If you had a chance to read our last article on how much you need to start a small business you probably know that every single business is different in terms of how much money they need to startup. Your business startup is not any different.
But don’t worry, we are going to show you how to start a small business for less than $5,000.
Before we start, you need to understand a few things…so here they are:
– In order to start a small business, you will need to invest money
– In order to start a small business, you will need to invest time
– In order to start a small business, you will need to know a few things
Now that you acknowledge that you will do the research, invest time and as much money as you can – here are the details you need to be aware of in order to start a small business for less than $5,000.
It is important to know that you can’t just out of nowhere say “I’m starting a small business”, and just hope you become a success over night. There is a lot of planning and patience that goes into making a small business, and a lot more when you actually want to grow the business and make it successful.
Before you jump into it and say that you know everything there is to know and that your small business idea is the best. try to do some research before getting down to business. By doing prior research you will be investing some more time, but be saving yourself money for when it comes time to pay for the research, or pay for the mistakes made due to lack of research down the road.
You have to remember the steps that make a small business successful.
- Ensure you have an idea
- Create a Business Plan
- Find Funding
- Test Launch
These 4 steps will help you create a successful business if followed step by step.
Since you are trying to come under budget and start your small business for less than $5,000, you will need to do most of these things on your own.
The very first step is to have some money to start up with. No matter how much it is, any money is better then no money.
But try to avoid starting a business with less than $1,000 – this will not get you very far.
So look in your pockets, look underneath the couch, ask your family and friends…and when you have enough built up…put it all in a box and let’s get started.
Start with the idea. Most likely if you are reading this article you already have an idea in mind. Conduct some research and figure out more details that can help your small business such as who else is doing the same, how much are they charging, why? Who are the potential customers? What is the market like?…etc
This preliminary research will prepare you for what comes next. The Business Plan.
Most of the time, a Business Plan will cost you anywhere from $1,500 to $5,000 if you hire a professional writer to create one. Do you really want to spend that much money? If you think you do, go for it. Probably a great investment – but not if you are trying to come under budget for starting your small business for less than $5,000.
So your options are to download some free business plan templates and try to figure it out. Research the web for sample business plans or you can get access to our Business Plan Builder Tool and spend some time developing your business plan on your own. Sure it may take you some time, but it is a step by step, easy to follow, fill in the blanks style business plan builder. In no time you will have saved at least $1,500 by not having somebody else write the plan for you and you are coming way under budget for the goal of less than $5,000 total spent.
The best part is that the Business Plan Builder Tool will only cost you a membership fee to access that and plus a number of other tools that will help you with the rest of your small business. You can access the membership details here, and see the other tools that come along with your membership here.
Once you had the time to work on your business plan, you will have the opportunity to search for government or private funding. By using your business plan, you are basically able to present to investors and funding agencies your business idea in hopes to obtain small business funding (think SharkTank or DragonsDen).
Before you decide on the search for funding for your small business it is important to remember the following tips on getting your small business funded:
– Know how much money you have
– Know how much money you need
– Know how borrowed money will help you
– Have a backup plan if you can’t get funded yet
When you are getting into the funding search, keep in mind that not every business owner can get funded. Doesn’t mean you won’t be able to get funding from somewhere, but it could mean that banks, private investors and government funding agencies can refuse to give you funding.
Some of the main reasons why a business owner may be refused funding is due to the lack of business history or credit, asking for too much, not having invested any money of their own, not having a business plan, having bad personal credit and simply by having a bad business idea or bad approach to funding.
It is important to present you idea well. Many investors look at you as a person (as the owner) and that is how they judge the business. Other may only judge you based on numbers you provide, so as a entrepreneur getting into business you have to be able to read into the type of investor and align yourself with them.
One recommendation is to ensure that you have money invested in your business (or at least available) to be invested. Think about it…Why would a potential investor give you money when you have no risk of your own in the business.
Before you ask for money to have your small business funded, be sure to know how much money you really need, and why? Do you need all the money at once? Maybe it can be broken down for multiple grants, or loans? This may also make the potential investor feel more secure then giving you a lump sum.
Be sure to have the ability to address any questions a potential investor may have and always have a backup plan if you aren’t able to get funded.
Funding is not easy to obtain, especially for new startup businesses with no history. This is one of the main reasons why entrepreneurs often turn away from banks and to go 3rd party private investors and our own Canadian government funding programs.
The Canadian government has hundreds of funding programs (some grants, some loans, tax breaks..etc) to help entrepreneurship like you. Be sure to read our article on Canadian Government Funding For Canadian Business Owners as it may give you some insight into what you may be able to obtain.
The search for funding can take a long time, so be sure to have enough time invested into finding the right program or private investor.
A word of advice, to ensure that you stay within your budget of less than $5,000 be sure to again take a look at the membership program to CanadaStartups, because along with your Business Plan Builder Tool mentioned above, you would get access to our Funding Database.
The Funding Database provides you with access to over 1,500 funding sources which include government funding programs and private investors – so you are really saving a lot of time, and money from having to pay somebody else to do the research and find the programs/investors for you.
Looking back to see how much money we spent so far…we are at only $297 if you decided to register for the membership to CanadaStartups.
That’s much much less than the anticipated $5,000 isn’t it?
Well remember that there are many costs associated with starting a small business that you may not even think of, so having the right guidance is really important in order to stay within your budget. Keep in mind that with your membership mentioned above you also get access to the Startup Guide and Timeline, so you would be guided every step of the way to starting your small business, creating your business plan, finding funding and much more. This way you won’t forget to include charges such as business license fee, other fees..etc
To take advantage of our Small Business Startup Portal you can register for the membership.
Once you have the critical components needed to start your small business, the rest of the money will be used to “pay for yourself”, to pay for “website, hosting, rent, equipment”, or to pay for “advertising/marketing”. This amount really is dependent on you as a business owner and how much you are able to invest.
If you started a small business in the past, let us know how much it cost you!
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