Job Creation and Small Businesses Blog

In spite of what we discussed in a recent blog, i.e. many new small businesses fail because they were undercapitalized from the start, starting a small business does not necessarily require a lot of money for the start-up phase. The undercapitalization happens when the initial plan is bigger than the available budget and the entrepreneur didn’t have a clue because of a lack of planning and budgeting. Overenthusiastic entrepreneurs just throw themselves in the project and spend all they have before they start thinking about what they want to do.

It is possible to start with very little money, if your plan takes it into account. While there will always be small expenses, it is possible to start gradually and set something up in a way that does not require a big initial investment. The key is to do the exercise on paper first. Starting a business on paper does not require any money. You can make as many adjustments as you want until you get the ideal scenario for you, i.e. find a way to start your business with what you have on hand and keep going until you start making money. This is done with an operating budget. Preparing the operating budget is described in detail in the book Whiz Biz in Changing Times.

Starting on a low budget is particularly feasible in two ways:

1)    Offering your services to existing businesses
2)    Setting up a virtual business using the Internet

1. Service Business: There should be an increase in the demand for services from existing businesses. As many larger businesses have to downsize and cut jobs, some of their needs do not completely disappear. When the need for certain services decreases, it may not justify a full time job and when that job is abolished, enterprises may turn to freelance services. This has been done for many years. There are several advantages for employers: first, they don’t have to pay someone full time but only for the hours worked or the services rendered. Second, they don’t have to pay benefits to freelancers. Third, very often freelance services are paid out of different budgets than salaries are. This may be an advantage for managers. If you can package your knowledge into a range of interesting services and visit businesses that may have a need for your services, you could be starting on a shoestring. Remember that networking can be of great help to find new clients. You can find more information about networking in the book Whiz Biz in Changing Times.

2. The Internet offers many business possibilities on several levels:
• You can offer your services online. For instance, you can do translation, programming, illustration, counseling consultations (with webcams and audio), etc. If you already own a computer and have access to the Internet, you can start making money now. Even if you don’t have Internet access, you can visit the local coffee shop and plug into their wireless network.
• Writing and publishing: the possibilities are endless! Web sites, Blogs, participating to surveys, evaluating products, writing books and self-publishing are but a few of the options.
• Reselling other company’s products. One good example is Amazon.com. When people click on a link on your Web site and buy a book or other merchandise, you get a commission (provided that you have registered with the company, of course). Same thing with Web hosting services.

One important thing: beware of scams. There is currently an unprecedented number of them online and they seem to be multiplying every day. Read more about this here.

It is a fact that expanding your business may take some money later on, in order to have the necessary resources to expand. For instance, you may need additional equipment or stocks. However, you should be able to see it in advance on your operating budget, if you include some business growth in your scenario. You should also be able to determine exactly how much money you will need and when, according to how fast you want to expand, and you can adjust your expansion plans accordingly. Again, all this is explained in detail in the Whiz Biz in Changing Times book.

This BLOG is originally published by Danielle Vallée at http://blog.whizventures.com

Job Creation and Small Business Blog by Danielle Vallee is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at blog.whizventures.com