Case in point, billionaire John Paul Dejoria was living in his car at one point before he found success, according to CNN.
It's possible to start a successful company even if you don't have six figures in the bank. TRUEen helps businesses of all sizes find success through affordable online listings that help generate leads. This is just one of the resources you can use when starting a company without big bucks. Read on for a full guide to starting a business with minimal money.
Research the competition to develop a foolproof business concept
If you have a sketchy financial past, you don't have the luxury of blindly trying out business ideas to see if they work and losing money by investing in faulty concepts. Before you put cash down, you want to determine whether your business is destined for success or not. How can you do that? QuestionPro explains that market research is the answer.
This process involves analyzing the marketplace, looking at everything from competitors to consumer demand. You can do your own research by studying the products and services offered by other companies and seeing which goods are a hit versus which ones fall flat. This is also a great way to identify gaps in the market.
Write a business plan to structure your enterprise
Once you've identified a strong business concept based on your market research, it's time to start planning the details of your company. Download a free business plan template from Law District to start getting organized. You can select from different templates for different industries, covering everything from food services to manufacturing.
A business plan is like a blueprint for your future business. This comprehensive document covers everything from how your startup will be organized and managed to what marketing methods you plan to use. Having all of these details thought out in advance will ensure a methodical approach to entrepreneurship, improving your odds of long-term success.
Establish a formal business entity to safeguard your personal assets
Before you go any further in your startup journey, take the time to register your business as a formal legal entity. You will have to file this paperwork with the state that your business will be based in. Pathway Lending explains some of the more popular legal structures, including general partnerships, limited liability companies, and corporations.
Setting up a legally recognized business entity offers a couple of benefits. First, it will help protect your personal assets in case your company ever gets into hot water legally. Further, it will simplify your tax filing and bookkeeping by making it easier to distinguish personal versus professional assets.
Review your financial history and take steps to improve your profile
Every business requires some startup capital. If you've experienced financial problems in the past, this can be problematic. You may not have enough savings to fund your startup yourself, for example. Further, if you have a bad credit score, banks may not be willing to extend you a business loan.
Take steps to improve your financial profile to improve your odds of getting the startup funding you need. Rocket HQ offers a handy guide to boosting your credit score. For example, you should keep your credit utilization low and check your credit report annually for errors—sometimes credit reporting agencies make mistakes!
Come up with a plan for how to get funding
Even if you do manage to improve your financial profile, you may not get your credit score to the point where a bank is willing to extend you a loan. Don't stress! This doesn't have to derail your dream of entrepreneurship entirely. There are other ways of getting the money you need. Become provides a primer to alternatives to traditional business loans.
Examples include a merchant cash advance, invoice factoring, and equipment financing. You can also look into loans from the U.S. Small Business Administration. Finally, you might consider sourcing money online, for example via crowdfunding platforms or peer-to-peer lending. Borrowing from family or friends is yet another option.
Minimize business overhead costs at every step
Once you have the money you need to get started, create a budget. Consider all of your possible business costs, like equipment, staffing, and marketing. As you write your list of expenses, look for ways to keep costs low. By minimizing overhead spending, you will be able to ensure that your startup capital lasts longer
There are many ways to cut costs. For example, Accion Opportunity Fund notes that you can save money by running your business out of your home instead of leasing a commercial property. Meanwhile, you can save on staffing by outsourcing to freelancers instead of hiring full-time staff—and cut marketing costs by relying on free tools like social media.
Use technology to minimize operating costs
You can also use technology to save time and cut costs. For example, you can use tools to automate tedious tasks like social media management and marketing, eliminating the need for a marketing team member. Meanwhile, project management software can help you stay on top of day-to-day deliverables.
Modern innovation can also minimize administrative tasks like payroll. Look for a payroll system with time-tracking integration, so you can track your crew and their time easily. QuickBooks is one option and also offers real-time reporting and a mobile app, so you can handle payroll anytime, anywhere.
Take time to build a strong support network
As an entrepreneur, a strong support network is critical. Connecting with like-minded business owners offers practical benefits, as you may meet potential business partners, employees, collaborators, or referrals. There is also an emotional advantage to having a strong support network as an entrepreneur.
Other business owners will understand the hurdles you face and may be able to offer helpful advice. If you're lucky, you will even be able to find a mentor through your network. An older and wiser entrepreneur who has already gone through the trials and tribulations of startup life can be a valuable source of wisdom.
While founding a business does require some financial investment, you don't need six figures in your bank account to get started. The above guide maps out a path to entrepreneurship that you can use if you don't have a stellar financial history.
For more content like this, check out the TRUEen Blog. We provide business owners with a platform to connect with customers and generate leads affordably.
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