When you’re an entrepreneur with an idea that you’re sure will make you a million dollars, one of the tricky pieces of getting started is raising enough startup capital to get you off the ground. Before you can start approaching Shark Tank competitions and Small Business Administration grants, you need to have a solid business plan, and often a basic prototype. And then there’s the question of just how much money you need to get the business off the ground.
It can be tempting to say that all you need to do is scrape together enough cash to make an inexpensive logo, use a basic website template, and call it a day. There are some places where you can save money on your business – and some places where trying to cut corners is going to hurt you. Let’s take a look at the difference.
Prototype Development
Do not cut corners on your prototype development and don’t try to copy another business model. This is going to be what you show all of your potential investors to help them decide whether or not they want to help you develop your business. Not only does it need to be properly made, of high quality materials, it’s also going to need to stand up to going in and out of your bag, being shown off to different potential clients, and demonstrated over and over.
Marketing
If it contributes to your brand, spend money on it. If it’s just about spreading the word, save your money at the start.
What’s the difference?
When it comes to designing your brand, you need the best products you can afford. Your website, your logo, your actual content – much like your prototype itself, these directly affect an investor’s decision to give you their money, and can cause a customer to decide that they do or do not trust you enough to buy an untested product.
Paying for ad spreads, banners, and elaborate signage, however, may be too soon. You don’t need banner ads in the early stages of startup; you need to establish a presence on social media, interacting with experts in the field of your business, and beginning to develop an audience. These days, investors want to know not just what product you want to create, but how you’re going to get people to buy it. Showing them that you have digital reach and that you’re putting in the work to build a platform will increase their interest in you.
None of that costs a cent. And building an audience when you don’t have a great web page to capture them isn’t going to help your business prospects. Spend your money on your web page and your graphics, not on banner ads for your product or boosted Facebook posts.
Insurance
There are insurances available for every kind of risk that a small business could possibly face. Whether or not you choose to get small business insurance from day one depends on how much risk you’re comfortable absorbing personally. If you do choose to start off with insurance from the beginning, make sure to speak very clearly to your insurance agent. Insurance exists to protect you, but its primary function, never forget, is to make a profit for the insurance company. There are things that your insurance companies may not share with you unless you directly ask!
Education
There’s an old adage that money you spend to improve your knowledge is never wasted, and when you want to start your own business, this is especially true. Even if you intend to hire a CIO, marketing team, and sales reps, knowing how these people operate, as well as the current state of each industry, is essential to being a good CEO.
If you don’t know anything about accounting, this is a good time to learn.
Find Mentors
This goes along with education, but deserves its own headline because it’s just that important – and unlike other things we’ve mentioned, finding a mentor won’t cost you a cent. Finding a mentor can look like: reading out to other businesses in your community, talking to your local chamber of commerce, or simply sending out a call on social media. When you have a good mentor, you may be able to save yourself some money overall simply by avoiding many of the pitfalls and stumbling blocks that trouble new businesses.
If you want to start a million dollar business on the cheap, don’t try to go it alone. Talk to those who’ve been there about the smart ways to spend your money – and where to save your pennies. They’ll prove to be an invaluable resource.
