When a startup business owner has never run a business before, one of the biggest challenges is knowing where to use your startup funds for maximum results. The risk is you’ll spend the budget on things that aren’t necessary for business success, often due to friendly service providers you meet who tell you they should be first and their service is the most important to the success of your business… just remember they have a vested interest! So how do you move forward?
1. Create a budget based on the essentials (e.g., product to sell), the legal requirements (e.g., registering your business name) and your marketing plan. Ensure you have enough start-up capital in place. Yes, you can start an internet business for $100 – but in most cases, you’ll need quite a bit more than that to build a sustainable business. Be realistic – triple your startup budget!
2. Identify what is required in order for you to make your first sales. Unless you are primarily an online business, it won’t be a website. Business premises? Visibility and profile? A database? A product prototyped and tested?
3. Focus on the next ‘one thing’ that is going to make the biggest difference to making your first sales. Temporarily forget the ‘nice to have’ ideas and prioritise the purchases that will deliver profit – without profit, you won’t need the ‘nice to haves’!
4. For anything you outsource or purchase, be as specific as possible about what you require and ask for recommendations in your networks. There are plenty of people who spot newbies at 1000 paces and fill your pretty brain with unnecessary complexity in relation to what’s required. Stick to your core goal – to sell something as soon as possible! Fill the basic requirements quickly– you can always upgrade later.
5. For most businesses, there is a natural order of priorities. If you are a retailer, premises and stock are pretty important. If you are an online business, your web presence is critical. If you are a service provider, developing relationships will be a priority. Until you know your product sells, hold onto your money, unless you are convinced you can’t make a sale without it!
If you are unclear about your first steps, talk to other business owners, a mentor or coach. I talk to too many startups that have spent months on business planning and branding, without ever selling anything. Finally it is all ‘perfect’ and they launch, only to find that demand is not what they expected, the audience they were aiming at is uninterested and they’ve invested their budget in the wrong areas, so there’s nothing left in the kitty for marketing or making changes to the business over the longer term. The sooner you can get into your market and test it, ideally with only the business basics in place, the sooner you’ll know if you have a viable business. You can always upgrade as the business grows and if you have managed your investments carefully from the start, you can always change your focus if you need to. Starting a business is a time when less is definitely more, unless you are talking profile that leads to sales!
