How to Run a Business on a Shoestring Budget
Running your business on a tight budget is not only possible, but extremely beneficial, even when times are good. You don’t even need a degree in business or finance to create and stick to a budget; all you need is common sense, organizational and planning skills, and motivation. Read on for some ways to operate your business on a shoestring budget.
Understand your cash flow.
Cash flow, in its simplest terms, is the movement of money in and out of your business. It is of utmost importance that you know where every penny you spend goes, and where every penny you earn comes from. This may seem easy, especially if you’re the only employee, but unless you document carefully and review your cash flow frequently, you may find that too much money is being spent that does not contribute to your bottom line. If you need to tighten your belt, so to speak, it may be necessary to cut back on expenses that are not directly related to income. For example, that shiny new business card certainly looks nicer coming out of your pocket to hand to a prospect, but is the higher cost going to directly result in a sale? These are questions you need to ask yourself when creating and/or revisiting your budget.
Stick to your budget.
This may seem obvious, but it isn’t difficult to underestimate your expenses and overestimate your income. When budgeting, be conservative. Before making any kind of purchase, ask yourself why you need it and how it will bring in money. Sticking to your budget and reviewing it often will help prevent cost overruns before they happen.
****Tip:**** Categorize each expense according to a pre-determined system that works for your particular situation. This will make it much easier to sort your expenditures and decide which ones contributed to your income and which did not.
Push sales.
Starting and running on a shoestring budget means you lack capital and that’s not the ideal. To overcome the lack of capital you must be willing to quickly generate sales. You must clearly identify your target market and have prospects ready to buy. Make sure your marketing materials reach those who need your products/services and your sales presentation is effectively closing sales. For free marketing resources, visit the Small Business Administration website.
Establish a network.
You will need to quickly establish a large targeted network of prospects that are ready to buy, a network of influencers that will help spread the word about your business, and a group of people who’ll support your vision. Having a large network of people is the key to running a business on a shoestring budget. The more people you and your business are connected with, the more sales you will have. This will allow your business to get established, maintain stability and create the foundation to a successful long term business.
If you do go this route you will need strong planning, organization, networking skills, and a commitment to push for sales to quickly generate income to establish your business. Operating on a shoestring budget is definitely achievable as long as you’re willing to put in the work. How do you run your business on a budget? Please share your ideas below!
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