How to Effectively Run a Business on a Shoestring Budget
When you’re starting up a new business, sometimes you just have to make do with what you’ve got. That may mean that your budget is practically nonexistent and you have to get creative with different ways to make sure all your bases are covered. When you first start a business, don’t worry about all the bells and whistles you’d love to have. That will be for another day down the road. For now, focus on your shoestring budget and how to make the most out of what you currently have by using these tips below.
Set a Budget
Part of operating on a shoestring budget means actually creating and following a well thought out budget. How do you plan to finance your business? Do you have money of your own? Are you using an investor? Getting a loan? Give every single dollar of that money a home. What are the most important things to worry about first? If you operate out of a location, rent and utilities should be at the top of your list. If you run an e-commerce store out of your house, make sure you’ve set aside enough to set up a good website and keep it fully operational. Make absolutely certain you can cover the more crucial things, and then allocate what’s left to everything else.
Try using different categories such as “need”, “want”, “nice to have”, “when we make our first sale”, or any category you see fit. Doing this gives you clear direction and helps you see that those things you really want later but can’t afford now are completely attainable in time.
One of the biggest mistakes new business owners make is thinking they need more than they do. Tip: you don’t need the biggest and best hardware from Day 1. In fact, doing that would be a huge disservice to your company. If someone fresh out of college only making $40,000 a year suddenly decides to buy a $500,000 house with no down payment, how do you think that will end up? He’s going to lose the house because he can’t afford the payments or the upkeep. The same concept applies to running a business. Start small and build your way up to those bigger and better things.
When you’re first starting out, don’t dismiss second-hand furniture or equipment. Go to your local thrift store and see what gems you can find. Look in to local warehouses or colleges for potential surplus sales. It may take a little bit more effort, but you could end up getting some really amazing deals on “used” stuff that is practically brand-new, for a fraction of the price.
Do as Much as You Can Yourself
Now, this doesn’t mean “do everything yourself until you burn yourself out” but rather, don’t hire people for roles if you don’t truly need the extra hands. Sure, it would be great to have extra hands, but at what cost? If you’re operating on a shoestring budget, evaluate very carefully what positions you actually need to hire for and what functions you can still cover yourself.
Running a business on a shoestring budget can be tough. But if you plan it out and stick to your budget, you should see your business begin to grow. As it grows, those minimal funds will slowly increase. As it increases, so will your budget, and that nearly nonexistent budget will be a thing of the past!