English: A Wells Fargo bank on College Avenue in Berkeley. This branch office is typical of older... [+]
There were many urban legends for starting a business in the Internet bubble days of the late 90’s. Back then, entrepreneurs could seemingly write a business plan on a napkin and angel investors would give them $1M to launch that business. As an angel investor in the early 2000’s, these entrepreneurs always told me that all they need is a $1M to get started!
More than a decade later, entrepreneurs now brag about how little money it took to launch their business. Eric Ries, with his book, The Lean StartUp spawned a new generation of entrepreneurs who are now doing it for less. Business frugality has become the new black. A Wells Fargo survey stated that the average small business owner started their company with $10,000. This amount can be far less if the entrepreneur is starting a services-based business. Experience shows that actually having too much money in a business launch can be wasteful. It can lead to lazy and ultimately stupid business decisions.
Starting a business does not need to cost a lot of cash. Be cheap since most of this money typically comes from owner savings. Here are 3 tips to start a business for less:
- Spend less designing a logo and a website. Use crowdsourcing websites like crowdSPRING, Odesk or Elance. Here, companies bid for your creative design and writing projects that save money.
- Use free or inexpensive software for your web site and business. Use a free platform like WordPress as a website platform. There are thousands of templates available to customize the site for a specific business brand. Use a free product called Highrise as a customer relationship management system. Google Drive can be used for collaboration of office documents.
- Work virtually and hire freelancers. Never rent office space unless the business must have a retail presence. Hire freelance workers (see #1) so company expenses match revenue as it is earned.
Most importantly, entrepreneurs need to stop looking for friends or investors to fund their business. This can be done "the old fashion way" by finding customers to buy products immediately! There is no better funding for a business than paying customers.
