So many of my young enthusiastic entrepreneurs get so excited about the prospects of launching their own business (or businesses) they want to quit their day job and get started, right away.
There are so many stories of now affluent and influential entrepreneurs who started their business from scratch, however, there was always some form of support. Scratch means from nothing for sure, but be smart about it.
You need money to make money is a very common saying meaning that it’s hard to make money in a business without investing some money in supplies, products, advertisement, or other business expenses. What we do use it for as well though is to justify overspending or simply not launching a business for fear of not being able to afford it or throwing money away.
Risking it All
In the incredible story of Chris Gardner’s rise to the top, he literally had nothing yet he gambled everything, working for free on a one-year internship to get to that vision of where he wanted to be.
Yes, he had nothing but it’s important to note that he risked everything. He understood how essential it was to learn the skills and strategies that would help his long-term success. No matter what, even homeless, he never gave up and did whatever it took to stay true to that vision. There is no need for you to take it that far, to live in homeless shelters and create what he did was an incredible feat. It’s a story that inspires by the true depth of determination.
No matter what you spend, you need to have that determination to make it work.
It’s the ability to hold that vision and do whatever it takes.
Richard Branson took a huge risk and gambled everything buying second-hand passenger jets to launch Virgin Airlines. It paid off, however, he had no guarantees at the time. The investment is believing in what you are doing enough to back it.
These are two very different examples, however, there are strong similarities in mindset. It’s not the amount you invest in either time or money, it’s the passion, dedication and smarts you invest with!
What I tell people over and over is go slowly. When creating and launching your business, make as much mess as you can, as fast as you can, but have additional income to support you.
Part of your goal plan should be set points where you are ready to step down to part time work and then into your business full time, but you need to be ready for that to take a while. Rather than a safety net, consider your income as a business resource. Eventually, you will have other avenues for that resource.
Spend Your Money Wisely
Having limited funds can certainly make you smart and savvy in all aspects of your business, it can also help you really appreciate just how far you’ve come when you get there. There is no reason though to get too painful about it.
Tighten your belt and cut your costs but don’t run on empty. Overnight business success is a bit of a fairy tale. If it happens for you, awesome, well done, however, most entrepreneurs start out slow, building, creating, growing while they test their market and get a great foothold on what they are actually delivering. So be ready to do the work.
I like Gar Vee’s suggestion, that you only need to sleep for six hours, so hustle from the moment you get home from your 9-5 job until 2 am if you need to!
While that happens, you need to have a way of paying the bills, buying food, getting around and investing in your business. Just because you are launching your business doesn’t mean you can let your insurance lapse. If you can’t afford car insurance, it’s probably fair to say you can’t afford the car.
Look at what you have and what you need and make those vital adjustments that mean your business start up and life will function to their highest capacity. Do you need the car, do you need the gym membership, are there other ways to get creative to get your goals met? Can you do a service swap, can you share with someone (living space, car, travel expenses?)
What most start-ups find, even people who are well established and are looking to start a new arm or venture, is it costs money to set up. The set-up stage usually has a negative impact on your finances, it’s only after that investment that you make a gain. Then it’s uncapped, as long as you keep supplying the resources that make it work, it will continue to work for you.
Everyone Starts Somewhere!
IBM when starting out didn’t go to all the trouble of making their own components and setting up a manufacturing plant. Instead, they did a fantastic amount of research into the components that were already out there, sourcing what was reliable and effective.
They purchased those parts from multiple sources to create a prototype for the PC. That takes some money and some guts and a bit of creative thinking for the time. What that meant for them was faster turnaround times and lower costs.
That outside the box thinking and approach put IMB on the map. What works for one business doesn’t necessarily work for another though!
Have the guts to invest in the right area for what you want to achieve. If you want the very, very best, un-hackable, tamperproof model like Apple, then you will need to manufacture your own components. That was never IBM’s plan. You need to know your vision, (rather than your business plan) and make the right choices to get that vision into the world.
In the meantime, look after yourself, be smart and above all, be resourceful.
It’s not your resources. It’s your resourcefulness.
Invest in Your Product
Straight up, if you believe in your product you need to invest in it.
Of course starting a business doesn’t need to cost a fortune. The available technology we have today means you can get started on next to nothing but it is so important that you get the best you can afford. A great looking website, reliable internet, well-written content. If you are not able to do these things yourself you are going to have to pay someone to do it for you. You don’t need all the bells and whistles, but if you want an online presence it needs to look and feel professional and it needs to be appealing and working.
Starting out you might be investing time over money but with each step you take you are going to need to invest. You need to believe in your product or service so much that you will back it. Because if you have doubts about making a good investment in yourself, you might find others are just as reluctant to back you.
Without a doubt the one thing that all entrepreneurs share when it comes to their success is the amount of money they put back in. To grow bigger and stronger and create something the whole world can recognise they invest a large part of what they earn into pushing the limits and boundaries of what they can do.
Yes, they could find a sponsor, yes they can and do form partnerships but they also put their own money – not their businesses money, their own personal money into what they are creating. They want it so much, they’re happy to do it. Not to make more (although they usually do) but because they just have to see what happens next and be part of the experience. They are willing to back themselves.
That means that you don’t get excited and go on holiday the first time you bring in a profit. Pay yourself, put some aside and invest the rest in moving forward with your business.
Do you need to have thousands, no, you can work with what you have. Ask yourself, what is the most important thing I need in my business right now and do that. Not what will look good, not what other people have. What do you need right now to take the next step?
It’s Not What You Spend, It’s Where You Spend It
Much more important than how much you spend is how you spend it. Spend your money wisely. No matter how much you have if you buy the wrong ads or rent a large office space you are throwing your money down the toilet.
If you don’t have much to get started there are plenty of ways to do that.
Be really careful about the advertising you buy. It needs to suit your avatar exactly and be targeted and focused. Test what you do in small batches and investigate what works, get feedback from your current clients before you lay down any big money.
Start from home. There is no need to rent office space or lease a shop. Get momentum before you move into a space and only do it when you simply have to. If you are concerned about your home address being used, get a PO Box.
Don’t waste money or too much time on a big business plan, your product and services will move rapidly as you learn and grow and the market changes. A detailed multi-chapter business plan is not an important part of getting started. Play with your product and figure out what it is and how it works before you get too attached to a paper version.
One to two pages that explain who you are, your vision and how you will reach it is all you need (in fact, all an investor needs as well, they don’t have time to wade through a novel that tells them how robust your services are). If it’s longer than this blog, you’ve gone too far.
Where Do You Invest?
Getting the product right
You need to be sure you can deliver what you promise. If that’s quality, you need to have great components. If that’s service, you need to have all aspects covered for a great experience. If that’s ingenuity, you need to spend time and money stretching what you have to its absolute limits.
What that is, is up to you and your business vision. If you are looking at launching something you know nothing about, you will need to hire a trusted person in the field to either show you how or do it for you.
If you don’t have enough hours in a day you need to hire someone, a VA or some base staff (as few as you can manage) to allow you to keep up with your product or service.
Hiring an expert might mean having a business coach or business mentor to keep your focus clear and your eyes on the goal. Making all your own decisions as a start-up can be costly, there is so much to discover, so many traps and things can get emotional. It’s good to have someone who can watch your back and help you avoid making mistakes that take not only time, but money to repair.
The problem isn’t really about spending money, it’s spending money wisely and being about to back it up with a product or service that works.
If you would like help learning to launch and market your business on a shoestring budget, join us for our next free Disruption Tour!