How to Start a Business When You Have Short Capital?
Lack of capital should not deter you from pursuing your dreams of starting your own business. Many successful entrepreneurs were in the same boat years ago, but look where they are now. They do not allow setbacks to stop them from pursuing their dreams. They step forward and upward. Are you ready to follow their steps and unleash your entrepreneurial spirit?
Checklist of essential things to do
1. Be clear about what you want.
Everything starts with an idea. If you want to make it come true, make a solid plan to map out your vision and goals. It should include strategies of execution, alternative options, and deadlines. Once you have them covered, the next step is to work on your business plan.
2. Plan carefully and conserve your limited capital.
In any type of business, cash is essential. Do not invest all your cash in one aspect of your business, because there are bills to be paid in between sales and collection period. You need a cushion to keep you going while you are establishing your brand or business reputation. With limited capital, opt for something that requires very little overhead.
- Hire yourself as your main employee. Do not consider your business as your personal piggy bank. Be prepared to have no or little salary during the first few months. Even if your business is growing and you need to hire staff, be the lowest-paid worker.
- Have a lean mindset. Do not spend a dollar without thinking about how it will get you more customers or make your business grow.
- Don’t buy everything. Find alternative ways that will give the same quality results. Leasing a piece of equipment for S$75 a month during the early stage of your business is much practical instead of buying a brand new one that costs S$1,500. Find used office furniture and other essentials in the thrift stores.
- Hold off your plan to open a physical office. Test the water first by opening an online shop for your product or service and use a corner of your home as your office. It will eliminate upfront expenses that include office rental, utility bills, and staff to help you.
3. Start with what you have.
Take stock of what you already have. It includes your knowledge, skills, experience, and tangible resources. These are the essential things you need to start your venture. You already possess them and are ready to help you in your journey to entrepreneurship.
- Invest what you can afford to lose. It is contrary to the conventional mindset of people who invest and expect a certain percentage of ROI. By shifting to an alternative entrepreneurial mindset, you invest a part of your savings and use it to grow your business.
- Run a trial. Start your business on a small scale and offer freebies to your target customers to see their response. Feedback is important because it will gauge the interest of your target audience and provide insight into the effectiveness of your campaign or products. It also mitigates risks and allows you to scale up to the next level.
- Seek expert opinion. It will be useful and give you a cutting edge advantage, especially if you are putting up a completely new venture in your community. Getting a second opinion from a person who knows the ins and outs of the business, the challenges, and the market’s behavior will give you more knowledge and see things from different perspectives.
Build your connection with the right people. Attend trade shows and events to meet potential investors or customers. Explore crowdfunding platforms to raise additional funds for your new business. A lot of investors and venture capitalists are active in social networking sites, so pitch your ideas to attract their interest.
Have you heard of angel investors? They are people who are current or former entrepreneurs and want to help start-up businesses with great success potential. They can also mentor you, providing sound suggestions and tips that can help you grow your business.
5. Look for small business grants or apply for a loan.
Once your business is running, you can always look for funding opportunities. The government has programs for small entrepreneurs to help them grow their business. If you qualify, you get free cash or additional resources.
Another way is to apply for a small business loan. There are online lenders and banks that offer investment funds for entrepreneurs. If you are considering a loan, watch out for lenders who offer loans with high- interest rates to prevent detrimental effects on your new business. Another option is to have a business line of credit, which allows you to purchase essential items when you need them.
Businesses you can start with little capital:
If you are still considering what type of business you want to pursue, here are some low-investment ideas for beginners:
- Selling of homemade and handcrafted products. If your passion is creating stuff like soap, candles, embroidery, or anything that people like to buy, start selling your products. Create an online shop on social media platforms and display your creations. Begin with per order basis and produce a small batch of on-hand items.
- Dropshipping. This type of business involves a 3rd party supplier who fulfills and ships products to your customer on your behalf. It allows you to focus on marketing the goods and gain profits without a lot of physical effort. Later on, you can add your own products and earn more.
- Sell your service. Are you a writer, developer, fitness trainer, designer, or photographer? Turn your passion into a business venture. Your biggest investments in this business are time and skills. If you already have a laptop and internet service, you’re ready to sell your services to unlimited numbers of clients across the globe. Join freelance marketplaces to increase your job opportunities.
- Create an online fashion store. If you love fashion, consider selling new and pre-loved clothes, shoes, bags, and accessories. Build your own fashion brand or niche to attract customers.
If you always want to become your own boss, venturing into business is a wonderful idea. With the advent of modern technology, it is easier to offer your brand to the global market. You can always start your own business even if you have short capital by using your talents and skills. The best time is today. Act now!