You’re excited to start a business. Maybe you have an idea, or you’re just fascinated with the idea of launching and growing your own enterprise. You’re willing to take some risks, like leaving your current job or going without personal revenue for a while. But there’s one logistical hurdle stopping you: You don’t have much money.
On the surface, this seems like a major problem, but a lack of personal capital shouldn’t stop you from pursuing your dreams. In fact, it’s entirely possible to start and grow a business with almost no personal financial investment whatsoever – if you know what you’re doing.
Why a business needs money
First, let’s take a look at why a business needs money in the first place. There’s no uniform “start-up” fee for building a business, so different businesses will have different needs. It’s important to first estimate how much you need before you start finding alternative methods to fund your company.
Consider the following uses:
- Licenses and permits. Depending on your region, you may need special paperwork and registry to operate.
- Supplies. Are you buying raw materials? Do you need computers and/or other devices?
- Equipment. Do you need specialised machinery or software?
- Office space. This is a huge expense, and you can’t neglect things like Internet, utilities costs, janitorial services and whether to outsource back office tasks, like payroll and invoicing.
- Associations, subscriptions, memberships. What publications and affiliations will you subsribe to every month?
- Operating expenses. Dig into the nooks and crannies here, and don’t forget about marketing.
- Legal fees. Are you consulting a lawyer throughout your business-development process?
- Employees, freelancers and contractors. If you can’t do it alone, you’ll need people on your payroll.
With that said, you have two main paths of starting a business with less money: lowering your costs or increasing your available capital from outside sources. You have three options here:
1. Reduce your needs
Your first option is to change your business model to demand fewer needs as listed above. For example, if you were planning on starting a company as a consultant or freelancer, you could reduce your “employee” expenses by being the sole employee at the start. Unless you need office space, you can work from home. You can even do your homework to find cheaper sources of supplies, or cut out entire product lines that are too expensive to produce at the outset.
There are a few expenses that you won’t be able to avoid, however. Licensing and legal fees will set you back even if you cut back on everything else. According to the SBA, many microbusinesses get started on less than $3,000, and home-based franchises can be started for as little as $1,000.
Your second option invokes the idea of a “warmup” 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 company, such as Due, can be a big help when you are struggling to invoice and follow up professionally.
Once you start realising some revenue, you can invest in yourself, and build the business you imagined piece by piece, rather than all at once.
Your third option is all about getting funding from outside sources. I’ve covered the world of start-up funding in a number of different pieces, so I won’t get into much detail, but know there are dozens of potential ways to raise capital – even if you don’t have much yourself. Here are just a few potential sources for you:
- 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.
- Angel investors. Angel investors are wealthy individuals who back business ideas early in their generation. They typically invest in exchange for partial ownership of the company, which is a sacrifice worth considering.
- Venture capitalists. Venture capitalists are like angel investors, but are typically partnerships or organisations and tend to scout businesses that are already in existence.
- Crowdfunding. It’s popular for a reason: with a good idea and enough work, you can attract funding for anything.
- Government grants and loans. The Small Business Administration (and a number of state and local government agencies) exist solely to help small businesses grow. Many offer loans and grants to help you get started.
- Bank loans. You can always open a line of credit with the bank if your credit is in good standing.
With one or more of these three options, you should be able to reduce your personal financial investment to almost nothing. You may have to make some other sacrifices, such as starting small, accommodating partners or taking on debt, but if you believe in your business idea, none of these losses should stand in your way. Capital is a major hurdle to overcome, but make no mistake – it can be overcome.
How To Apply Lean Principles To Your Start-up’s Productivity And Time Management
Focusing on one thing at a time is a very good start.
If you’ve recently launched a start-up, I’m sure that you’ve heard a lot about being “lean.” But I’m not here to discuss the methodology popularised by the likes of Eric Ries.
The lean principles from a Toyota exec
I’m actually writing about the term and concept of “lean” that was originally developed by Toyota executive Taiichi Ohno during the reconstruction period in Japan following World War II. The process was so successful that more and more organisations around the world began to embrace it. However, it didn’t hit the mainstream until James P. Womack and Daniel T. Jones released their book Lean Thinking, in 1996.
Applying “lean” to productivity in start-ups
Today, lean principles have been applied to almost every industry both large and small scale. For instance, lean principles in the healthcare industry have been able to reduce costs, while improving efficiency. On a smaller scale, employees have used these principles to organise their workspaces.
Here are four ways you can apply lean concepts to your startup to improve both productivity and quality.
1. Improve your workplace using the five principles of lean
According to the Lean Institute, which was established by Womack and Jones in 1997, there are five core principles of lean:
Value: Value means putting yourself in your customer’s shoes and knowing what their needs are. This helps you determine timelines, pricing and expectations instead of constant trial and error. For your team, letting them know how they fit into the bigger picture can keep them motivated.
Value stream: Value stream is where you create a “value stream” of all the steps and processes required in getting the final product or service to your customers. This could include design, production, delivery, HR and customer service. Knowing this information allows you to eliminate any wasteful steps.
Flow: After you’ve removed any unnecessary waste from the value stream, you want to make sure that everything runs smoothly. Flow means not having any interruptions or delays. The flow involves breaking down steps, leveling out workloads, creating cross-functional departments and training your team so they can develop multiple skills.
Pull: When flow improves, so does the time it takes to get your goods or services to customers. As a result, they can “pull” whenever needed so you’re not constantly under- or overproducing inventory, content, etc.
Perfection: Even after successfully completing the first steps, you still need to constantly keep working to improve processes so that you can eliminate waste. Perfection may be an exalted goal in whatever endeavour we are pursuing – but we still must always be moving forward toward being the best and achieving the best.
2. Use the concept of 5S to get yourself organised
5S stands for sort, set in order, shine, standardise and sustain. You can use this concept to organise your workspace so you and your team are more productive by doing the following:
- Remove any items that you no longer need (sort)
- Organise your remaining items so you’re more efficient (straighten)
- Keep your workspace clean and tidy so you can find items and identify problems more quickly (shine)
- Color-code and label files and calendars to make you more consistent (standardise)
- Develop repeatable behaviours and habits that will keep your workplace clean and organised, such as completing one task before moving onto the next (sustain).
You and your team – even if they’re virtual employees working from a home office – can get started by throwing away anything unneeded. Place files into cabinets – colour-code your calendars – and keep items you frequently use nearby.
But these principles aren’t just limited to physical items. Digitally, you can use a project management system to assign tasks, quickly see the progress of projects and share files and comments in one organised dashboard.
3. Standardise your work to become more efficient
In manufacturing, there’s a standard process for everything. The reason? By doing something the same way time and time again you will eliminate waste since you’re not constantly trying out new techniques. Standardising also prevents errors and forgetfulness because there’s a checklist for ever step of the journey. For example, when a car is on the assembly line, it can’t move forward if someone forgot a bolt or installed a faulty steering wheel.
4. Standardise what makes sense
Start by keeping a time log to see when you’re most productive and how you’re spending your time. You may notice that you’re most productive in the mornings. If so, that’s when you should work on your most important task.
If you discover that you’re checking your email and social accounts too often, schedule specific times throughout the day to check them. To prevent wasteful meetings, you can standardise meetings. Make sure these meetings are necessary and include only key people pertinent to the information. Keep all meetings as short and concise as possible.
Get into a good flow to optimise your and your team’s performance
Flow is simply how work can progress through a system. When your system is running smoothly, flow is good. When flow hits a snag, it slows down the process and waste occurs.
Manufacturing facilities make it a point to ensure that the flow is good. Unless it’s an emergency, production lines rarely stop running. Everyone has a specific job to do, and that’s all they’re focused on. That’s not the case at your start-up. You must wear multiple hats, as well as deal with constant interruptions. How many times have you been in “the zone” and gotten distracted by a phone call or have no choice but to go put out a fire?
One way you can improve flow in your start-up is by focusing on one thing at a time. That means no more multitasking. Give your 100 percent focus to what you’re working on at the moment and then move on to your next task. This may take some self-discipline. But you can start by turning off all push notifications, closing your door, block scheduling and setting boundaries.
You can also help your team improve their flow by setting “do not disturb” zones and time frames. Another tip is to schedule a “no meeting” day. This way you and your team can maintain focus without getting interrupted by a meeting.
Finally, you may want to consider outsourcing and delegating certain tasks. Instead of worrying about your inbox all day, hire a virtual assistant to manage your email. If you need to get your books in order, then bring in a bookkeeper. This frees you up to work solely on growing your startup.
This article was originally posted here on Entrepreneur.com.
Which eCommerce Platform Should You Build Your Store On?
This is an important decision to make and with so many options out there it can become a bit overwhelming and confusing to decide which platform is the best option for you. So which platforms are best suited for a South African eCommerce entrepreneur?
Having owned and run websites using XCart, Magento, Shopify and WordPress, I’ve made enough mistakes and learnt enough lessons along the way to be able to help guide you to make the right decision about which platform is right for you…
When looking for options you’ll come across platforms like Prestashop, WordPress, WIX, Shopify, Squarespace, OpenCart, Magento, Shopstar, OneCart, ShopOn, LiquidBox, BigCommerce and endless more. All of which are trying to convince you that their platform is the best for you to use.
Reading international blogger reviews is helpful but they don’t account for how these website platforms perform in South Africa. They don’t review what the support is like in SA and which local software services are compatible. You see, these points are often neglected until you need them further down the line and only then find out how important it is that the platform you’re running your store on is made to work in SA.
Having worked with all the major website platforms I understand the importance of website support and how the site integrates with the local services which will make your life easier and your website better. Services like this include integrations into Rand (ZAR) based payment gateways, integrations into local courier services, API connections into marketplaces like Takealot and Bid Or Buy, and API connections into price comparison sites too.
The final factor to consider is the reputability of the website platform itself. There are many new and upcoming website platforms which I would love to support but when it comes to choosing a platform on which I’ll be building my business I need to know that I am going to be selecting a world-leading service provider.
So with this in mind I can help to narrow down your options to two platforms being WordPress with WooCommerce and Shopify. Which of these two is right for you will depend on how much you value your time.
Shopify will cost you $29 per month but the ease-of-use is such that even a novice can get a site live within a week. Operating WooCommerce on WordPress is complex for beginners and it will take you much longer to figure it all out before you can take your site live but the plus side is that it is free to use.
So ultimately you need to consider which of these two is right for you and your business but the most important thing is that you don’t spend any more time researching, take action and get started sooner rather than later so you can start to grow your online empire.
6 Ways Starting A Business Is Like Raising A Child
Here are six ways that embarking on your own entrepreneurship journey is like raising a child.
While you may think work and parenting are worlds apart, when it comes to starting a business versus having a baby, the two have more in common than you think.
After all, both involve bringing something new into the world, preparing for the unexpected, and riding the storm when things don’t go as planned. Here are six ways that embarking on your own entrepreneurship journey is like raising a child:
1. It involves new expenses
From nappies and school fees to food and clothing, there are a whole lot of new expenses involved when it comes to kids. In the same way, starting a business also involves various costs – whether it’s paying accounting fees, setting up your website, buying stock or employing people. In both instances, having a good financial plan in place can go a long way to help you manage these expenses.
2. It’s an emotional rollercoaster
Parenting invariably means you’ll experience every emotion under the sun, from unmatched joy when they’re born, to frustration at toddler tantrums, to wonder at seeing their little personalities develop. The same goes for a new business: Expect a range of emotions, from the highs of getting your first customer, to the satisfaction of making a profit, to anxiety if the market doesn’t respond to your product as you envisioned.
3. Expect the unexpected
Few things are as unpredictable as babies: One minute they’re gurgling contentedly, the next minute they’re crying for reasons you may or may not know. Just like babies, businesses can be highly unpredictable too. Product prototypes can fail and cause delays, employees get sick, an unforeseen tax bill could arrive on your desk – you’ll need to get comfortable with expecting the unexpected. And, if you run your business full time, you’ll need to bid farewell to your predictable monthly paycheque too (at least in the beginning).
4. It requires stamina
Late night feeds, helping your child with homework, washing, cooking, cleaning, answering all their burning questions – there’s no parenting “off” switch. In the same way, being an entrepreneur means it’s hard to stop thinking about your business at the end of the day as you would with a regular 9 to 5. This constant call for attention means it’s crucial to schedule in some downtime for yourself so that you get time to decompress and refresh.
5. You’ll need safeguards in place
While their immune systems are immature, young children get sick, which typically involves trips to the doctor, medication and possibly even the odd hospital stay. Having a good medical aid means you’ll be financially prepared for these intermittent expenses. And, just as you should ensure your child has the right medical cover, your business and your employees should also be covered properly. Fedhealth is one example of a medical aid that specialises in providing medical cover for SMMEs.
6. Love will get you through
As hard as parenting can be, the enduring love most parents have for their children means they keep caring for them day after day, no matter how exhausting it is. Similarly, if you love the industry your business is in and the work you do, you’ll have the fortitude to keep at it over the long term.
Both parenting and starting a business are hard work, but they’re hugely rewarding too. With both of them, it’s true that what you put in, you get out. Seeing your child grow into a well-adjusted, caring adult can be as satisfying as watching your business mature into a something that’s profitable and self-sustaining. Upon reaching these milestones, most people will agree that the journey to get there is definitely worthwhile.
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