There’s no sugarcoating it: starting your own business is risky. One study found that about 20% of small businesses fail in their first year. And while there are plenty of articles out there on how to start a business, there aren’t many that focus on how not to go broke doing it.
Here are 15 tips to help you avoid financial ruin as you start your own business:
1. Make sure you have enough money saved up.
Starting a business takes money. You’ll need enough to cover your personal expenses for at least six months, as well as any business-related costs like licenses, permits, and taxes. It’s also a good idea to have a cushion in case of unexpected expenses.
2. Have a detailed business plan.
Creating a business plan forces you to think through every aspect of your business, from your target market to your marketing strategy to your financial projections. This process can help you identify potential problems and find solutions before they become too costly.
3. Research the competition.
Knowing who your competitors are and what they’re offering is essential for any business, but it’s especially important when you’re starting out. This information can help you determine your pricing, find your niche, and craft a marketing strategy that will set you apart from the rest.
4. Consider hiring a professional accountant or bookkeeper.
Unless you have experience with bookkeeping or accounting, it might be worth hiring someone who does. This will ensure that your financial records are accurate and up-to-date, which can save you a lot of money and headaches down the road.
5. Get insured.
Insurance is a must for any business, but it’s especially important if you’re starting one from scratch. Make sure you’re covered for things like property damage, liability, and product liability. This will protect you in the event of an accident or lawsuit.
6. Be mindful of your spending.
When you’re first starting out, it’s easy to get caught up in the excitement of building your business and spend money carelessly. But every penny counts when you’re on a tight budget, so be mindful of your spending and only purchase what you absolutely need.
7. Negotiate with suppliers and vendors.
Don’t be afraid to negotiate with suppliers and vendors for better prices. This is especially important when you’re first starting out and your budget is tight.
8. Make use of free or low-cost marketing strategies.
There are plenty of marketing strategies you can use without breaking the bank. Social media, word-of-mouth marketing, and blogging are all great (and affordable) ways to spread the word about your business.
9. Keep your overhead low.
One of the best ways to save money when you’re starting a business is to keep your overhead low. That means avoiding unnecessary expenses like fancy office space or expensive equipment that you don’t really need.
10. Don’t be afraid to ask for help.
There’s no shame in admitting that you need help, especially when you’re starting a business. Ask family and friends for help with things like child care, marketing, or even just moral support.
11. Consider working from home.
Working from home can save you a lot of money on things like rent, utilities, and commuting costs. And with today’s technology, it’s easier than ever to run a business from home.
12. Get creative with financing.
If you don’t have the cash on hand to start your business, there are other options available. You could take out a loan, use credit cards, or even crowd fund your venture.
13. Make a budget and stick to it.
One of the most important things you can do when starting a business is to create a budget and stick to it. This will help you keep track of your expenses and avoid overspending.
14. Start small and grow as needed.
You don’t need to have everything figured out from the start. Start with a small, manageable business and then grow as needed. This will help you keep costs down and avoid becoming overwhelmed.
15. Be prepared for bumps in the road.
Starting a business is not without its challenges, so be prepared for bumps in the road. Things will go wrong, but how you handle them will make all the difference.
Starting a business is a huge undertaking, but it doesn’t have to be an expensive one. By being mindful of your spending, negotiating with suppliers, and getting creative with financing, you can keep your costs down and give your business the best chance at success.