5 Ways to Start Your Business Cheap

Erik Karey Jul 16th, 2007 13 Comments

When starting a business, there are too many entrepreneurs who spend too much time and way too much money on things better left until the business is established. These unnecessary costs can eat into a business’s initial profits and make sustainability an issue. I discussed how much money you need to start a business before and feel that you can there are a number of areas where costs can be cut or even eliminated.

1. Software – You don’t need it! In many cases there are free open-source alternatives to paying for costly software. Need Photoshop? Have you tried Gimp? Need Microsoft Office? Have you tried OpenOffice? Need invoicing software? Have you tried Blinksale? Instead of paying for name brand software, consider the free alternatives.

2. Office Space – Most online businesses won’t need an office per se and by not buying/renting office space you are saving a bundle. Even if you business isn’t internet based, consider working from a home office, until your business gets our of its infancy. Office space tends to be expensive, plus a home office is tax deductible.

3. Staff – Hiring people to work for you right off the bat isn’t the way to go. Instead consider outsourcing your work and having people work for you on an hourly basis. Outsourcing through sites like Rent-A-Coder and E-Lance can save you tons and produce the same quality work. If all else fails consider taking on a partner to share the workload.

4. Don’t Quit Your Day Job – If at all possible, keep your current job and operate your business before and after work. By keeping your job, you are able to keep your steady income while you grow your business. And should your business fail, you won’t find yourself dead in the water.

5. Advertising - Keep your advertising budget low! Overdoing your ad campaign initially can break your budget, especially when there are alternatives to high priced advertising. Consider press releases. Many online companies will write and release press releases for a modest cost which can generate a good amount of buzz. Also consider doing a lot of the legwork yourself. Be proactive; get out and spread the word yourself; network and create buzz.

By reducing startup costs through these five means, your startup business can grow (and turn a profit) quicker than you ever expected. Eliminate ill-advised costs and work hard; that’s the best path to your business’s success.

Good Luck!

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13 Comments

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1

Barrera July 16, 2007

I started a business with two partners. We each invested $500 and each of us live in different parts of the country. We worked on our business/website for a 2-3 months in our spare time, and we recouped our investment the first day we opened our ‘virtual door’.

We were able to do all of this by using nothing more than everything that you mention above. People read a post like this and think - yeah, yeah - sounds easy enough, but we took the time to act on the suggestions and proved that it works!
2

Verne July 16, 2007

When I started my business about 4 years ago I invested about $100 in starting capital to buy a domain and hosting package. No staff (only passionate partners) and no office! Only in the last year or so have we started investing in areas like outsourcing, yet we still enjoy the flexibility of a virtual office and a $0 advertising budget (word of mouth goes a long way for us).

Starting a business these days is definitely cheaper than most people would think. What I’d like to know is how [much more/less] successful are those businesses that did opt to spend on say, staff, office space, and advertising right off the bat?
3

Erik Karey July 16, 2007

Exactly Mark, people don’t actually think it’s possible to work on such a small budget, but it is! A story like you have helps too.

Verne, I totally agree. I think a lot of people are discouraged from starting their own businesses because they think it will cost too much and it’s too big of a risk, but it doesn’t have to be.
4

shaun July 16, 2007

Haha that’s funny, I will be launching my new e-commerce site and all of the points you listed I have already thought about the cheapest way around them and you just put all of my ideas in to words! Very good article thanks.
5

Sanjay Kumar July 17, 2007

Absolutely agree — you can get started with almost nothing these days.

On the software front, SimplifyThis.com, is a great way to go for free/cheap online invoicing — it’s an intuitive, web-based app that lets you easily invoice your clients by email and get paid faster online.
6

Erik Karey July 17, 2007

Shaun - thanks for the comment. Good luck with your new site too. Do you have any information on it yet?

Sanjay - That does look like a very nice online invoicing script. Do you have any experience with it?
7 Posts of interest July 18th » Shaun Low July 18, 2007

[...] Karey lets us know how to start a business the right way…the cheap [...]
8

Web Presence July 20, 2007

Nice to read all the success stories on the comments

I wish I’d learn how to minimize my cost for maximum profits.
9

John July 21, 2007

I’d just add one more point, before spending any money ask yourself if you REALLY need the product or service. Then sleep on it and ask yourself again in the morning, it’s far to easy to spend money of uncessary things at the start of a business.
10

Paypal2u Bloggers July 21, 2007

April 2000, I started my virtual hosting services by investing $1000. After a small struggle, I managed to earn basically more than $2000 monthly just from the virtual hosting business.

With no office space and employee, this earning is quite big for me. Now, I’ve started promoting my own low cost domain registration services and the income flows is coming all the wsy, and still with no office space and employee.
11

Bryan @ One Man's Goal July 30, 2007

Great tips!

Another thing to consider if you can’t keep your full time job is picking up something part time. It gives you a small bit of income while you get up and running, and affords you the time to work on the new endeavor.
12

Erik Karey August 10, 2007

That’s true Brian. Even part-time income can keep you afloat while your business gets off the ground.
13

Mike June 25, 2008

Good tips. Reads like the history of the way I set up my first business. Using the internet to find free services and advertising via your own website can keep your initial costs low if you are prepared to put in the hours to do your research. The only difficulty from my point of view is balancing the day job and your new statup. In the end time costs - you either buy someone else’s time or you spend your own …