You are wondering how to start a business , maybe you already have an idea for something new, or you want to expand because you already offer services or products. Are you ready to take some risks, quit your job or do without a fixed income for a while.
But there is a small problem: you don’t have a lot of money. It might seem like an insurmountable problem, but come to think of it, it’s not a lack of capital that keeps you from making your dreams come true. In fact, it is possible to start a business without investing too much money if you know what to do.
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What is the money for
Before we get started, let’s see what the money is for. There is no fixed cost to start a business, every business has its own costs. But it is essential to make an estimate of the expenses you will encounter. Here are some of the items to consider:
- Licenses and permits. They vary according to the area, and their cost can also vary according to the type of activity.
- Supplies. Do you have to buy materials? Do you need computers or other devices?
- Equipment. Do you need special equipment or software?
- Offices. It is a very important expense, and then you will need the internet and there are utilities, condominium costs and other related expenses.
- Operational expenses. In addition to production, there are other costs to consider, such as those related to marketing.
- Legal fees and accountant. Often you will need to turn to professionals for certain legal or tax services.
- Employees, freelancers and contractors. If you can’t do it all by yourself, you’ll have to pay someone.
How to start a business while reducing expenses
That said, there are two basic ways to start a business while reducing expenses: lower costs or increase the capital available thanks to external interventions. And the options are as follows:
1. Reduce your own needs
The first option is to change your business model to reduce the spending needs already listed. For example, if you can start off by offering consulting services or working as a freelancer you won’t have to pay employees. If you don’t need an office, you can also work from home.
Of course, there are some expenses that are impossible to avoid. Licenses and authorizations remain but there are many benefits for small businesses.
2. Proceed step by step
The second option provides a “running-in” period for your business. Instead of venturing out and doing it big, you can take small steps. You can launch a blog with a niche service, scaling your goals, audience, and profits. You can start as a freelancer by limiting the initial expense items (and have a more manageable tax situation). And once you’ve started earning, you can invest in yourself and build the business you’ve imagined piece by piece instead of all at once.
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The third option is to get funding from external sources. There are several ways to find and raise capital to start a business, here are a few:
- Friends and family. Do not rule out the possibility of getting help from friends and family, even if they cannot cover all the expenses they can lighten the initial investment.
- Investors. Investors can be wealthy people willing to support your business in exchange for a share of your company, a sacrifice to consider. There are two types, some invest in start-up companies, others prefer to support already started companies in order to expand them.
- Crowdfunding. It is becoming more and more popular and is used to finance just about anything.
- Public calls and funding. There are several calls for funding for small businesses, but it is important to have all the requisites required.
- Bank loans. Another viable option that can be considered.
Read also: How to create and manage a small “minimalist” business?
Thanks to these options you can reduce your initial investment considerably. Of course, you will have to face other sacrifices, perhaps starting slowly, reassuring your partners or getting into debt, but if you believe in your ideas, nothing can stop you from being successful. Finding the right way to start a business is not easy, but neither is it impossible.