Start Your Own Business Under 10K

Wednesday, October 21, 2015 - 19:00
Start Your Own Business Under 10K

Keeping Costs Down as You Start Your Own Business

Starting your own business can be extremely daunting. It can be hard to get your head around everything required and unless you have a great deal of entrepreneurial experience you are likely to overlook something critical in the early stages of constructing your business. Starting your own business under £10K is feasible, but it requires excellent planning and budgeting.

Research by the Daily Telegraph indicated last year that as many as half of all start-up businesses fail within their first five years. With your business on a tight budget, you’d better be prepared to put in the groundwork to avoid becoming just another statistic.

Here we provide details of five key factors that can be pivotal in preparing to start your own business today for under 10K.

Plan Ahead & Make Accurate Estimates

Forward planning is as pivotal as it is obvious when starting your own business on a tight budget. Once things are underway, they will move very quickly and early mistakes or oversights can grow into significant issues further down the line. Instead of blowing your budget on backtracking, do everything you can to get things right first time.

Create a Checklist for Starting a Business

As simple as it sounds, mapping out your business plan and milestones will reveal more than you expect. Smaller elements you may have missed will become apparent. Weaker aspects of the business plan will come to the fore allowing you to go out and strengthen your skills or strategy.

By putting together a business strategy from beginning to end, you will ensure that nothing critical is overlooked. It will also allow you to break down your business plan into manageable chunks and create more accurate timescales for the project. Learn more about creating a business checklist here.

Calculate the Costs

Evaluate your business outgoing and expenditures. Depending on the business type you have chosen costs will vary significantly. More information on potential business types under 10K can be found here. Make sure to consider income potential and all outgoings. Make a list of expenses versus a meticulous income estimate. Consider the costs of bookkeeping, time/energy required, overheads and identify recurring expenses that you can reliably cost and incorporate into your budget.

This will require a great deal of research and estimates, but will pay dividends. Unexpected expenses and taxes can cause severe cash flow issues when poorly accounted for so it pays to keep these in mind.

Know Your Business Idea Inside Out

Having a solid understanding of your business idea is critical. This goes far beyond simply knowing your budget and overheads. It’s about understanding demand, knowing your demographic and having intimate knowledge of the industry. This can give you an advantage and allow you to distance yourself from your competitors.

Imagine preparing an investment pitch for your business. This is the kind of quality planning and data that you need to compile at this point. Furthermore, if you do at some point seek investment, you will have the solid foundation pre-prepared to mount an affective effective pitch.

Use Your Skillset to Enhance Your Business Options

Whatever additional skills you can bring to the table for your business need to be considered as part of your strategy. It may be that a lot of your previous skills are not directly related to your start up business idea, but they may be transferable.

IT skills may allow you to more effectively use online tools or even develop a website for your business. Managerial skills will allow you to manage time and employees more effectively. Skills in the service industry may allow you to better understand your customers. Take a close self-examination and identify your key strengths. Ensure that you make use of any previous experience or skill that could give you an advantage over your competitors.

Study Your Industry, Competitors and Demographic

How well established is your business’ industry? Are you bringing something new to an already saturated industry? Are you targeting a unique market or offering a service that goes beyond that of your competitors? Is your industry growing or shrinking? Understanding and answering these questions are critical for you to find your place within it.

Knowing who your competitors are will allow you to scale your businesses aspirations for growth. Examine where other businesses are failing or succeeding and apply the best of these practices to your business plan.

Every industry has its demographic, whether by gender, age, social status or location. Identifying who you should be targeting will save you a great deal of time, effort and money on the marketing, advertising and development of your product or service. While researching your target demographic, use the opportunity to hone your business image and personality as well as learning how best to interact with your potential customers.

Learn the Benefits of Networking

The value of effective networking cannot be over-estimated. It is vital for business growth, especially in a world where online networking provides straightforward means to connect globally in your industry.

Use networking to establish and strengthen relationships, find fresh ideas, raise your business profile and gain access to new opportunities. A strong business network is all about mutual advice and support as you seek to raise your profile with your business peers and potential customers.

Learn How to Network Online

Getting connected to your industry and customers online is a big part of any successful modern businesses’ ongoing strategy. Knowing which sites and tools are most effective for online networking in your specific industry is a critical part of this. The value of a B2B company on Facebook may not match its impact on LinkedIn for instance. Understand your market and industry and find out which online networks and forums are most frequented by your peers and target demographic.

Attend Business Expositions and Seminars

Ensure you are kept up to date and are made aware of any upcoming business expositions or seminars for your industry. Likewise, look out for more general expos for start-ups, business growth, industry leaders and investors.

Each of these will offer you invaluable information and resources; all whilst establishing new contacts within your industry.

 

Control Finances & Seek Out Investment

Tight control of your finances will be critical to the success of your start-up business. Whether you are looking for investors or going it alone, your expenses need to be kept to a minimum as you look to get a return on your initial 10K investment.

Have a Financial Estimate beyond the First Year

For the majority of start-up businesses, breaking even in the first year can be considered a success. Depending on your businesses structure this may or may not apply but a financial plan that covers more than the first year will be pivotal. Clearly identifying your financial targets after six months, a year, two years, five years, etc. will give you a clear scale by which to chart success and growth.

Calculate the Costs and Cut Them Down

Cost cutting will be an important ongoing exercise if you want to successfully start your own business under 10K. This will cover all aspects of your business from tools and software required to taxes.

Handling more aspects of your business in-house will result in less out-going expenses. However, you will have to weigh up the cost of dedicating time and resources to this versus outsourcing.

Identify tools that can fulfil multiple functions. Doing so will cut down on the cost of using multiple platforms and make management of those used quicker and easier. Likewise you should shop around for the best business insurance options and do likewise purchasing supplies.

The costs of employees in the infancy of your small business can also be debilitating. If additional work is required then you may want to consider more cost effective options such as cloud sourcing staff or bringing in an intern.

Seek Investment

Do you feel that your business idea could achieve greater things from funds beyond the £10,000 mark? You may consider looking at outside investment. While not strictly sticking to the pre-determined budget limit, it does offer the opportunity to either expand the scope of your plan or even accelerate it.

Pursuing a Bank Loan

Spend a good amount of time researching the options available to you before applying for a bank loan. While flexible plans are available, keep in mind than a bank loan for a start-up business is a gamble for both you and the bank.

Make sure you have a manageable repayment plan and find an option that works for your business strategy. These days it can be more difficult to secure small business loans. Ensuring your business plan is well composed and that you have a viable credit score will most likely prove critical in your application process.

Comparison websites are an excellent resource when examining your loan options. On the other-hand always remember that some of the best providers keep their rates down by not subscribing to these websites. Be thorough in your research as going the extra mile will often pay off.

Funding Alternatives

There are ways to fund your business without going directly to the bank. These options can allow for more flexible repayment options or investment based alternatives that provide you with engaged shareholders in exchange for a portion of your business.

Crowdfunding can allow you to fund your project by raising monetary contributions through a large number of people. With a good idea that captures visitors’ imaginations you can acquire significant investment. There are potential negatives to crowdfunding of course. Effectively answering and accounting your business to a multitude of people can be problematic and the terms of their investment can vary. Popular crowdfunding websites such as Kickstarter and Crowdfunder.co.uk can offer more insight into the processes involved.

Investors are most often located through networking. Meeting people in your industry with the experience and knowledge to nurture a fledgling business can be of great benefit. Having such people on board and invested in your business can provide you with a range of unique benefits.

Potential investment can often be found in the form of what are known as ‘Angel Investors’ or ‘business angels’.

While in each case investors can give your business an early boost via financial and personal investment, it is at the cost of some form of convertible debt or ownership equity. Always bear in mind that investors have their interests in mind primarily, not yours.

Streamline your Business Processes

Before your business is operational you will need a reasonable estimate of the infrastructure that you require. Will you be selling directly to customers? Via an online sales portal? As part of an ongoing contract?

Whatever way your business is structured you will need to ensure that your business processes are streamlined for both you and your customers in order to maximise efficiency.

Manage More Efficiently

Project management is an evolving responsibility. It is only in recent years that this role has begun to manifest itself as a genuine profession. Poor project management will lead to mistakes, missed leads, over-run jobs and unsatisfied customers. Using an effective CRM or project management system will be vital in keeping costs down when you want to start your own business under 10K. Popular paid project management tools for start-up businesses include Atlassian Jira and Salesforce but a list of available free project management options can be found here.

Staff Empowerment

If your business is large enough to have multiple employees, staff empowerment will be vital. This means giving your employees more power to dictate their workflow and manage their projects. Micromanagement can be the enemy of business efficiency so don’t fall into this trap. You are only likely to increase the paperwork and reduce efficiency. Both of which are likely to push up costs on an already tight budget.

Consolidate Software

You may be tempted to manage many aspects of your business through a system of spreadsheets for tasks, timetables and stock or inventory control. This can get convoluted and out of control very quickly. Having a simple tool that can handle these simultaneously will come at a cost but at a cost significantly lower than the cost of constant management and maintenance of your data.

Some point of sales systems such as intelligentpos® can provide these functions alongside full payment processing; allowing you to track staff, orders, stock control and inventory easily and cost effectively.

By streamlining your processes in this way you save time and money through far more efficient business management.

Brian Ramsay