Starting a new business can be challenging. Navigating the maze of rules, regulations and licensing requirements and the constant lack of resources constitute some of the reasons why more Americans don’t follow their entrepreneurial dreams.
Small business drives our economy, though, so finding ways to promote new business development is vital. Fortunately, there are creative ways to start a new venture without breaking the bank.
For starters, consider buying an undervalued existing business. During economic downturns, many owners are forced to sell their ventures for various reasons. This creates opportunities for individuals with available capital to purchase existing companies under more reasonable terms. An established venture is ready for business they day you buy it, and assets and equipment could be part of the sales price. You also buy an established client base. Customers are familiar with your brand. Lenders are more willing to provide financing to an existing business. Moreover, you could inherit a trained and experienced staff.
Exchange salary for an equity position in business. Most existing businesses are hungry to hire experienced, driven and innovative employees. Cash-strapped businesses that are growing but need new talent could be willing to exchange an equity or stock position in the company in lieu of a traditional salary and benefits. This new equity position could eventually provide an employee with an ownership opportunity. Consider working part-time at a startup while maintaining your regular job to learn the business and make an offer to purchase the firm at a future date.
Virtual office and shared creative work spaces are the wave of the future. There are many creative alternatives to traditional office or retail spaces. The Internet is the location where most new small firms market and sell their products and services. Working from home and using shared office services is another way to create a virtual office space. Virtual offices could significantly reduce the cost of your startup. A new trend is the development of large creative work spaces where tenants share open spaces, small private offices and even lunch areas.
Use creative means to secure capital. An undercapitalized business could be a losing proposition. This is especially true when the economy is faltering or slowing. Obtain capital by bolstering your personal savings in advance of starting your business. Friends and family financing in exchange for stock or an equity position in your company offers another option. If you’re averse to taking on new debt, try starting your business slowly by using internally generated cash flow for expenses and growth. The less debt you incur today, the better position your business will be in when you do apply for a business loan.
Leverage outside counseling before starting your new business. Now’s the time to make an appointment with an SBA resource partner — including SCORE, Small Business Development Centers and Women’s Business Centers. The counselors at these organizations can help you develop a well-defined and comprehensive business plan, realistic financial statements and extensive marketing strategy. Studies have shown entrepreneurs who put a minimum of one year of planning into their new ventures have a better chance of succeeding over the long term.
Owning and running your own business can be more satisfying and fulfilling than working for someone else. Creating innovative strategies for starting a new business can make the difference between success and failure. For more information on SBA programs and services, visit www.sba.gov or call your local SBA district office.