How to Run a Business on a Small Budget
When you start a business, budget constraints are a daily topic, unless you received funding immediately or if you have piled up substantial amounts of capital before you started out. Even then, the reality in small and young companies is that you have to think twice about every penny. But also in more established companies, it is always good to know some tricks on how to save money.
I started my business with my own capital. I transitioned from the corporate world to becoming a founder. Even though I was used to be smart about money, the budgets in a multinational company and a start-up are vastly different. I soon learned that my challenge was to build a brand which can compete with the big players – on a start-up budget. So here is what I did:
Assess which Tasks Are Really Worth Your Budget
As a perfectionist I wanted to do everything right. I aimed for the most beautiful and professional outcome. However, I realized that with the budget constraints, I was forced to prioritize. I learned how to assess which tasks are really the important ones for the customers and which ones can be done later or in a different (cheaper) way.
For example, when it comes to packaging – do you really need the most beautiful and expensive box or can you find a compromise? Do you really need a professional photoshoot or can you shoot some pictures yourself?
Take Over a Lot of the Tasks Yourself
As a business owner, we wear many different hats. I knew that before I started out. However, it became more and more clear with every day I have been running my business. It is natural that we are only good at certain things and that we rely on the help of other people. I outsource tasks that I absolutely cannot do myself. Other tasks, I taught myself (see below). There is no task for which I consider myself too senior, good, experienced. If you do not have the capital, you have to invest your own time and effort.
One of my favourite examples was when we carried out a marketing campaign in Shanghai. We booked some girls for promoting the app on a major shopping street. However, on the day, only half of the girls showed up. As I could not shift the date, I had to participate myself. And this is how I ended up wearing a princess costume on a summer day in 37-degree-heat in Shanghai, trying to convince passer-bys to download our app. (You can read the story here.)
I also apply this mindset to recruiting: When I interview people I give them a fictional case similar to that Shanghai experience and see what their answer is. I want to hear that they would do it themselves, then I know they are right for the team.
Teach Yourself
Youtube and Google have become my best friends. Before I started as an entrepreneur I had zero knowledge about how to use tools like Photoshop or Premiere (these are graphic design and video editing programmes). My brother gave me a basic introduction into these two programmes. From then on, I kept teaching myself with tutorials.
You can find anything you need online. There is a tutorial for pretty much everything. Today, I can stage, shoot and edit my own pictures, use various graphic design programmes, edit and shoot videos. I even learned how to build websites. I would have never thought that I would be able to do that. I always compare it to learning a language – if you are in a foreign country where you can only communicate in the local language, you will do anything to progress fast. Running a business is very similar. There is no time to waste, if you cannot do it your business may fail and you will be forced to learn really fast.
Work with People you Know and with Small/Young Companies
After working for a multinational company, I was used to working with established companies and agencies. In the beginning, I had some meetings with similar organisations. However, I soon learned to appreciate working with people who run smaller companies. I realized that they understand my needs better. They know what the struggle is like. And most of the time, I just found them to be more creative, flexible and deliver better work. Furthermore, it is a win-win situation, because both of our organisations support each other. I rather support somebody who hustles and tries to build something up than a big established machine. Most of the time, we also agreed on a more favourable pricing structure as well.
Talk about Your Projects
Spreading the word may sometimes be uncomfortable, but it can definitely benefit you. Let people know which hurdles you are currently trying to overcome. Are you looking for support? Maybe somebody in your family or circle of friends can help? Or they know someone how can.
Ask for Help
If you do not ask for it, you will not get it. I am fortunate to have family members and friends who are a very big support. From Photoshop-support to shooting products to driving around models for our shoots or being the “security” at the shooting location – they always have my back. But people need to know that you need help to be able to support you. As mentioned above, spread the word and actively ask for help.
I am not saying that you should make people work for free for you. Favours are nice but there is a limit to a favour. Sit down with those who want to help you out and explain your needs to them and your budget. I am sure you can find a compromise and they will give you a good price.
Have Trusted Advisors and Check Multiple Sources
As I mentioned above, we cannot know everything. Therefore, when I outsource certain tasks which are not within my sphere of expertise, I talk to trusted advisors. I always check if the contract is fair and corresponds to industry standards and if the price is adequate. Even if you work with a big budget, I always recommend to get two or three alternative offers to compare prices and scope.
Be Creative
Creativity can be a big money saver. When it comes to Marketing, for example, there can be really effective ways to get your word out. Even if you cannot afford TV-commercials or billboards, maybe you can team up with aspiring bloggers or with a local initiative or a good cause to spread your word. Try to think out of the box, it can save you a lot of money.
Share a Vision and Motivate Others
Probably one of the most difficult hurdles to overcome is hiring on a small budget. I learned that one of the most important factors to motivate (potential) employees is a strong vision and development opportunities. The pay may not be as high as in an established company but you can offer a steeper learning curve and a faster career track. Most importantly, you need to be able to make people believe in the success of the business as much as you do. I will write a separate article about Recruiting and Human Resources on a small budget, stay tuned!
Was this article useful? Do you have any further tips to share? Let me know, I am curious and want to hear about it!