There’s no doubt about it: Building a sustainable business in 2020 requires many more resources than generations’ past. Regardless of their industry, every business needs to market itself, establish a professional online identity, and ultimately outperform the quality and/or convenience of their growing competition. This makes the idea of starting a business on a tight budget seem increasingly unrealistic. But what it really means is that today’s entrepreneurs just have to be a little more creative when it comes to startup costs.
Believe it or not, it is entirely feasible to accomplish the aforementioned objectives while completely avoiding significant expenses. Most successful entrepreneurs would likely admit that they were only able to grow their businesses by strategically skimping on several areas. After all, there’s no rule that says you absolutely have to break the bank to acquire and serve your customers.
If you’re concerned about the costs of technological tools, you’ll be delighted to learn that many of these tools were actually created to help you save money on traditionally costly expenses. This is a key tenet of starting a business on a limited budget: always looking for cheaper yet equally effective alternatives.
And while sticking to a budget is definitely a challenge, learning to do so is an invaluable skill for any entrepreneur. Maintaining a financially-conscious mindset will prevent you from making poor investments or trying to grow too quickly. You won’t be constantly worrying about whether certain expenses are truly necessary.
In this guide, we’ll explain how to grow numerous elements of your business on a limited budget without compromising the quality of your work.
Starting a Business on a Tight Budget: Apps and Software Tools
Before we get to money-saving strategies, we must first identify the apps and software tools that will keep your monthly operational costs low. These services range from bookkeeping to social media scheduling to web analytics.
While there are a ton of apps and software tools to choose from, only some are considered low-cost. Here they are:
1. QuickBooks Online
As far as accounting software goes, none have achieved the popularity and praise of QuickBooks. This is largely because QuickBooks is incredibly easy to use and will walk you through its multitude of services, which include expense management, profit analysis, tax planning, and creating financial statements. If you need help with specific services, there are plenty of tutorials and guides available online.
The price of QuickBooks depends on the amount of services you require. But since QuickBooks is used by many solopreneurs, the most basic version still supplies the most important services. And no matter what version you have, all QuickBooks subscribers gain access to the highly rated QuickBooks mobile accounting app.
You’ve probably heard of project management tools like Monday, Trello, Asana, or Basecamp. But these tools are geared towards businesses with multiple employees, and they cost money. Evernote, on the other hand, is completely free, as long as you stay within the limits for monthly usage.
This note-taking application allows you to create notes consisting of text, drawings, photographs, or saved web pages. It’s perfect for making daily to-do lists and documenting fresh ideas. The ability to tag and annotate notes makes them very easy to search for.
Evernote also offers project management services to help you organize tasks, track their progress, and set deadlines.
3. Google Drive
Imagine Microsoft Office, but you need Internet access to use it. That’s Google Drive, which is designed primarily for creating documents and sharing them with colleagues. Once you grant someone access to a document, this person can edit your work and leave comments next to specific parts of the text. You’ll receive email updates whenever someone edits a document or leaves a comment.
While Evernote is geared towards to-do lists (and also free), Google Drive is geared towards larger projects involving multiple people. This is because as long as the colleague has Internet access, he or she can use Google Drive and access your documents. With Evernote, the colleague would have to download the app to edit your documents or leave comments.
4. Google Analytics
Few resources are as important as your business’s website. But you won’t know how to optimize it for your audience’s preferences without Google Analytics, or “GA.” This invaluable tool presents a host of performance metrics: how many people are visiting your website at different times, how much time they are spending on your website, or how many of these visitors convert into paying customers. Google Analytics also tells you what visitors click on to access your site (social media ads, organic searches, emails, etc.).
The basic Google Analytics plan is completely free but still offers a myriad of critical metrics.
In order to take full advantage of Google Analytics, you must look beyond what are known as “vanity metrics,” like website traffic. Let’s say you see an increase in website traffic, but hardly any of these visitors entered personal information or ended up making purchases. Google Analytics provides all the data you need to officially confirm that your websites and digital advertisements are successfully converting visitors into paying customers.
Hootsuite is a social media management platform, which means you can create and publish posts to multiple networks (Twitter, Facebook, Instagram, LinkedIn) from one place. Much of Hootsuite’s popularity can be attributed to its dashboard-like layout. Users can view streams from multiple networks simultaneously and track performance in real time through key metrics like clicks, response time, and overall engagement.
Hootsuite also allows you to schedule posts ahead of time, automate posting frequencies, and instantly respond to comments.
Another popular feature is Hootsuite’s keyword and hashtag filter. This lets you find out which keywords or hashtags people are using when talking about your business on social media. And in addition to the main social networks, Hootsuite integrates with various tools like Evernote and Mailchimp, which we’ll discuss later on.
Hootsuite’s basic plan is mainly for solopreneurs and can cost as little as $19 month. The price depends on how many accounts you manage and the amount of posts you publish per month.
Buffer is one of the cheapest social media management platforms. Unlike Hootsuite, the price depends entirely on the amount of features you require. Unless social media is a major element of your business, Buffer’s basic plan will likely give you everything you need for just $15 per month. You’d still have access to the most important analytics (clicks, likes, comments, shares). Buffer is also very easy to use when it comes to creating posts, scheduling posts, and looking for data on previous posts.
Several email marketing services offer similar features as Mailchimp, but none can compete with its cost. Only Mailchimp allows you to send up to 12,000 messages to up to 2,000 subscribers for free each month. You can schedule and automate emails that look highly professional thanks to Mailchimp’s template selection. Each template could theoretically be used for a different type of recurring email, like weekly newsletters, holiday greetings, or cold pitches. Mailchimp doesn’t even charge you to access performance metrics like the amount of recipients who opened your email or clicked the links inside.
Starting a Business on a Tight Budget: Hiring
Thanks to online services and the gig economy, today’s entrepreneurs don’t have to start hiring full-time employees right away. Unless demand and/or your workload calls for it, you should probably postpone your first hire(s) for as long as possible. Full-time employees require multiple forms of insurance. And their salaries must account for federal, state, and local taxes, not to mention health benefits, social security, and Medicare benefits. Also, since full-time employees are such a significant expense, they will likely cost the business far more money than they bring in if you don’t have the right systems and processes in place.
So, instead of hiring full-time employees, consider outsourcing individual projects to 1099 independent contractors. Though independent contractors tend to charge high hourly rates, the cost of hiring a full-time employee for a task of this size will likely be much greater. This is because independent contractors are responsible for their own expenses and have to pay their own taxes. Many startups save on payroll costs by working with the same group of independent contractors every week or so. You could theoretically give independent contractors a similar workload to a full-time employee. It’s up to the contractor to set their limits as to the amount of work they can take on from one company.
When the time comes to hire full-time employees, look into apps like Gusto to manage payroll. Gusto’s simple layout lessens the stress of integrating taxes and health benefits into employee paychecks.
Starting a Business on a Tight Budget: Marketing
Here’s where that entrepreneurial creativity really comes in handy. If you take the time to develop the right strategy, the cheapest marketing resources can promote your business just as effectively as the latest, most advanced options. Here are some low-cost marketing tools and strategies that can draw tremendous attention to new businesses:
1. Search Engine Optimization (SEO)
A marketing strategy can only be called a true success when it brings in more revenue than it costs. This is why SEO is widely known as one of the most profitable marketing strategies. It technically costs nothing but can do wonders for lead generation if used correctly.
An SEO-proof website shows up at the top of results pages when someone enters a relevant search query. Optimizing your website for SEO, however, is no easy feat. Step one is making sure your website is up-to-date, user-friendly, and full of relevant information. Visitors should have no trouble finding answers to frequently asked questions about your business, your offerings, and your industry.
Then, you must litter your content with keywords or phrases you want your business to be associated with. What kind of words does your target audience use when searching for a business like yours?
But even if you obtain these components, your website’s search position probably won’t improve without substantial traffic and engagement. So, once your website is SEO-proof, you can focus on driving both metrics via other low-cost marketing tactics on this list.
If you can’t figure out why your search position isn’t improving, you may consider enlisting the help of an SEO expert. Since you haven’t spent any money on SEO thus far, the cost of a single consultation will still be lower than most paid advertising tactics.
2. Start a Blog
Blogging and SEO go hand-in-hand. Not only does blogging give your site more relevant information, but it can also act as another source of traffic. You can promote your posts through social media or email and structure them to boost their own capacity for SEO. Integral components of an SEO-proof blog post include outbound links, strategic use of keywords, and clear, concise writing that isn’t too wordy or repetitive. New blogs often gain traction by addressing industry-related topics that have yet to be given this much attention. The reader looks at the title and thinks “This could be fresh and interesting.”
The reception of different topics can show you the kind of content your audience prefers moving forward. And of course, there’s no cost to starting a blog.
3. Social Media Marketing: Facebook
Facebook is considered one of the least expensive digital marketing channels. Yes, it costs money to promote your posts, but most businesses only promote a handful of posts per month. It’s simply not practical to promote the majority of your Facebook posts because promoted posts are supposed to be designed for narrower audiences with higher potential for conversion.
A successful Facebook marketing campaign usually involves a healthy mix of promoted and standard posts. Also, the whole point of marketing to narrower audiences is that it shouldn’t take much effort to convert them. So, if you structure your promoted posts carefully, you should be able to grow your customer base with a relatively small monthly budget.
The cost to promote a Facebook is determined by a per-click model, which means you pay a fee each time a user clicks your ad. The average cost-per-click for a promoted Facebook post is approximately 27 cents, though it can range closer to 50 cents.
Step 4: Taxes
It’s safe to say that a lot less people would start businesses if it wasn’t possible to deduct up to $5,000 in startup costs. Your accountant should be able to help you take full advantage of this deduction. The vagueness of the term “startup costs” makes this fairly simple. For example, plenty of new entrepreneurs have likely categorized the cost of a recent vacation as “industry research” in order to deduct the flight and hotel from their tax bill.
Your accountant should also make sure to capitalize on your ability to deduct up to 20% of your income before calculating your individual tax rate. If your business is a limited liability company (LLC), sole proprietorship, general partnership, or S-corporation, your individual tax rate determines the amount of income tax you pay. Do you work out of a rented apartment? You may be able to deduct your rent costs as well.
In summary, if you take the time to find a good accountant, you won’t have to worry about missing out on major deductions.
Step 5: Free Business Development Resources
Another incredibly helpful (and completely free) resource for new business owners is expert advice. When you’re operating on a tight budget, you must resist the natural urge to assume that acquiring a certain tool or service will solve your problems. Odds are, you just haven’t executed the right strategy because you haven’t sought advice from the right people. And by this, we mean successful business owners who were in your shoes not too long ago.
Thankfully, there are a number of avenues to forge relationships with veteran business owners. Local networking events take place all the time, and you can find out about them through your local Chamber of Commerce or networking platforms like Meetup. There’s a section of this website that’s exclusively devoted to small businesses.
Yes, asking strangers for help is unbelievably awkward. But refusing to let this awkwardness impede your quest for knowledge is a crucial skill for entrepreneurs.
If you’re starting a local business, you should definitely consider paying the small fee to join your Chamber of Commerce’s small business association. Members gain access to professional development workshops, the latest updates about the local economy, and even data about local demographics.
Another fabulous resource for business mentors is SCORE, which was originally started by the US Small Business Administration (SBA). This nationwide network is completely free because the mentors actually volunteer their services. The only form of compensation they’re after is seeing their mentees succeed. Along with one-on-one mentorship, workshops and webinars are available for entrepreneurs at all stages of their journeys.
Part 6: Extra Tips For Maintaining a Tight Budget
Earlier, we mentioned that staying on budget is not just a task but a mindset. It teaches you to make the most out of your resources, which includes your time and your employees. You’ll learn to only invest in tools that will help you save money or increase efficiency.
Here’s a few final tips for staying on budget as you grow your business:
Automate Monotonous Tasks
Your budget is directly linked to your revenue. For this reason, you cannot spend too much time on manual tasks that take you away from revenue-generating activities, like making sales. If you were to automate these tasks, not only would you spend more time making sales, but you would also get more out of the tasks themselves. Common examples include writing pitch emails or sending invoices.
Do More With Fewer People
We’ve already touched on the importance of conservative hiring. To keep your team small, consider training current employees on new tasks rather than just hiring more people. The former would almost certainly cost less than the latter, despite the increase in the current employees’ salaries.
Use Business Credit Cards for Certain Startup Costs
There’s a lot of business credit cards to choose from. But only some are specifically designed for saving money on startup costs. The Brex Corporate Card, for instance, offers a myriad of discounts and credits on common expenses for tech startups, like digital marketing services and CRM (Customer Relationship Management) platforms. The rewards program also earns points towards other common expenses like travel and recurring software charges.
Starting a Business on a Tight Budget: Time is Money
The timeless phrase “You’ve got spend money to make money” is losing relevance by the second. Instead, you should focus more on how you spend your time, and who you spend it with. An expert at time management is a success story waiting to take place.