Who hasn't dreamt of being the captain of their ship? More often than not, people prefer to be their own bosses and work in a trade or profession that inspires them. But then, real life intervenes. Would-be business owners find the stacks of regulations discouraging and startup costs too high to think about professional independence.
Today's conditions compel a rethink. During COVID, many people started businesses online, including launching podcasts and YouTube channels. For many, those endeavours became their full-time jobs. And then, coming out of the pandemic isolation, even the most active job hunters found few opportunities.
And now, inflation makes us wonder if the standard nine-to-five is still the best way to earn a living. We've seen how successful those podcasters are and wonder if we shouldn't go into business for ourselves. As you're thinking along those lines, you need to know:
- how to plan your business
- how to plan your finances
- how to market on a budget
- how to grow your business
Some businesses call for very little money to get up and running, and others need at least some capital. But every business requires at least those four phases. Superprof shows you how to become a business owner on a budget.
Thinking About Business on a Budget
In our introduction, we mentioned people finding success by launching podcasts and YouTube channels. Doing so is free, and anybody can do it, but it's an iffy proposition. If the algorithms don't find your content worthy, your channel will linger at the bottom of the heap, unviewed and unrecommended. That level of risk should be unacceptable unless you can afford to wait for the algorithms to favour your content.
You must develop a business mindset to launch a successful business on a budget or not. Many would-be entrepreneurs run with their idea but soon get frustrated and lose the motivation to continue. So if starting a business is your goal, don't run on reason alone. Plan carefully.
What type of business do you want to run? What concepts are you basing your business on? Will you need lots of inventory or special equipment to produce your goods? Is this business something you can do for the next five or ten years?
Do what you love and you'll never work a day in your life.
Author unknown
Career websites and other well-meaning people like to dole out this advice, but it has two significant flaws. What if what you love to do cannot be monetised? What if it can be, but the market is already saturated?
Let's say you love creating pottery. Your designs are unique, and you already have access to a kiln and other pottery equipment. So far, that sounds like a winning formula, but then, you realise you live around Manchester, an area lousy with artisan potters. The greater the competition, the lower your chances of a successful venture.
The best way to decide what business you'll start is to measure your skills and interests against the market's needs. That calls for you to research the market and assess your competition. What can you do better or differently than they do? Is there a need or desire for the goods or services you will provide?
Once you've found the balance between your skills/interests and market need, you need to SWOT. That stands for strengths, weaknesses, opportunities and threats. A SWOT analysis looks something like this:
Strengths
- Total assets
- Strongest asset
- Specialised knowledge
- Resources
- Competitive advantages
Weaknesses
- Where are the gaps?
- What do I lack?
- What must I improve on?
- What tools/technology do I need?
- What do my competitors have that I don't?
Opportunities
- Is there a growing need to fill it?
- What talent might I have/hire?
- What social/economic trends benefit the business?
- Can I offer something others can't?
Threats
- Law/regulation changes impact the business
- Competitors roll out new products
- Natural disasters - climate, fire, etc
- Lacking supplies
Your market research and SWOT analysis results give you enough information to draft your business plan. It will include your market analysis, mission statement, marketing plan and financial analysis. Being financially literate is beneficial, especially for sole trader businesses. Accounting for finances is a must.
Starting Your Budget Business
Depending on the type of business, a business plan may be required when registering. This plan should outline the details of the business. A sole trader business is the easiest to register but you still have to prove you'll be able to cover your business expenses. If you register a limited liability company (LLC) or a partnership - you and your mate go into business together, you will need to provide a business plan.
The UK has rules and requirements for just about every business situation. For instance, if you run an online shop from home, you will need a business license. You may also need to get permission from your local council or planning office. In all cases, you should have insurance to protect your business and the property.
Even if you're running a small-budget business, you should open a business bank account. This will keep your business and personal finances separate. You may also want to hire an accountant so you won't have to stay atop His Majesty's Revenue and Customs (HMRC) rules. Taxation is always a thorny subject, even for budget businesses.
All of this means you will have to have at least a little bit of startup capital. You'll have to pay for any licenses and buy your insurance; you may also have to invest in some equipment or supplies. You may apply for a business loan or apply for a small business grant from the government. Knowing a bit about banking and finance will help you understand these aspects of starting your business.
Advertising on a Budget
No matter how good your product or service is, nobody will pay for it if they don't know about it. In the past, advertising ate up a large portion of any business' budget but today, you can advertise your business practically for free. Social media and other web-based advert platforms cost little to no money, only the time it would take you to post your notices.
Online advertising is particularly effective if you run an online business. Let's say you're launching yourself into business as an online tutor specialising in investment and finance. You could build a tutoring profile on the Superprof page that lists your credentials and experiences for free. And then, students needing an online tutor would find your profile and contact you for lessons.
We'll stick with tutoring though these cheap or free advertising methods work for many businesses. You could post fliers advertising your tutoring business on library bulletin boards, in shop windows (with permission!) and at the pub. Fliers cost only the paper and printing, and maybe the tacks or tape to affix them.
Word of mouth is the least expensive and most effective form of advertising. Talk your business up with friends and family. Mention your venture at the supermarket, in church and wherever else you may be. If possible, carry samples around with you and if you create content online, keep your website loaded, ready to show your work at all times.
Business Budgeting for Growth
People who go into business for themselves usually plan to grow their business but growth is not required for your business to be successful. If you earn enough to sustain your business and support yourself, you may be satisfied with maintaining your level of business activity. Still, you have to budget for the future if you want to stay in business.
If you need equipment or supplies to provide your product or service, you must factor those into your budget. If the equipment you have is good enough to start with but you would like to upgrade once things start going well, plan how much you will spend on your new setup.
Let's say business is going really well and you need an extra set of hands. You might contract a freelancer to save on insurance and benefits costs. But if the boom looks like it will last, you may have to hire someone outright. That will incur labour costs and an upgrade to your business license, as well as a higher insurance premium.
Finance experts recommend that small businesses put up to 30% of their profits back into their company. That should be apart from expenses you've already budgeted for and your salary. But this is just a guideline. If your business breaks even after you've paid all expenses and yourself, you'll have nothing to reinvest.
Financial tips such as these are the same commonsense measures you likely heard when you were getting started as an adult. Back then, you likely heard that anything is possible if you work at it hard enough. Starting a business on a budget is a fine example of such.
Enjoyed this article? Leave a rating!
Loading...
Wow! Such an amazing article! These tips will be helpful to run a budget or small business UK.
Hi David! Thanks very much for your feedback, glad to hear that you found the information useful! Have a great day :)