Starting a business can cost a varying amount of money, depending on a number of factors. It’ll depend on the type of business you’re looking to start, as well as where in the world you’re starting, what supplies you need, whether you’re going to hire, whether you’re going to trade online or offline, and more. However, there are ways you can keep your startup capital fairly low. If you’re worried you’re going to be remortgaging your house or selling your possessions to start your business, don’t. Here’s how to start a business for under $5000.
Choose The Right Kind Of Business To Start
Although there are definitely a few ways you can keep your startup costs low regardless of the type of business you start, the amount you spend will largely depend on the kind of business you start. Fortunately, there are many different businesses you can start for under $5000. Here are some ideas you could look into:
- Auto detailing
- Bed and breakfast
- Cake making
- Candle making
- Card making
- Computer repair
- Event DJ’ing
- Jewelry making
- Personal shopping
- Virtual Assistant
- Web designing
There are so many more ideas you can look at too – check this page for 55 business ideas. The above are just a few ideas. It’s a good idea not to focus too much on the cheapest startup, or the startup you think will make you the most money. It’s important your startup is in alignment with your skills and passions.
Write Out A Detailed Business Plan
Writing out a detailed business plan is going to take a bit of time. After all, it needs to contain a pretty much all information regarding your business. This is where you write down your plans on how you’re going to start, how you’ll expand, how much you think you’ll make, Plan B’s, and so much more. The more detailed, the better. It’ll help you to stay focused for one, and remind you why you’re doing what you’re doing. Of course creating a business plan can be free depending on how you do it, but you should be prepared for it to take a bit of time.
Not only that, a business plan can help you to secure financing down the line, when you are able to show investors that you have your plans together and you’re confident you’ll be able to pay them back.
Below is a list of topics you should address within your business plan:
- Summary – this should be a look at your business overall and a quick idea of your goals and what you’re about.
- Organization and Management – the structure of your business.
- Funding request – you’ll need to research this if you’re looking for funding depending on where you’d like to get it and how much.
- Company description – a more detailed description of your business and how it’s different to other businesses.
- Service or product line – this is all about telling a story of your products and service and who/what they serve.
- Financial projections – these will backup your request for funding, if that’s what you’re looking for.
- Market analysis – you need to have researched the industry, market, and your competitors before you start your business, and record the findings in your plan.
- Appendix – this is optional, but you can put things here such as your resumes, permits, and leases.
Make sure you take your time over your business plan. If you need help, ensure you get it. This is one of the best ways you can get your business off on the right foot and save as much money as possible, as well as secure financing. For more helpful information regarding business plans check out: How Do I Write A Business Plan?, 10 Tips for Developing a Business Plan and How to Write a Business Plan.
Look Into Business Help And Training
Business help and training can get you in the right place mentally to start a business. You can get help with just about anything imaginable, from how to do your business plan to securing your financing.
Just because you’ve had the idea to start a business, doesn’t mean you’re ready. Not everybody has the entrepreneurial skill and mindset, but that doesn’t mean you can’t pick it up. You can find many free courses to help you, and some that will cost you next to nothing to do. You can find these on sites like Udemy and Skillshare. You could potentially do a regular part-time course or even a full-time course, but there are going to be many more fees associated with this than the online options.
It’s a good idea to use as many free resources as you can, and even search on YouTube for people who have done it before you. Entrepreneurs often write books on how they did what they did, so consider picking a few up and following the steps they recommend, too.
Another option is looking for somebody who offers mentoring and training over Skype. This may not be as cheap as the free video tutorials, but it’ll still be cheaper than enrolling in a course or going to a physical mentor. You can talk them through your business, and they can give you personalized advice that’s right for you as an individual and your industry. It’s a good idea to look at testimonials before you decide who to go with. Read Where To Find Help And Training For Starting A Business? for more ideas on locating business help and training.
Ultimately, you’ll learn what you need to learn as you pursue your dream of starting a business, but business help and training can definitely get you there faster, and by spending little cash.
Find The Perfect Business Location
The right business location is going to make a massive difference to how successful your business is. You can’t just assume that you’ll build it and the people will come. You need to make sure your business is in prime location so that staff and consumers can find it with ease. Just as finding the right house is all about the location, so is finding the right business.
There are so many different things to think about when it comes to finding the perfect business location. You’ll also need to ask yourself a number of different questions.
Some things you’ll need to ask yourself include:
- Are there good transport links nearby?
- How much will this building cost to run?
- Will I likely need to move soon – if so, is there a contract I’m signing?
- Are there any problems with the location that could cost me more money in the long run?
Finding a building, then adding your signs and other business features, is not going to be cheap. It could be a good idea to start up in a spare room in your home, the garage/basement, or even your bedroom, if possible. For some business ideas you won’t even need a premises, e.g., dog walking or cleaning. All you’d need is a place to store your materials and other important business stuff.
Sorting out your location isn’t needed if you’re starting online, but if you need a physical premises, it’s going to be a little harder and more expensive. You’ll likely need to look into somewhere as cheap as possible when you’re just starting out, but you should be sure there are no big issues with the place, like repairs that need to be done and hazards that could potentially cause problems.
Always read the small-print of any contract before you sign, too. If you could grow faster than expected and need to move, or it turns out you can’t afford the premises for whatever reason, you’re going to need to leave with no repercussions. The last thing you want to do is fork out money for a place you’re not even using.
Work Out The Legal Structure Of Your New Business
You have a few different options when it comes to the legal structure of your new business. They are as follows:
- Sole proprietorship – this is the basic business structure. You own your business alone and are responsible for assets and liabilities.
- Partnership – there are a few different kinds of partnerships, but this is usually where you own your business with another person.
- Limited liability company – this provides the features of a corporation and the tax efficiencies and flexibility that is more like a partnership.
- Corporation – this is for larger, more established companies.
- S corporation – similar to a C corporation but you will only be taxed on a personal level.
Not only will you need to get this in place, you’ll also need to think about anything else you need operating as that sort of business. You may need different types of insurance, for example. Make sure you do your research to find a trustworthy, affordable company. Read What Is The Best Legal Structure For My Business? for more a detailed explanation of the options.
Register Your Business Name
Registering your business name is a really important step in all of this, and there are a few different ways you can choose to do it. Take a look below to see what the right option for you is:
- File A DBA – this is how you can use your business name without needing to create a corporate identity. You get a DBA for your business name when you are a Sole Proprietorship.
- Create an Official Business Structure – when you form an LLC or Corporation, you’ll automatically have your business name registered with the state. Before your application has been approved, the state will make sure nobody else is using your name. When you’ve been approved, nobody else will be able to come into the state and use your name.
- Get A Trademark – a trademark is the way you protect your business name in all 50 states, if you’re serious about it. You’ll get common law rights to that name, rather than be an actual trademark. You’ll get stronger protection than a common law mark alone. Doing your research on similar business names beforehand is important.
You don’t want to end up getting in trouble for having the same name, or a business name that is deemed too similar to another in the state, or even the country. This is why market research is essential. Make sure you are confident in your business name before your register it. You’ll need to make sure it will suit you years down the line, even when you may have altered what you offer. You also want to make sure you have the domain name for your website! Read How To Check Business Name Availability? for advice on ensuring your business name is available.
Don’t Avoid The Taxman – Register For State And Local Taxes
Avoiding the taxman will only get you in trouble in the long run, so make sure you register for state and local taxes. You must pay certain state and local taxes as well as federal business taxes. A small business usually needs to pay income taxes and employment taxes, too.
- Income Taxes – these are determined by the legal structure of your business.
- Employment Taxes – if you have employees, you’ll be responsible for paying this.
Your tax obligations will vary by location, so you need to make sure you do plenty of research for your area and where you plan on trading You’ll also need to make sure you get the correct business licenses and permits.
One of the best things you’ll invest in as a business starting out, is an accountant. It may seem like an unnecessary expense, but it will take so much of the heat off you when it comes to keeping track of your financial situation. They may also be willing to give you some advice when it comes to having a cash cushion behind your business, dividends, and more.
Use Government Surplus
You want to start a business, but that doesn’t mean you can afford all of your supplies. You don’t necessarily need to buy everything brand new or take out a loan to do it. You can actually use government surplus to save lots of money on your supplies and other things you need.
You can buy all kinds of bits and pieces, from computers to cars. These are items that may have been seized for whatever reason, and have only been lightly used. You will be able to have quality business equipment without spending a fortune.
Lock-in Your Website Domain And Social Media Profiles
In the age of eCommerce and social media your business needs a website and social media profiles to help promote and get in-front of prospects. Having a website is not just for blue-collar type businesses – all businesses regardless of what products or services they provide will benefit from having an Internet presence. Gary Vaynerchuk is a perfect example of how using social media grew his family wine business into a multi-million dollar enterprise and helped Gary to become a global thought-leader. 5 Reasons Why Your Business Needs a Web Site post provides some thoughtful reasons why your business needs a website and Branding Considerations for Your New Business provides advice for addressing business branding.
It’s totally possible to start a business for under $5000. You could even start one using the advice here for under $500!
10 Things To Do Before Starting A Business
You should not underestimate the challenge of starting your own company. It is always going to be a massive endeavor to take on. You need to make sure that you prepare for the uphill climb because there is certainly a steep road ahead. The idea that most businesses fail within the first five years has been hotly debated however starting and running a business for years on end is no small endeavour. The key cause is that new business owners do not take the right steps before opening their company. There are a number of important issues to consider before you even think about opening your doors.
Find Your Target Market
Your first step has to be thinking about your target market. You need to consider who is going to be interested in buying from your business and who your products or services appeal to. No product is universal and finding the right target market is going to increase your chances of making large profits. Your target market is going to impact everything about your business model from how you promote your company to where you choose to promote it. For instance, if you are using sponsored content it will shape which blogs you select for the articles advertising your business.
Name And Logo
Next consider the name and logo for your business. The name and logo needs to be memorable and dynamic. It should stand out amongst the sea of competition that you’ll face online. You may want to pay more attention to the logo rather than the name. Research shows that consumers are more likely to remember images rather than words. Consider hiring a professional to create your logo too. That way, you can avoid it looking as though it came out of a cookie cutter. Once you have decided on a name and logo, trademarking is vital. You must make sure other businesses aren’t able to piggyback off your potential success. Also have a look at Branding Considerations For Your New Business.
Build Your Site
Where are you going to display the name and logo of your business? A key area of your campaign would be your website. Again, you should hire a professional to design and website and make sure you host it yourself. By hosting it, you can increase your potential ranking online, thus attracting more traffic to your site. You need to think about what your site is going to be used for. It could be a place purely for marketing purposes, or you may want to set it up for purchases. If the latter is true, you must invest in secure sales software to protect customers data.
Set Up Social Media
No company will survive on the modern market without a social media presence. You need to set up profiles on everything from Facebook to Instagram and Snapchat. This will give you a wide range of options when choosing how to interact with potential customers online. More importantly, it will enable users online to easily find your business, updates, and information. These profiles can should have a specific tone and a consistent. You can also republish any content that you produce across all your profiles. This will ensure that you get the largest reach online.
Get In The Green
Starting a business is always going to be expensive, and it will damage your credit score at the beginning. You will need to borrow a lot of money for everything from inventory to employees. Increasing your credit score before you open your company will ensure you can borrow money with low-interest rates making it more manageable. At the start, most business owners pay for expenses out of their own savings and quickly run out of money. At this point, you will have no choice but to borrow. It is crucial that lenders trust you to pay the money back or interest rates will quickly push your company into unmanageable levels of debt.
Pick Your Business Model
There are lots of business models to choose from when you decide how to run your company. For instance, it is possible to set up a company and run it from home, online or tap into an established brand via a franchise model. You might also consider using freelancers or outsourcing agents rather than hiring permanent employees on contracts. It all depends on the type of business that you want to run and the cost cutting schemes that you want to use. Another good post to read is What Is The Best Legal Structure For My Business?.
Hire A Legal Advisor
A legal advisor is always going to be a beneficial hire for your business. It should be one of the first individuals you think about recruiting. They can help you with everything from paying the right amount in tax to forming contracts with business owners for suppliers and stock. They will ensure that you are up to date with important regulations and laws that will affect how you run your business. Also read Why Its Important To Engage A Lawyer ASAP When Starting A Business.
Form Contacts In The Industry
No business owner is an island, and it’s important that you have people in the industry who you can contact for help and support. A mentor to help guide you and provide skilled opinion is also highly recommended. You also want to make sure that you have clients set up, interested in your service before you open your doors. Early guaranteed customers will be crucial for keeping your company profitable in the first few months. You might already have contacts from a previous position in a similar business. If you don’t, think about attending tradeshows and exhibitions. This will give you a natural way to rub shoulders with investors, suppliers, and buyers.
Consult With An Expert
You won’t be an expert in all the areas of running a business. But you can hire someone who is. There are consultants for every sector of a company who can aid you in marketing, accounting or employee management. With someone by your side who has experience in these areas, you can avoid some of the common early pitfalls new owners always fall in.
Prepare Your Escape Plan
Finally, make sure you have an escape plan ready if things don’t go your way. It is possible that your business doesn’t see the level of demand it needs to stay profitable. If that happens, you should have a plan to quickly sell your inventory and make any money you spent back as quickly as possible. This will ensure that a failed business plan doesn’t throw you into a debt spiral. You should hope for the best outcome when starting a business and yet plan for the worst.
Where To Find Help And Training For Starting A Business?
How To Check Business Name Availability?
How Do I Write A Business Plan?
How Do I Price My Products/Services?
Ideas For Keeping Business Costs Down
How Do I Manage Business Cashflow?
How Much Money Will I Need For My First Year Of Business?
How Do I Check My Businesses Compliance Requirements?
What Do I Need To Prepare Before Hiring Staff?
Five Basic (And Cheap!) Tasks That Will Dramatically Improve IT Security For Small Businesses
What Insurance Do I Need For My New Business?
Do I Need To Be PCI Compliant?
Suggested Next Read: How to Start a Business For Under $5,000
Is A Franchise Business Right For Me?
With startups all the rage these days, it’s easy for people to forget about another way of starting a business – franchising. Franchises are still a great way for people to get ahead in business, and there are options in almost every single industry. But, while franchising offers plenty of potential for success, the business model isn’t for everyone. In this guide, we’re going to take you through a few of the pros and cons of becoming a franchisee, and, hopefully, help you find out whether the pathway is a suitable one for your needs. First of all, let’s take a look at some of the advantages of becoming a franchisee.
Taking advantage of a recognized brand name
When you start a business yourself, there is a lot of work to do to establish your brand name. With franchises, however, it’s a little different. You are, in essence, buying into an already recognized brand name, and that means there are plenty of benefits. There is a lot of security in place right from the start, and you could be profiting from trading under a name known nationally – or even globally. In short, it almost guarantees customers as you already have their trust for quality and reputation.
Buying into an established – and successful – model
It can take a long time for startups to work out how to do things the right way – years in some cases. However, when you assume a franchise, everything is already there for you to take advantage of. The way of working is proven to be a success already, and you are enjoying a tried and tested formula. All the hard work of refining the business model is already done, leaving you to reap the rewards.
Running a business
Running a franchise is, to all intents and purposes, precisely the same as running an independent business. You will be responsible for everything, have the opportunity to explore growth opportunities, and, ultimately, will need to meet the same expectations as you would impose on yourself anyway.
When you buy into a franchise, the franchisor wants you to succeed. So, you get everything you need to kick things off in the right possible way, right from the very start. First of all, you have excellent training to ensure you have the skills necessary to become a success. Your employees get that training, too, making sure that everyone knows what to do before you open your doors. When you start a business yourself, training employees comes at a vast expense – which you just don’t need to incur with a franchise.
Systems, support, and savings
You will also get the advantage of equipment, software, IT systems and a lot more besides when you get involved with a franchise. Everything you need to succeed is given to you and is refined to the exact standards to ensure you achieve your goals. There is support available when you need help, too, which you just don’t have when starting a business. And, finally, the scale of orders that franchises place with suppliers means that you can take advantage of lower costs of raw materials.
Of course, franchising isn’t always without its problems. And to work out whether the model is the right one for you, it’s important to know the disadvantages, too. Let’s take a look at the other side of the coin of running a franchise business.
First of all, it’s vital to understand that buying into an already successful brand name is not cheap – some franchises cost millions for the license. Some franchises require less, of course – five-figure sums for buying in are not uncommon. But you should expect to part with a six-figure sum in many cases, and you will also have to pay ‘royalty’ payments of anything between 4 and 7 percent.
While starting a business of any kind requires 100 percent commitment to ensure success, it’s even more important for franchisees. When you consider the vast sums of money you have to spend to trade under a strong name, it can take years to pay that back. It means that commitment to your business is nothing short of essential, and you also have to bear in mind that signs of success could take a couple of years to start showing.
As we mentioned above, your franchisor will give you plenty of training opportunities to develop your skills. But you shouldn’t assume that this will be enough experience to run a well-drilled and productive team. If you have never managed people before, it can be a difficult prospect, due to the type of employees you have to take on. As a rule – although this isn’t always the case – franchises pay low wages, which, in turn, means a low quality of staff. Employee turnover, therefore, tends to be high in many franchises, and enthusiasm and productivity are often significant issues you can’t afford to ignore.
The rules and regulations
When you work under a franchise name, there is little room for creativity with regards to making choices for your business. The franchise rules will run through everything you do, from the decor of your store or offices to the way everyone works. And if you want to make changes, it can be hard to persuade the franchisor to let it happen. Bear in mind that many franchisees have made changes to the way they run their business, and are, more often than not, punished with a contract termination.
Not all franchises are a safe bet
Not all locations in the country are suitable for opening a franchise – even when that franchise isn’t represented in the local area. For example, some parts of major towns and cities are fiercely independent and don’t like the prospect of a massive global chain opening up on their doorstep. It’s vital to explore the market potential of your franchise of choice before making the wrong decision – which could result in an incredibly expensive mistake.
As you can see, running a franchise business is not for everyone. The big question is – is it a good fit for you?
How To Find A Business Mentor?
For many people, it can be difficult to find that one person who can help them move forward in their careers or business. Finding a mentor can be an intimidating process, of course, and it’s also hard to know where to look. However, finding the ideal advisor – either for your business idea or career – might be a lot easier than you first thought. In this guide, we’re going to explain a few things about mentors and, more importantly, how you can find and approach them to get the solid business advice you crave. Let’s get started right away.
What makes a great mentor?
First of all, what can a business mentor teach you? The simple fact is that they bring a lot of experience to the table, and you will be able to bounce a lot of ideas around with them. They will have a great belief in you and your idea. They will be able to focus your mind on what’s important and advise you on strategy, networking, and establishing your vision. However, before you establish a relationship with a business mentor, it’s important to understand what you want, which we are going to go into right now.
Why do you need a mentor?
Looking for a guide is going to be a lot more difficult if you are unsure of why you need one. The first step to doing so is to establish some key business goals – what are you trying to achieve in business, and what are you looking for to help you? Do you need a good listener to act as a sounding board, for example, or are there specific business tasks that you need help with – marketing, or networking, for instance? Also, bear in mind that it’s possible to have more than one mentor if you need it.
Selling yourself to a mentor
Make sure that you have a simple one-liner memorised that explains who you are and what you do. It’s also worth considering brushing up your small talk skills. You will need to appear enthusiastic, inquisitive and incredibly keen to learn. You also need to leave your ego at the door – no one will consider helping you if you seem unwilling to listen properly.
Establishing a connection – start close from home
If you are looking for a mentor, you need to establish a connection. It could be online or on social media, or it could be in person. But one of the best things you can do to start looking for a business mentor is ask your wider family and friends. It works on two levels. First of all, if you have a family member or friend who already owns a fruitful and long-running business they could be an invaluable source of information. Sure, different industries require different skills, but ultimately all businesses need one important thing: getting results. And the theories and methods of getting those results don’t change much between industries at all. The second way family and friends can help is that the six degrees of separation theory come into play. They might know someone who knows someone else – and before you know it, you could be going out for a dinner meeting with Bill Gates.
Network like crazy
Not everyone has family and friends with a fantastic black book of business contacts. And if this is the case for you, it’s important to get yourself out there. Try attending local business events and getting to know local business leaders – it could prove invaluable. Trade shows are another great opportunity to meet people from all walks of life, and as long as you follow up with your new contacts after the event, you have a chance of striking gold. One thing to bear in mind, however, is that you don’t want to plump for the first person that shows an interest. Finding a good and long-lasting mentor won’t happen overnight, and it requires a lot of meetings and relationship development to know if you both fit each other.
Spread your wings
If you are a local business owner, don’t be afraid to approach others in your industry who do business elsewhere. As long as you aren’t treading on anyone’s toes, many successful owners will be happy to lend you an ear. And they might even be able to recommend someone who would suit your needs. However, bearing in mind that the Internet is making marketplaces smaller than ever, be careful about who you choose to contact – some people might see you as a threat if you intend to have a significant online presence that serves a national market.
Pay for it
Don’t be ashamed of paying for a business advisor or consultant. Ultimately, this is your easiest option (if you have the budget) and it’s a far quicker method of tapping into expertise than developing a long-term relationship. As long as you research each potential consultant and are sure they can bring you value, paying for mentorship can work.
Developing the relationship
Whether you are paying for it or not, it takes time to build up a healthy relationship with a mentor. Once you have decided you are a good fit for each other, you will need to take some time to find out how the other works, including identifying each other’s strengths and weaknesses. You will also need to agree on a workflow – and, of course, any potential payment terms. Make sure that you draw up a schedule that outlines how often you will meet and determines some short-term and long-term goals.
Completing the process
With any luck, your relationship will blossom and result in success – for both of you. It might be the case that you have developed a friendship, but ultimately you should be in a position where you can be a mentor to someone else, rather than the mentoree. But what if you haven’t’ achieved your goals? And what if the relationship hasn’t worked out as well as you had hoped? It’s best to reduce contact over time, and always be polite and respectful. Thank your mentor for the things they have helped you with – there will always be something you have learned. And if you do decide to find another mentor, make sure that you don’t leave your previous contact feeling aggrieved – you never know when it could come back to bite you.
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