Six Errors To Avoid When Starting A Business On A Small Budget

Let’s face it, most of us would prefer running our own businesses. Being the leader and in control is attractive so to the excitement of taking an idea and commercializing it or buying a business and growing it beyond recognition.

So what’s stopping us? Know-how for sure, as well as courage, remember most startups fail within their first two years and all new ventures need investment. There are so many challenges with commercializing a product or service too including how to market and sell, attract and keep staff, and afford the operating costs like workspace, utilities, and technology.

All new businesses experience a bumpy ride in their first years of trading and with COVID-19 and a recession there are tough trading times ahead so in this article, we’ve compiled advice from some top business experts on how to get a new venture off the ground with little investment.

Avoid Spontaneous Purchases

A common error novice entrepreneurs make is they burn through their startup capital too quickly. A way to avoid this action from happening is to buy only what you need to get the business operational. The top priority is on sales and generating revenue. Your business plan can itemise what you need to achieve sales and get the business operational. Follow your business plan to the letter to avoid spontaneous purchases.

Avoid Permanent Office Space And Your Dream Location

Think Google, Microsoft and so many businesses that started at home. Work from home, and then choose temporary or short term leases for your place of work. Committing to permanent or long term leases is a huge liability for a startup business with unstable revenue.

When you can afford office space avoid going for your dream location. For example, a new tech company might not be able to afford to be located in Silicon Valley so working nearby in a cheaper area of San Francisco is a great starting point. Plus taking the short journey to Silicon Valley regularly keeps the dream of moving the business there alive.

Underutilize Technology

Whatever your business, technology has its place. Embrace systems and apps for efficiencies, reach and perception.

One of the ways to survive COVID-19 is remote working. For many businesses who were reluctant to let their workers telework, being forced to work from home has been an experiment and one that has been successful thanks to technology. Fast internet connection, tracking and live video apps have made working away from the office doable.

Start your journey using video conferencing for meetings, this action alone will save your business a lot of time and money.

Staff monitoring or tracking apps have shown your staff can work from home and this will save your startup on office space. A smaller workspace replaces the need to accommodate all your staff in the office full time.

Technology is a big topic and your business plan needs to identify your startup needs and costs. Remember avoid purchasing software and devices that you don’t need immediately to get your business operational and making money.

Staff Up Too Quickly

The best companies always try to avoid hiring too many employees. Your aim as a business owner should be to set up as small a team as possible, without sacrificing on output and productivity. The best way of ensuring that this happens is by placing emphasis on hiring quality employees with expert knowledge or high potential for growth. Once again itemise your staffing requirements in your business plan and stick to it.

Also the last thing your business needs is employees with little work to do or need micromanaging. Choose staff that can manage their own workload and have a genuine interest in the success of the business.

Diversify

Diversifying in your business leads to a loss of focus on core revenue-generating activities and requires investment. Therefore, avoid diversifying before your core offering has gained a healthy market share. Your business plan will outline what your business model and the milestones for the company. Expanding your product range, or services too early will come at a cost and you want to avoid that cost being your business.

Avoid Quick Loans

In your business plan will be a section on finance. How you fund your startup and when to get injections of investment and from whom will be itemized. Know in advance which lender will forward the funds when your business needs them. Get approval before you open the doors and managing your cash injections is an ongoing process. Never ride by the seat of your pants with quick high-interest loans from high-risk lenders.

Summary

Starting a business is exciting and fun. Yes, it’s risky but with careful planning and execution, the rewards make it worthwhile.