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

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

So what’s stopping us? Know-how, for sure, as well as courage. Remember that 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 typical error novice entrepreneurs make is that 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 itemize what you need to achieve sales and operationalize the business. Follow your business plan to the letter to avoid spontaneous purchases.

Avoid Permanent Office Space And Your Dream Location

Think of Google, Microsoft, and many other 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 to 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.

For many businesses, the pandemic was a test of resilience. Despite initial reluctance, they adapted to remote work, proving their capability and resilience. Thanks to technology, this experiment has been successful, with fast internet connections, tracking, and live video apps making working away from the office possible and efficient.

Start your journey using video conferencing for meetings; this action alone will save your business time and money.

Staff monitoring or tracking apps have shown that your staff can work from home, saving your startup on office space and associated costs. A smaller workspace replaces the need to accommodate all your staff in the office full time, making your business more financially savvy and resourceful.

Technology is a crucial component of your business plan. It needs to identify your startup’s needs and costs, and how technology can address these. Avoid purchasing software and delaying it until you don’t need it immediately to get your business up and running 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 output and productivity. The best way to ensure this happens is by emphasizing hiring quality employees with expert knowledge or high potential for growth. Once again, itemise your staffing requirements in your business plan and stick to them.

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

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 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

Your business plan will include a section on finance. This section will itemize how you fund your startup, when to get injections of investment, and from whom. You should also 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.