Start-up capital in a crisis: start small

Start-up capital

We continue a series of articles on how to get or save start-up capital in times of crisis .

In a previous article, we talked about how you can save start-up capital by purchasing used equipment .

But there is another “killer” way to save money. This method is very simple — you need to give up everything superfluous and not start grandiose projects right away.

I will give one example from my training on saving start-up capital

The girl Lena decided to open a cosmetics business. To the question: “what do you need to start a business?” — a long list was written. I’ll give it in an abridged version:

– rent a room of at least 30 m2;

— purchase commercial equipment;

— purchase a batch of goods;

— purchase printed products;

— purchase advertising stands.

The list is actually not limited to this list. It makes no sense to bring it all here. Now let’s test this list for feasibility.

To do this, Lena was asked the following questions:

1) Can advertising stands and printing products be requested free of charge from the supplier?

2) Is it possible at the first stage to confine ourselves to trade according to samples, without purchasing large quantities of goods?

3) can we at the first stage limit ourselves to renting a workplace of 5 m2 instead of 30 m2?

To all these questions, Lena, after some reflection, answered: «yes.»
As a result, the amount of initial investment for starting a business was reduced from $200,000 to $20,000.
The moral of this fable is simple: there is no point in spending money on something that you can do without.

How to distinguish those expenses that are really necessary to start from those that are made without much sense?

Firstly, everything that is required for organizing sales is vital for a business: products, printing, commercial offers. Therefore, if there is a dilemma: to invest in office furniture or to expand the range of goods, it is necessary to expand the range of goods. Good furniture in the office is not the most important factor in sales growth.

Secondly, it is better to test the business idea first on a small area, and then gradually expand it. It means that:

— it makes no sense to open three points of sale at once — you can start with one,

— it makes no sense to immediately purchase a huge consignment of goods — first sell a couple of test samples;

— it makes no sense to immediately start providing 100 services — learn how to make money on one or two services.

Having achieved success in a narrow area, this success can be developed and expanded: buy more goods, open new points of sale, expand the range of services provided.
This strategy of achieving success in a small area, and gradually developing it in the future, will save you a lot of money at the start.
Use these rules and save your start-up capital!

I will talk about the most effective way to save money in the next article .