You may not need a lot of money to start your small business, but a shoestring budget can come with its own problems. As part of our series on ‘How to Start a Business’, Helen Lindop, one of our Sage Business Experts, looks at the potential pitfalls small businesses face, and how you can avoid them.
I’ve previously written ‘Can you start a business with no money?’ stating that you don’t need a lot of money to start a business. Creativity, determination and the right attitude are more important than starting out with lots of money. That’s because, with the right attitude, you will find a way to get where you want to be.
But if you do so, you should still be careful – trying to do everything on the cheap could have some unpleasant side-effects.
Here’s what you need to know.
If you’re working with a budget that is unrealistically small, everything seems to be over-priced. You can end up sweating the small stuff like saving pennies here and there when you should be focusing on taking your business to the next level. It can stop you from being generous with you time as well as your money, which holds you back because helping other people out is a great way to build business relationships.
You can develop a sense that there’s never enough to go around – enough money, enough work, enough clients, enough time. That can lead to you under-charging which keeps you stuck in the ‘there’s never enough’ trap. If you feel trapped in a financial corner, you’re not open to new ideas and opportunities, so you miss chances to grow your business.
The secret? Keep your mind open and your attitude big – even if your budget is small.
You can’t do it all
Running and growing a business requires a lot of different skills – web design, copywriting, graphic design, bookkeeping, financial planning and administration to name a few. You can try to do them all yourself to save money but you won’t be able to do all of them well.
You’ll eventually either reach the point where some aspect of your business isn’t being done professionally (e.g. your logo looks home-made or your books haven’t been kept up to date for a year) and this will stop your business from growing. Or you won’t make much progress because you simply don’t have enough hours in the day to do everything yourself.
Read more about why you cannot do it all yourself for free here.
Rise above the competition
If your business is inexpensive to start up, the barriers to entry will be low so there will be many other people doing the same thing as you. You’ll need to find a way to rise above everyone else to get noticed. Look at the other business that are doing the same thing as you and work out how you can make your service better, more targeted to your audience, more interesting, faster or whatever it takes to stand out. But avoid trying to compete on price because, eventually, someone will beat you.
It’s certainly possible to build a business from nothing, and plenty of people have done this. But you need to be realistic about what you can achieve with little or no money. Eventually your business will need more investment if it is going to grow, so it’s best to be prepared for this from the beginning so you can build it into your plans.
Helen Lindop is the creator of Business Plus Baby, and a successful author and writer.