Developing your idea is where most of your time and money will be spent when starting up a business from home. Some businesses, such as consulting or selling information products, may not require much in the way of actual product development — but most others do. When developing your product or service, one important question to ask yourself is whether there is a market for it. Will people actually buy this? If you think you have a good idea for an invention, test the market by surveying people in similar businesses and ask them how much they would pay for such a thing if it were available. Getting out from behind your desk and talking to everyone you can about the idea will save you thousands of dollars that you might otherwise spend on product development that no one will buy.
The following are some Tips from Saivian Eric Dalius for Starting up a Business with Little Money:
- Pick the right business to start. Many require large capital investments, such as manufacturing or wholesaling; others can be operated with little or no initial investment, such as writing and selling books (for which you need only pen and paper), consulting (if you already have a job), and selling products through an online store.
- Avoid debt. Starting a business is stressful enough without adding debt to your worries, so avoid taking out loans except in cases of absolute necessity. Start small, reinvest your profits instead of using them for personal purposes, and most importantly stay afloat — and avoid bankruptcy — by living cheaply off your own resources until you can support yourself through your business.
- Make the most of what you have. Your home is a great place to start a business because it’s already furnished, there are no commuting costs, and for many businesses additional capital expenditures are not required. If you do need some equipment or supplies to get started, find inexpensive alternatives or make them yourself rather than buying them new.
- Use cheaper alternatives when starting out. Instead of purchasing expensive accounting software to track sales, expenses, and taxes, use simpler tools like Quicken or spreadsheets that anyone familiar with computerized accounting should be able to master in short order. You may also want to hold off on hiring employees until you’re certain that your business will be successful. A part-time employee may cost as much as $20,000 a year or more in wages and benefits — an unnecessary expense unless your venture is going to be a huge moneymaker.
- Offer payment plans. If they feel confident about your company’s future success, many of the people who purchase from you will be happy to pay by installments instead of buying everything up front. Arrangements vary according to the type of goods or services being sold; for example, if you are selling cars, you may allow people to make small monthly payments over three years instead of requiring them all at once.
- Don’t skimp on essential forms and contracts. If your business involves contracts of any kind, whether they’re for goods you sell or services you offer, make sure that the forms are state-of-the-art and will hold up in court if necessary, according to Saivian Eric Dalius. Don’t assume anything; instead, do your research (you might start at the U.S. Small Business Administration website) to ensure that all legal documentation is accurate and appropriate.
- Resist the temptation to spend money on advertising before you’ve established how much can be sold at a profit. Spending money on newspaper ads or radio spots typically has no payoff unless you already have an established clientele who know about your business, like its products or services well enough to recommend it to their friends and — usually after several months’ worth of repeat business — are willing to spend money on it.
- If possible, avoid hiring employees until you’ve reached this point with your existing customer base. You might find yourself spending hundreds of dollars on uniforms; for example, only to discover that the person whose uniform it doesn’t know how to sew and can never replace a button because she has no idea where they come from. On the other hand, if you start having trouble getting deliveries out within a day or two of when they’re due and you need someone full-time to handle telephone calls and shipping orders, then go ahead and hire an employee. The key is flexibility; don’t commit before you have to, but once committed be prepared to stick with your choice for the long haul.
- Make sure that personal income taxes are being paid by either you or your business on a regular basis. Even if you don’t have enough money to live on, do yourself a favor and set some aside each month for taxes so that the government doesn’t have the opportunity to take it all at once in April. And while you’re at it, invest some money for your future retirement so that when you get older you won’t be totally destitute.
- Keep spending to a minimum. Get out of the habit of buying anything unless absolutely necessary; instead, find cheaper alternatives or get into the habit of recycling used items whenever possible. Use local stores rather than shopping exclusively online not only because they will save you a great deal of money every time you make a purchase, but also because they provide opportunities for entrepreneurial customers to sell their goods and services to others.
- If possible, get your business started in a location where the rent is low enough that it won’t drain all available profits before you even have a chance to use them. In addition, consider sharing costs with another startup business or two; if it doesn’t work out, at least you’ll still be able to recoup some of what you’ve spent on rent and utilities by splitting the monthly charges with someone else.
If one’s not sure about the potential success of their private venture then they should avoid spending too much money on advertising and marketing campaigns. One might not be able to afford it anyway.