How to start a business with small capital: In Nigeria and elsewhere in the world of business as it is today, many entrepreneurs or ordinary individuals have thought of various business ideas and plans which should ordinarily be successful considering necessary pros and cons of such business ideas as some of them are relatively simple but an underlining issue has been the financing of such business ideas or start ups as the case maybe.
The issue of financing continues to be a hydra head in business start up and successful operation especially when it is a small business being run as a sole proprietorship, here all the financial burden and risks will be upon the business owner to undertake or leave the business to suffer. But in this paper, it will be made popular the way to successfully start a business with small capital.
Table of Content
What is business?
According to Wikipedia business is the activity of making one’s living or making money by producing or buying and selling products (such as goods and services). Simply put, it is “any activity or enterprise entered into for profit.
Examples of businesses that require little or no capital to start and run are; consultation services, tutoring services, drycleaning services, little commercial food set up et.c.
Why people start their own business
Usually, people are not satisfied with their jobs either because they feel they are not fully engaging their skills or talent and are therefore not fulfilled or because they may feel that they are not adequately compensated for their work hence they decide to give up their regular jobs to start a personal business and get to know what it is like to be their own boss and put that skill into proper use.
Being a proud business owner is the aspiration of many people so as to get the chance to put all the necessary skills in their arsenal to good use and be well compensated for the work they do while also managing, controlling and making all important decisions necessary for their business.
However, the first thing to put into consideration in preparation to setting up any small business is the capital. Most people are daunted by the belief that businesses need large capital in order to be successful but the truth is that an entrepreneur does not need to empty their savings or go to get a huge loan from a loan shark or bank in order to start up a business and keep it going and generating profit eventually.
Also see: Highest paying businesses in Nigeria
How to start a business with small capital
1. Identify a business idea: the most important and the very first step for any business is brainstorming on the business idea, it is from here that any further consideration is put place. The idea can be from a market opportunity, problems in the target area that needs that solution, or from your passion.
2. Validate your business idea: this can also be referred to as the viability check. To put money into any business idea and set it going, you must make sure that such business is viable and something that anybody would want to put their money in be it customers or investors.
3. Get a business name: the business name is the very underrated but important part of a business startup. It is very necessary to get a simple but interesting name which will be both easy to remember and original.
4. Make a business plan: for anyone to take your busines seriously especially as regards investing in it, your business plan must be on point.
5. Understand business finances: you must not be an accountant to start your own business but you need to understand basic business fiances to get things started, like how to open your business bank accounts, and set up the bookkeeping and accounting processes for the business.
6. Develop your product or service: here you bring your product or service idea to life and make it to as attractive as possible to customers and prospective investors.
Also see: Top 10 Business Schools in Canada 2021
7. Find a business location: get to understand how your business will run and what location will be of advantage to your business for your office or shop to be located based on space, customer availabilty and retail needs.
8. Plan workload and team size: at this point you have to preempt the work that is going to come with your prospective business and be able to tell if your time alone will be adequate to run the business or if you need the help of a full-time or part-time employee and add the cost of payment of such persons to your account.
9. Launch your business: importantly start your business and use your network to make the business go loud alongside any business launch strategies like discount on first timer services for a duration or promotions.
Tips to run a business successfully with low budget
a. Time: as someone with little money, you need to realize that your time is your best resource and a minute of it must not be wasted. You must plan to use your time well for the business as well as how to balance it with your personal life which may at the early stage if the business be nonexistent.
b. Opt not to buy: to start a business successfully with little capital is not an easy task and it requires wit and wisdom. At this point is is not necessary to buy everything you need, if you can get a good lease on any of the equipments, that would be a wiser choice so that the money left can be channelled into other important areas of the business.
c. Trift buying: for equipments that are a must buy and are very expensive to run what ever type of business you are starting, there must be a trift store where you can get them and if not so look online or in your locality for anyone who wants to do away with fairly used properties you would be needing so as to reduce the cost you incur on such things.
d. Employing staff: all caution is necessary when on a tight budget for running a business and keeping a full-time employee(s) is one of the things that can double the expenses of a business, hence as much as possible, limit the number of workers you take on, and do not take up any fulltime worker except when necessary but rather have one or two reliable part time people on board along side yourself- freelancers.
e. Personal discipline and sacrifice: to successfully run a business on a small capital budget the owner of the business is the center of it all and can cause the rise and fall of such business. You must at this point exercise the highest possible financial discipline, buy only necessities and not spend a dime on luxury, also in the beginning it is not necessary to pay yourself if the business has little, you must make the sacrifice until the business is stronger finncially.
f. Getting a business place: if your business is one that does not necessarily needs an office set up, then you can hold off on getting an office initially because this will save you a lot of money, for instance running a delivery service or laundry you can use your house as your workspace for as long as it takes to get your financial balance.
g. Connection: after a business has started it is always necessary to have a backup plan on the funding of the business, hence relying on your savings alone or waiting for the profit from the business especially at the early stages is risky and may lead to the end of the business, therefore it is necessary to make a good impression on persons you know by showing how the business has come so far so that you can successfully seek for partnership from such persons, especially their financial participation when the business hits rocky grounds.
Conclusion: From the above, it is clear that one can start a business with little capital and climb up the ladder like the present day Domino’s Pizza that was acquired with just $900 alone but has made a name for itself in many countries around the world. All that you need to do to get your own version of the Domino’s pizza which is clearly a success is to sit and read, understand and then apply the above given tested and trusted processes in starting a business with small capital.
Edeh Samuel Chukwuemeka ChMC, is a Law Student and a Certified Mediator/Conciliator in Nigeria. He is also a Developer with knowledge in HTML, CSS, JS, PHP and React Native. Samuel is bent on changing the legal profession by building Web and Mobile Apps that will make legal research a lot easier.