So you’ve decided to start your own business, a daunting task for anyone—especially if you haven’t done anything like this before. One of the biggest struggles in starting your own small business is money.
You’ll probably need to have some money saved up to put into your business before the business starts making money for you. Here are some other great tips that will get you started.
Research your business before you start
The very first thing you need to do is figure out what your business does. Are you shipping other people’s products, or maybe starting a restaurant? Look into your industry’s market to see where it’s been and where it’s going.
Discover who your main competitors are, and exactly what they’ve done to become successful. You should look back at least a decade or so, and scope out the trends in the local and global market to see what has affected the rise and fall of various companies in this industry. Have they gone bankrupt due to falling profit margins?
You should know the ins and outs of the history of your specific niche in the market and learn from every failure and success to apply it to your own business strategy before you start. This is not only helpful in knowing what to avoid, but it is also a great way to see what empty space you can fill; you can be the company that offers the missing gaps in your market, making your business more likely to succeed where others have failed.
Small business bootstrapping is best
Now that you’ve got a business plan in place, you need to find a way to fund your business until it starts generating revenue. This is usually the hardest part for entrepreneurs, simply finding the funding to make your dream business a reality. It may seem like a good idea to start off with a large loan from the bank but paying back money with interest will eat into your profitability.
If you can bootstrap your small business at the beginning, you’ll have fewer bankers to thank (and payback) later. Bootstrapping is an entrepreneurial term that means starting a business with money that you’ve managed to save.
You’ve likely been thinking this idea over for a long time, and you should spend all that time putting aside money for funding. One or two small loans could be beneficial, but the majority of your capital should be personally set aside as an investment for the future. Live poor now so you can live rich later. Eat out less. Cancel fun subscriptions like Spotify and Hulu and forgo buying that game console your family has been looking at.
A general rule is to never invest more than you can afford to lose. With business leaps like this, you need to work for the best outcome but plan for the worst. Maxing out all your credit cards and spending your retirement is not the best way to do that.
Hire financial experts
In the world of bootstrapping, this may seem counterproductive; many probably feel that they can do their bookkeeping and accounting themselves, so why pay someone to do it for them? In reality, these days you simply cannot keep yourself afloat in these matters unless you have some sort of training or experience.
Even if you manage to figure out how to correctly manage all your books and accounts, as the owner of a new company, you simply cannot afford to waste the time. Something that could take you hours in your inexperience would take a professional twenty minutes, and hours at a time are not expendable when you’re fighting for the growth of your company.
As the CEO, you need to be spending as much time as possible on expansion, improvement, and development; you have more on your hands to worry about than bookkeeping. At the beginning of your journey you may only need to delegate to a bookkeeper and accountant, but as your business grows, you will likely need to hire a financial controller and/or CFO to keep track of the big picture of your finances and strategy. Until that point, outsourcing your bookkeeping is simple, and usually less expensive than the alternatives.
Be smart, know when to delegate
You have capital saved up, you have someone to manage the money you’re making and spending. Great, what next? Now it’s your biggest job to use your money wisely by investing in things that will help your company grow, but not overspending. Investments need to be made, especially at this point in the game.
For example, outsourced bookkeeping is something that you invest in to help free up time and make sure your business runs smoothly in regards to strategy and law compliance. However, you need to be sure you don’t invest too much in something with little to no return; this means not buying or renting a large, expensive office area for your small startup, and knowing when marketing is ineffective.
Being fiscally intelligent means knowing when to delegate as well; the core of bootstrapping your way up the food chain is in doing everything yourself, but there is only so much one person can do in 24 hours.
You need to remain the biggest proponent for growth in your company but also know your limits. Perhaps you need to hire on a new employee to deal with some of your responsibilities, freeing up your time as well as improving quality of service. Even a small thing like hiring a virtual assistant can save stress and time. Perhaps you’re really good at most aspects of meeting your company’s general needs, but have nobody with any skills in building a decent website. In the end, you will always need to work your hardest and give everything you’ve got to fight for your company’s success. But you can’t do it alone, and trying may be the downfall of your dream.