Taking on a new business venture is risky-about as risky as swimming with sharks. One wrong move could turn you into shark bait, or worse, bankrupt. Seeking investors, or bigger sharks, might be your top priority for your start-up. However, according to the American Economic Review, companies backed by venture capital firms are more likely to fail. So how do you use your small start-up budget wisely? Well… just keep swimming to find out –
As an entrepreneur it’s easy to let your passion get in the way of fine-tuning all business aspects. Too much confidence is also bad for business, when your confidence is bigger than your business plan. Take for example, the famous TV show Shark Tank, where you can see entrepreneurs sink on stage from aggressive questions and huge egos. Having an honest outlook and being in the business for the right reasons are key to making it as an entrepreneur.
Knowing your numbers will determine if your business venture will stay afloat. Along with your business plan a good advisor or accountant can help you reel in some financial savings. A helpful free tool when working on your new start-up is to contact SCORE. They will set you up with a business mentor who will provide free answers to your business questions.
One of the bigger aspects of working on a small budget is spending the right amount on market research and marketing. Market research can save a significant amount of money. Investing in a marketing agency to conduct your market research is a great idea to save time. Otherwise, take your time to conduct your own market research and marketing plan. You might think you have a great idea, but after conducting market research you could find ways to specialize your new service or product to better fit your market needs. This could be from a number of different sources and conducted through surveys, focus groups, and statistics. Start-Ups that fail tend to bypass this idea in their initial budgeting. A helpful easy tool when conducting your marketing research is to utilize online sources like the U.S Census Bureau.
According to the Small Business Administration, who also partners with SCORE, first year marketing should be 20% of sales. Following the first year, you should pay 7-8% of revenue to marketing. This helps generate new customer leads and should be a general, measurable, and flexible rule when establishing your marketing plan and budget.
Part of a marketing budget should also go towards Google Ads, content marketing, and social media advertising. This will help generate new customer leads for your start-up. When working with a small budget you can start small with ad tests and see what works for your business. A company website is a strong factor when dealing with your new brand identity. Your customer or client will see this first, and it should be user friendly. Good web design will help turn your online visitors into leads. Take a look at previous design we did for a new company launch here.
…So are you ready to take the plunge and dive into the entrepreneurial seas? At CDI we LOVE hearing unique start-up stories! We have our scuba gear and are ready to dive in deep with your entrepreneurial ventures!