We know it’s possible because Insanitek is proof. Grace, our CEO and founder, wrote a wonderful post on what she’s gone through to get this far. However, she’s not the only one making that leap of faith with no money. Forbes shows that it’s also a trend that’s on the upswing with a demonstration of 20 businesses you could start with a mere $5000 – 15,000 if you don’t already have the tools of the trade. The thing is, as an innovator and inventor, you might not want to try any of those ideas. So, how do you make your dream of taking your ideas from your mind to the market on a minuscule budget?
Start with a list
List everything that you need to make your dreams come true. Write down literally every little thing you can think of for both the short-term and the long-term. It helps to have a long-term vision on top of a short-term one so you can eliminate unnecessary expenses or mark the ones that you can put off. For example, let’s say you want to build and sell robotic pet feeders. On one end of the spectrum you can only think about the materials that you’ll need to make them work. On the other end of the spectrum you’re thinking about counting the cash brought in after you sell 100,000 items. But, put them together in your scenario and make a list of the things you’ll need to get from the struggle to the dream.
Now, you probably have something that’s far more realistic of what a business is run with. You’ve got supplies, materials, labour costs, health care insurance, overhead, taxes, lawyer fees, accountant fees, merchandising, advertising, etc. The longer and more detailed you can make it, the better off you’ll be when you start the next step of elimination.
Eliminate the unnecessary
When you look at that list and think about where you’re at now, cross off things that are just unnecessary. You probably won’t need a logistics service and your own fleet of semis just yet. However, you’ll need materials and marketing materials along with your overhead, insurance, and tax fees. Highlight these items and arrange them in order of most important to least important. Now, you’ve got an idea of where you’re going right now.
The top of your list is probably materials. After all, if you can’t make the robots, you’re not going to need to market anything, and you won’t have any income to pay taxes on. So, break down the topic even smaller. What do you need in materials? Write a list and put a cost down next to them. Then, try to find two or three different suppliers so you can take advantage of sales and have a backup plan if one supplier runs out. Now, the move to the next item and do the same thing until you’ve covered your essential list. After you’re done with that, you’re ready to move on to the next step of thinking financially.
Gather your seed money
Seed money is what you use to start your business with. This can be a savings account, the loose change in your couch, and borrowed money. Jon Oringer gave some great advice on reasons to avoid venture capitalists for as long as possible. His logic is sound and true; you really learn more, faster about owning and operating your own company, and the payouts further down the road are worth it. After all, it’s your brain child, you should be able to keep as much of it as you can further on down the road when you’re counting the cash.
Once you’ve gathered your seed money and taken stock of what you have against what you need, you’ll need to make some important decisions. Evaluate the realistic uses of this money in the best ways possible. You can cut corners by using free, open source software like we do here at Insanitek, doing everything yourself like Oringer (and Grace) did, and finding other unconventional ways to shave off a few dollars here and there. Remember, every cent counts, and you will be counting them. But, you can also balance them against the revenue you’ll be making, too.
Note sources of revenue
Money coming in is money that’s not going out. What can you do during the startup process that brings in revenue while building your company’s reputation? Grace, for example, does a lot of freelance writing for various people under Insanitek’s name. She then turns that money into Insanitek’s revenue and uses it to find more clients to work with. We also work with independent (freelance) artists that use our shop to sell items in our store. We might only ask for 5%, but we turn that around into more advertising for the company and store as well. Every penny that comes in goes back into the business. Be creative with how you can generate revenue, but also try to build a reputation at the same time. For example, you can tutor high school students and the robotics teams. This not only helps you bring in some revenue, but it also helps you build your reputation as an expert in robotics and network with potential employees and business partners as your company grows.
Really, all starting your company on a shoestring budget is being mindful of how your decisions impact your overall health of the business. There is far less leeway if you make a mistake, but it’s not the end of the world if you do. It’ll be a setback, but you can come back from it both wiser and tougher. Instead of thinking of starting a company on a tight budget as a downer, think of it as a way to modify your business plan in real-time. You’ll be happy you did.
Want a resource to start? A great resource I found at the library and took a look at was The Pocket Small Business Owner’s Guide to Starting Your Own Business on a Shoestring. It’s got a lot of information packed between its covers, so hopefully you’ll get a lot of inspiration from it.