Last week the Wall Street Journal published an article on the costs of starting a business. Citing Babson College, who have made a study of the costs of start ups who has estimated that on average it takes about $65,000 to start a business, a figure that can include everything from buying equipment and inventory to paying employees. Some industries come with even higher price tags, according to the Kauffman Foundation—$82,000 for construction, $98,000 for retail and $175,000 for manufacturing, to name just a few.
But the truth is to start a small business, you don’t need anything like a large cash outlay. In fact, I’m a firm believer that you can start a business for less than a $1000 easily, because you don’t need anything like the things you think you need.
You don’t need:
- an office, you can work from home
- business cards
- fancy furniture
- Employees, you can rope in friends or famiy or outsource stuff you can’t do yourself
- A 99 page business plan (just a clear idea of what you’re going to do and how)
- Large capital
You don’t need any of these things, at least not at the begining.
All you need to do is this:
Meet a need and someone willing to buy
It’s as simple as that. It really is. Many people starting out for the first time get hung up on the trappings of ‘being in business’ that they don’t actually get started and never actually get their business off the ground.
How to get started in two easy steps:
1. Do something: Meet a need
If you start out by meeting a need by having something to sell, then you’re half way there. But don’t spend forever either trying to come up with something or over developing a product, adding features that aren’t necessary. Start small and meet the need. You can always add extra features at a later date.
3. Have someone willing to buy
If you start out by meeting a need, then you’ll have people willing to buy. But you need to be able to identify people who are in a position to pay for your product or service. Generally speaking when starting out (especially if you have a small budget) it’s best to target people or business who have a need that is currently not being met. If people have a need, but they don’t know it then you’ll have to spend a tonne of time educating them in why they need your product. If you’re a good salesman you’ll probably pull this off. Maybe. If you’re not a good salesperson, then the chances of you pulling it off are remote. So you’ll end up wasting time and money and not getting anywhere fast.
Where people recognise that they have a need, you don’t need to spend a lot of time selling your product – the product or service will sell itself.
For example, if you had a car that was dirty and someone offered to wash it for you for $10 you’d probably say yes.
But if someone offered to replace your car’s brake pads with ceramic ones, you’d probably say no (especially if you knew the price).
So, the key question to ask for anyone starting out in business is this:
Who will buy my product or service?
If you can’t answer that, then you don’t have a business.
Here’s some ideas of businesses you can start on a budget:
- A car washing or valeting business
- internet marketing
- cake baking
- become a personal assistant to the busy homeowner (dog walker, gardener, collector of parcels from the post office)
So, if you were to start a business today, with less than $1000 what business would you start – could you manage on even less, say $100?
If you were looking at this being a permanent replacement to your current income, would the answer be different?