You have two main paths of starting a business with less money:
1. lowering costs or
2. increasing available capital from outside sources.

In order to do this, there are three options to choose from:

1. Reduce your needs
Your first option is to change your business model to demand fewer needs such as reducing operating expenses, office space, extra employees. For example, if you were planning on starting a company as a consultant or freelancer,  reducing your “employee” expenses by being the sole employee is a start. Unless you need office space, you could work from home. Options also include finding cheaper sources of supplies to operate your business, or cut out entire product lines that are too expensive to produce.

There are a few expenses that you won’t be able to avoid (sunk cost), however, Licensing and legal fees will set you back even if you cut back on everything else. Businesses can get started on less than $3,000, and home-based franchises can be started for as little as $1,000 even in this day and age.

2. Bootstrap
The second option invokes the idea of a “trial” period for your business. Instead of going straight into full-fledged business mode, you’ll start with just the basics. You might launch a blog and one niche service, reducing your scope, your audience and your profit, in order to get a head-start. If you can start as a self-employed individual, you’ll avoid some of the biggest initial costs. A payment processing tool like (freshbooks, Paypal) can be a big help when you are struggling to invoice clients and follow up.

Once you start realizing some revenue, you can invest in yourself and the business, and build the business you want in small steps.

3. Outsource
This is about getting funding from outside sources. Here are just a few potential sources in order to do this:

Angel investors. Angel investors are wealthy individuals who back business ideas early in their generation. They typically invest in exchange for partial ownership (equity) of the company, which is a sacrifice worth considering (negotiate the stake and the business benefit that investor will provide the company).

Venture capitalists. Venture capitalists are like angel investors, but are typically partnerships or organizations and tend to scout businesses that are already in existence.

Crowdfunding. Popular in the current entrepreneurial landscape, with a good idea and the efforts are evident in your project/business, you can attract funding for anything.

Government grants and loans.  Anywhere in the world there are a number of state and local government agencies which exist solely to help small businesses grow (such as business.gov.au).  Theses government bodies provide loans and grants to help get you started.

Friends and family. Don’t rule out the possibility of getting help from friends and family, even if you have to piece the capital together from multiple sources.

Bank loans. You can always open a line of credit with the bank if your credit is in good standing (personal through re-mortgaging your home).

With one or more of these three options, you should be able to reduce your personal financial investment to almost nothing. You may need to make some sacrifices, such as starting small, accommodating partners or taking on debt, but the number one goal is to believe in your business idea, the other losses do not matter if you have this in mind.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s