Many people dream of becoming business owners. Perhaps they have a great idea or are exceptionally skilled at something that brings value to others. Whatever the impetus for starting a business, however, an initial lack of funds can be the nail that deflates the tire of the whole enterprise.
Serial entrepreneur Donnie P. has over 20 years of experience in starting businesses and mentoring those who dream of entrepreneurship. His book, “How to Catch a Mouse with No Cheese,” addresses the conundrum of starting a business while strapped for cash, and his primary focus is helping uplift others, regardless of their economic status.
Donnie is intimately familiar with the process of working through challenges to reach success and encourages aspiring founders to demonstrate grit.
“Always stay disciplined, and keep the faith, even though your days will be challenging,” he advises.
Still, the process of launching a business with little to no money can be as daunting as it is exciting. Donnie offers some actionable items for capital-starved entrepreneurs:
1. Identify Your Target Market
According to Donnie, the first step when beginning any new venture is identifying who your client or customer is. After all, you cannot possibly know where to focus your efforts unless you know who the effort is meant to attract. Research your target audience, including demographic criteria like age, marital status, gender, income level, education, religion, and race, among others.
“The more research you do, the better off you’ll be,” Donnie says.
So, where to start? If your business is already up and running, analyze your current customer base. Who are the majority of your customers? What are their predominant demographic characteristics? This will help you understand your existing strengths to build upon them.
Next, Donnie suggests doing a competitive analysis, in which you analyze your competitors to improve your own profitability. Who are their base customers? What sets you apart from them? Is there a way to leverage or update your product to entice your rival’s customers to your business?
When you understand your market, you can better develop strategic marketing plans, revise your public-facing content, and improve your product or service. In addition, your revenue will increase once you start reaching out to customers who would benefit from your business.
2. Make a List of Non-Monetary Assets
Non-monetary assets include your skills, talents, credentials, and expertise and those of your team members. These assets are essential to establishing a business’s credibility and prospects for longevity when you’re strapped for cash. In addition, family, friends, and community leaders are often your first stop on the marketing journey.
When Donnie started his first business, he raided his dad’s former business space for basic supplies like printers, pens, and chairs. That helped keep his starting costs low. Then, he leaned on his friend who was good with technology, to help him set up his online accounting books. He also went out into the community to speak at local events to meet folks and better understand how he could reach potential clients.
3. Gain an Understanding of Business Structures
Many new business owners wonder how they should structure their company. Should one be a sole proprietor or an LLC? What about S-Corps or C-Corps? What benefits or caveats does each of these different structures offer? Having a clear understanding of the different business structures available allows you to anticipate financial obligations, such as taxes and scale your business properly.
For example, a sole proprietorship often works well for those who will run a business alone. But, perhaps the greatest advantage of this business structure is that it allows you to try out an idea without much risk.
Another option is forming a partnership.
“The great part about a partnership structure is that it reduces your financial risk. You’ve got someone or multiple people to help out,” says Donnie. “In addition, filing taxes is simple and requires very little paperwork.”
Other business structures offer liability protection, capital starting funds, and extensive tax exemptions. Researching which choice would work best for your situation can help you be successful when you have limited funds.
4. Seek Out Free Publicity
The good news for business owners who are low on funds is that there are free ways to promote your venture. Creating social media accounts, attending business networking events, and collaborating with like-minded brands are just a few of the ways you can spread the word.
Another targeted and effective way to spread the word about your business and build credibility in your field is to contribute guest articles or op-eds to publications. Research outlets that cover your industry and ask if they would be interested in a guest article or op-ed on a specific topic. When writing these pieces, remember to stay audience-centered and offer value to the reader. It’s important to understand these articles are not a chance to advertise. Rather, they are an opportunity to showcase your expertise. This builds your credibility and can help drive new customers to your website or social media accounts organically.
“It takes a lot of time and effort to research, write, and pitch guest editorials, but the payoff can be huge. It’s all about building credibility and getting your name in front of potential customers,” says Donnie.
5. Keep Clients First
To the entrepreneurs he mentors, Donnie stresses that the client is king. Businesses cannot get off the ground — much less survive — without clients and paying customers. Treating customers and clients like gold can lead to business growth even if you’re beginning a business with minimal finances.
If someone leaves a bad review or has a problem with your product, he advises addressing the issue head-on. Accept feedback and provide ways to make the customer happy. Perhaps sending them a new product or offering a different one would show that you stand behind your business and believe customers have a right to expect the best from you.
“Customers notice when you try to make things right. It’s not always cost-effective in the short term, but going above and beyond can set you apart from the competition,” says Donnie. “That makes a difference in the long run.”
Donnie makes no claims that beginning a business with little to no capital is easy. But he wants aspiring entrepreneurs to know that, with ingenuity and faith, it can be done successfully.
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