How to Launch a Small Business in Today’s Economic ClimateFinance | August 8, 2022, Monday // 18:42| views
The current economic climate poses obvious challenges for any business, and especially for new small businesses. The country entered a technical recession with two consecutive quarters of shrinking GDP, and more than 80 percent of small business owners anticipate a recision. This is in the midst of 40-year high inflation rates that are impacting business.
Small business owners have always been ones to meet a challenge face-on and rise to the occasion. After all, no one would successfully start a business if they gave up at the first obstacle. Some 600,000 entrepreneurs start a business each year, and there’s no indication that this year will be different despite the challenges.
If you intend to start a small business this year, these details shouldn’t dissuade you. They simply mean that you need to be extra judicious with your decisions. Here’s how to launch a small business in today’s economic climate.
Locate and Secure Financing
Self-financing is a preferred way to fund a new business if you’re able to, as outside financing can be difficult to come by. Many new businesses cost a surprisingly small amount to get going -- most micro businesses require $3,000 in initial investment, and home-based businesses often require $2,000 to $5,000. Those generally aren’t insurmountable amounts to save up.
If you do require outside funding, there are both traditional and non-traditional sources to use. You might appeal to:
Friends and family for small investments
Individuals via crowdfunding campaigns
Business partners for more substantial investments
Banks for loans and lines of credit
Specialized programs for grants
Customers for advanced sales
SBA for potential investment programs
Credit cards are another source of potential funds, but should only be used as a last resort (and perhaps not even then). For every successful business owner who relied on credit cards, there are many, many more successful and unsuccessful business owners with extensive, high-interest debt.
Start Small and Humble
Today’s largest businesses didn’t start out as multinational, or even regional, businesses. The first Nike sneaker was made in a waffle maker, and the first batch of Sam Adams was brewed in a home kitchen. Don’t be afraid to start small and humble -- and maybe in the kitchen if you take inspiration from these two companies.
Starting out small and humble has multiple benefits, and these benefits might ultimately be the key for your business to grow successfully. When you begin small:
Costs arising from mistakes are minimized
Future resources can be directed to growing the most profitable areas
You have more time to focus on the most promising parts of the business
The amount of startup funds needed is reduced
There are any number of ways to keep your business small at first. You can limit the number of products/services offered, limit the geographic region served, target only a few keywords online, lease a smaller facility, purchase smaller equipment, or reduce your hours. Exactly what you should do depends on your business, obviously.
Use Technology to Improve Operations
Businesses today must use technology to improve efficiency and effectiveness. Without tech, operations are too slow, too repetitive and too broad to compete well. Other businesses will be making use of various software in order to improve operations, and they’ll outperform yours unless you likewise take advantage of tech.
Because of this, technology is one area where you don’t want to cut corners. You should be investing in software that makes internal operations runs smoother, and helps you better reach customers. Some software programs to check out when you’re first beginning are:
QuickBooks: QuickBooks is probably the most common finance software for small businesses. You can use the software to track payments received and payments made, check ledgers, prepare tax documents, and more.
It’s simple enough for business owners to use, and widely used by bookkeepers and accountants so that information can be directly imported/exported. Small business owners that do their own taxes also appreciate the integration with TurboTax, as both programs are made by Intuit.
Sender: Sender is an email subscription software that has plans for small and large businesses alike. Companies such as Disney, HP, and the World Wildlife Federation use Sender for their email newsletters, and so do many micro and small businesses -- the free version allows you to have as many as 2,500 subscribers
The Sender platform allows you to customize, brand, and automate emails. You can also check email marketing performance with Google Analytics tracking, and see whether your messages are being sent to spam folders. Most importantly, you can reach your most loyal customers regularly via their inboxes.
Tailor Brands: Tailor Brands has extensive marketing and branding software that can help efficiently reach customers. A website builder and logo maker are available for businesses that don’t yet have these. The software can also help you design business cards and swag for in-person marketing.
Once your business is up and running, the software can also help with listing your business online and form an LLC.
Choose High ROI Marketing Tactics
Marketing is another area that you’ll want to invest in, as reaching people is the first step in converting them to customers. In addition to the pieces mentioned above (i.e. logo, website, business cards, swag, etc.), you also should use some smart strategies that require little investment but are effective.
Most businesses need to invest in both online and offline marketing:
Social Media Marketing: One of the more effective ways to market online is via social media. You can spend nothing and still reach people on the most popular social platforms, so long as you put time into posting and engaging people. If you have a budget for paid social advertising, the ability to create highly targeted campaigns makes this a particularly effective option.
Word of Mouth: Nothing is more effective than word-of-mouth advertising, which is also free. If you get customers recommending your products or services to others, exponential growth can ensue.
Asking customers to tell others about your business might have a minimal effect. The best way to pursue word-of-mouth advertising is by constantly providing a high level of customer service. Make sure customers are highly pleased, and you’ll become more well known as people share their experiences.
Lower Costs Whenever Possible
As your business grows, lower costs wherever you have a chance. You can take many steps to reduce cost-per-unit, operating expenses, or other costs. Each should make sense for your specific business, and you should only do a step once your business meets the appropriate threshold. Depending on your situation, you might:
Purchase equipment that you’re leasing once you’re constantly using the equipment
Place larger purchase orders once you’re moving more product
Cut products/services that aren’t as popular as your most successful
Spend more on the most effective marketing campaigns
Eliminate spending on ineffective marketing campaigns
Outsource rather than hire employees
There are many other ways that you may be able to keep costs low. This is far from an exhaustive list.
Start Your New Business Smartly
Don’t let anything -- including the current economic climate -- stop you If you’re ready to start a new business. Use these tips to start your business smartly, and you could stand a good chance of being successful.
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