Starting a business requires adequate capital. However, many entrepreneurs are finding that capital alone is not a guarantee for success. Some businesses start out with millions in the coffers, yet end up in the dumps. While a few businesses with shoestring budgets eventually grow to become extraordinary successes.
How can this be? Success in entrepreneurship is not necessarily a contest of having the fattest wallets. Rather, it is an exercise of smart financial management, careful strategic planning, and yes, lots of luck. Successful entrepreneurs know how to stretch and maximize every single dollar.
Here are ten ways entrepreneurs on a tight budget can still come out a winner:
1. Set realistic goals. The first step every start-up entrepreneur must do is to determine the right scope and size of your business. Many entrepreneurs simply jump into the idea of starting a business, without understanding what the business really entails – financial requirements, management know-how, and technological skills, human resource requirements. They eventually fall short of what they can really do. Review the business you have in mind and determine if it is within a range that’s both attainable and desirable.
2. Plan your costs properly. A lot of entrepreneurs start a business without the faintest idea of what the costs will be. They either overestimate the cost, or worse, underestimate the financial requirements needed to properly capitalize the business. This is particularly evident in the preparation of financial projections in the business plan. Some entrepreneurs prepare financial projections with numbers that don’t square with other sections of the business plan (e.g. marketing section calls for local television advertising yet budget is only $200). Some do not even include a list of assumptions to explain their numbers. From out of the blue, they feel that their business can grow from 20% in the first year to 40% in the second year, without explaining how the increased growth can be achieved.