4 Tips for Building a Brand on a Budget
Tuesday, May 28, 2019, 6:00 PM | Leave Comment
The idea that you need a big budget to establish a business and to turn a profit is a misconception. This is true regardless of your niche and your goal.
The simple fact is, there are always ways to drastically reduce your outgoings and to get that business off the ground for a fraction of the price you initially budgeted for.
I’ve launched several businesses in my time and for each one of these the goal was to keep the costs to an absolute minimum.
After all, the less you spend, the sooner you make a profit and the less you have to lose if you decide to drop the idea altogether and move onto another one.
To help you do the same, here are the rules that I follow for every business I launch, whether I’m doing so on the back of my own dollar or as part of a client or friend’s project.
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Buy Less or None at All
If you want to start a business but don’t know what to do or what to sell, you’re in a good position as you have the freedom of choice. In such cases, you want a product that meets the following criteria:
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Is cheap
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Can be bought in small quantities
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Is not perishable
This is essential for the success of your business, because if you go all-out early on, buying a lot of expensive stock that needs to be sold quickly lest it expire and become worthless, that means your marketing needs to be spot on, your budget needs to be high, and there is no room for failure.
If, on the other hand, you have a product that is non-perishable, and was bought in small quantities, then it doesn’t matter how long you take or how much you spend on marketing because that product will always be ready to sell.
A good way to do this is to find a product that can be bought cheaply from China and then rebranded. The rebranding will allow you to increase the price and beef-up the margins, which will more than cover for the fact that you’re losing money by purchasing in small quantities.
If you have your heart set on an expensive product, then try to avoid buying any stock whatsoever and focus on drop shipping. For instance, if you’re selling high-spec gaming machines that are branded with your company name, you can wait for the order to come in, give the customer’s specifications to a manufacturer who will then build the machine and either send it directly to the customer with your brand attached, or send it to yourself for you to add decals and other features.
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Take Your Time
A lot of businesses fail because the founders rush in. The problem with starting a business is that no matter how long you take, it will never be enough.
To give you an example, I recently helped a friend to setup a business with his partner. They both worked full-time and were competent writers, artists and coders, so they planned to do the work themselves in their spare time. They gave themselves 18 months to put it together and when the website launched they spent the first month only selling to friends and family so they could iron out all the issues without receiving bad reviews.
They did all of this at my recommendation and it worked brilliantly well for them. Every unforeseen issue, from regulatory problems to trademark issues and stock delays, was fixed with time to spare and they were able to keep costs and stress to a minimum. For the first few months they were still encountering and fixing issues, but that’s to be expected and if they had rushed in then those issues would have been magnified and everything would have imploded.
However much time you think you need, double it, because you’ll always need more.
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Have a Backup Plan
Going back to the friends that I mentioned above, their business was selling herbal tea. They had a good supply and could buy the tea in small quantities while the packaging could be bought cheaply and in bulk. The only issue they had is that the herbs, while they don’t expire, still need a “Use By” date and can’t be sold after a couple of years.
Rather than accepting the notion that their stock could go to waste when it didn’t sell, they connected with a local beauty manufacturer and agreed to sell them herbs that were close to expiring. They sold them at cost, so the manufacturer was more than happy to take them, and it meant they didn’t lose money and let them go to waste.
You have to think about what will happen if and when everything fails or doesn’t meet expectations. This is true even if you have stock that will never perish—what will happen when it goes out of style or when your business fails? Is there someone who will take it off you hands at cost, is there a way to repurpose it into another business idea?
In the past I worked with a potato farmer who built a potato chip company using his harvest, only to sell that company when it made a lot of money. After the sale he had a huge number of potatoes that he could no longer use to turn into chips. Did he give up, did he sell the stock at cost to a local supermarket? No, he bought a distillery, created a premium vodka brand, and turned those spuds into a business worth even more than his previous one!
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Focus on a Business you Can do Yourself or Hire Freelancers
Staff costs can get very expensive. You need to pay minimum wage, you need to pay them even when you don’t have customers or work for them to do, and if your business struggles for just a few months and you have a big team of staff, you could see losses in the hundreds of thousands.
Instead, try to keep the size of your team down, establishing a business that can begin with just 1 or 2 people and only needs to grow when more money is coming in. If you can be the person running it and doing all of the work—even better.
You should also look to hire freelancers for basic jobs. You may end up paying more per hour, but they only get paid when they work. There is no sick pay or medical benefits, you don’t need to pay them just to stand around and wait when nothing is happening, and there are no long-term contracts to commit to.
Obviously, there are limits to what remote workers can do. They can’t staff the till for instance or clean your establishment. But they can write, design, develop and perform admin duties.
The Difference These Rues Make
How many times have you seen failed restaurants on TV and heard from depressed owners as they describe how they’ve spent hundreds of thousands of dollars on their failing business? How many times have you shook your head or shouted at the TV in disbelief? How could they be so stupid, right?
In actual fact, this is very common and it’s because a restaurant goes against everything on this list. It sells a highly perishable product and it does so on a daily basis. They may need to spend $1,000 a day just to buy food and staff the restaurant, and if they go through dry spell that lasts a couple weeks, that is over $10,000 down the pan.
Now imagine how much better off they’d be if, instead of a big restaurant, they focused on a small kiosk or establishment that could be run by 1 person. Imagine how much they’d save if instead of fresh produce they just bought flour, sugar, oil and butter (products that keep for weeks) to turn into doughnuts, and if they ran the restaurant themselves.
These rules can mean everything for your business, so make sure you follow them closely if you don’t want to be one of those failing business owners that ends up investing every penny they have to keep things afloat.
Throw us a like at Facebook.com/doable.financeAuthor Bio
Martin Smith writes about marketing, accountancy, healthcare strategic planning, and more for leading firms across the United States. His work spans hundreds of articles across a huge selection of websites.
