referral customers. Since we are our own advertiser at first, knowing our mission statement really comes into play here as we find our customers. As you start getting the word out about your business, you are sharing how you are different, how the customers experience will be a step above. Tell your story; why you started your business and what you are excited to bring the community.
Maybe its honesty and transparency that sets you apart in a sales- based world. Maybe it’s the quality and speed that is the difference when others are taking shortcuts. Whatever it is, using that to bring in your customer base will go a long way. Many people are tired of dealing with the companies they’ve been going to for their services. A lot of them stay because they haven’t found any better options. Some people change over to save money, some for better customer service, and some because it’s the newest thing out there.
The phrase “Fake it till you make it” is true, but it is also not an excuse to foolishly start buying up the fanciest gear and supplies just to look the part. Starting with only the bare necessities or buying something used and giving it a paint job, are all ways to present your business with confidence and practicality. Upgrading your tools sooner than needed, buying too much variety of parts and stock before its really needed, investing in hired services like building a website or advertisements are all ways to over extend yourself early on. Many businesses don’t have a profitability problem, they have a spending problem.
In our business, we bought used furniture, equipment and our POS system off marketplace, or from other businesses downsizing. We kept in stock only the necessary, most common parts for our industry and special ordered the expensive parts as needed once the customer had made a down payment for the repair. We built our own website with user friendly companies like Wix, and made cheap signage and business cards online. We collaborated with another business owner to rent a small corner of his shop to get our business name and services out there for 6 months before having the clientele and business to support our own storefront.
The Power of Referrals- In many industries, there are services that companies offer and then there are many that they don’t, but they have nowhere to refer them out to. These are countless leads that are just hitting a dead end. Finding that niche is your key to getting revolving customer referrals. Those companies are happy to have a place to refer their clients to get their needs met and if you are good at what you do, the feedback they get from their clients about you will help build your reputation and their referral rate even more.
The few times we have invested in expensive advertisements, we did not receive any new clients. Maybe all it did was help with our brand recognition. The best advertisement we have ever done is the word-of-mouth referral network we have built up. It’s like having one of those dancing people holding a sign out front of a business telling customers where to go and why. The best part of it? It’s a win/win for all companies and it’s free.
Ideally you will be working a job as long as possible while building up your clientele, but eventually you will have to go all in full time. If you can plan it out properly, you can help this process go smoother by having a personal savings and emergency fund. We were able to start our business debt free with money from tax refunds and following all the steps listed above, but when it came time to go full time, we didn’t have the savings to help cover personal bills while we built up the business income. Our business was paying for itself, we just weren’t able to take a full paycheck from it yet. This is where the grind happens. When we are tired because we are working 7 days a week in our business, and we are penny pinching everything we can to ensure as much as possible is going back into the business to keep growing it.
Having the mentality of slow and steady, and not looking for the easy road of getting an investor by giving up a percentage of our business is super important. If we had done that, we may be a lot bigger and more profitable than we are now. But having full ownership of something we built from the ground up is irreplaceable. We get to decide what services we offer, what products we sell, what customers we serve, what morals we stand for and where we want to take the company. There are many sad stories of companies being started by ambitious entrepreneurs. With their grit, ideas and some hefty investors, they grew very quickly, just to be voted out of their own company because they gave away too much ownership to get there.
Constantly looking at your expenses to ensure you are making the wisest choices as well as adjusting your offered services/products and their prices, is key to running a healthy and stable debt free business.