Are you unemployed or underemployed? Have you been looking for a job, and just can't find one? Do you have $500 in your savings account? Then let me plant a radical idea in your mind: You can start a small business with this small amount of money. In fact, the less money you have to start with, the less likely you are to make common new-business mistakes, such as owing too much money, getting buried under too much overhead, or being so grandiose that you lose sight of your goal -- which is to consistently turn a profit, even a modest one.
I started Tweezerman, the global beauty tools company, with $500 in cash. When I sold the company in 2004, I walked away with millions. One of the reasons I succeeded is because I started small, very small, and had learned from all the mistakes I had made in numerous failed small businesses that preceded it.
So, a foundational principle for starting a business is to start small. Here are seven more:
- Tailor it to you.
Do you love antiquing? Fishing? Cars? Cooking? That's a start. Now, think about what pursuing this passion might mean for your lifestyle. Think how you want to spend your day; where you want to live; whether you want to work with people or alone; in the morning or at night; on the phone or in the field, and so on. Going through this exercise helps you eliminate any aspect of your business that doesn't create your preferred lifestyle -- and will work against you.
- Be frugal.
Don't spend money you don't have. Don't invest in anything you don't need. If this means baking cupcakes in the local church basement and delivering your signature pastries by bicycle to local stores -- two dozen at a time -- do it. Take the money you make and put it right back into the business.
- Record every expense.
From the dollar you gave to the homeless guy on the way to meet a prospective client, to the new tie you bought to look professional, write down every single penny. The key to launching a microbusiness is to keep expenses under control and fully accounted for.
- Keep a monthly profit-loss.
For the first two years of your business, complete a monthly profit-loss statement. This helps you stay on top of where your business is going, where it could do better, and why it fluctuates.
- Find free stuff.
Many items needed to start and run your small business are available for free or next to nothing. Be creative. Use freecycle.com; ask friends if they have an old computer or printer; or visit a thrift shop for office furniture or office supplies. A hair accessories crafter I know gets all her leather for free from a backpack manufacturer that throws their leather scraps away.
- Write down agreements.
With a very small business, your clients sometimes make the assumption that they don't have to sign an agreement. Wrong. Get in the habit of thinking like a company founder and get promises in writing. And while you're at it, keep your side of agreements.
- Keep it simple.
When I first started Tweezerman, I did nothing but focus on tweezers and selling them to cosmetic counters, one store at a time. Along the way, I got an offer to branch out and sell industrial tweezers to electronics manufacturers. Instead, I kept the focus on what I was already doing -- and doing very well. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time.
Adapted from "Raising Eyebrows"