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Four Tips For Starting A Business With Low Risk and Big Success

By Erik Folgate

I was reading this post on Career Ramblings, and it made me think about how our educational system has slowly taken away the importance of entrepreneurship and the ability to create jobs for others. Do you realize that when you launch a new business, you are adding value to your community and to the job market. The narrow-minded idea of going to GET a job riight out of college has diminished the value and importance of thinking like that of an entrepreneur. What about starting a business while you are in college? The main argument for having the mentality of going to work for someone else is that it’s easier to get a job rather than start a business, and it’s more risky to start a business than go and get a job. I don’t think that is always true if you are wise about the way you start a business. Here are four tips for launching a business at the start of your working life.

  • Launch a new business while your still in school or working another job. This is the ultimate way to get ahead of the game. If you’re still in college when you start a business, it won’t hurt you for the business not to be profitable at first because you were already a poor college student. Launching a business while working another job is the best to ensure that your business will be successful. You will need to put in a 14 hour day of work at your current job and workng on the business, but you will substantially lower the amount of risk in your life. Think about all of the business failures you’ve listened to your friends and co-workers talk about. Why do you think they failed? They probably failed in the first 6 to 18 months, because they tried to start big when they weren’t big. I can’t start a retail chain to compete with Wal-Mart just by opening up 500 mega stores and borrowing a billion dollars. It would fall flat on it’s butt, because I haven’t established any brand recognition or marketing reputation. Why should people just start going to my store when they already KNOW they can get what they want for cheap at Wal-Mart.
  • Keep Your Business Debt Free. So many business failures stem from bad financial decisions. One of the worst financial decisions that you can make is taking out a hefty business loan to start an unproven company. No matter how much market research you do, you really don’t know how well the market is going to respond to your product or service until you actually start doing business. Start out slowly by paying cash for things as you go. If you’re generating an income from another job, you can have the freedom to re-invest early profits to growing your company rather than using debt to grow your company. Again, you greatly minimize the risk in your life, and if you have a family, you’re not putting them in near as much jeopardy if your business is debt free. If you own a debt free business and it doesn’t work out, you can simply liquidate your assets and move on without a trace of that old company. The worst feeling is making payment for a business that already failed.
  • Be cautious when hiring your first employee. In a large company, a bad employee doesn’t hurt that company much, but a bad employee for a two or three person operation can greatly hurt the business. Try to screen who you hire as much as possible. I would not recommend hiring your friends, because then you are mixing business with pleasure, and if you have to fire them in the future, you may jeopardize the friendship. If anything, bring friends in as partners rather than employees. Spend the money to do a background check and credit check. It will pay for itself if you find out that person has a record or is horrible with money.
  • Be Resourceful and be a minimalist. My favorite pizza place is Satchel’s Pizza in Gainesville, Florida. Satchel, the owner, is a minimalist and a very wise business owner. He knew that if he was going to start ANOTHER pizza joint in a college town with dozens of options for eating pizza, he would have to make a great tasting product, have an original vibe, and keep his overhead low. He either bought or rented a building that is well outside the area of the university, he bought a bunch of thrift store furniture and dining ware, and he doesn’t do any radio, newspaper, or television marketing. Satchel used his gourmet pizzas, mouth watering calzones, and unbelievably tasty salads to be serve as his marketing campaign through the power of word-of-mouth advertising. Satchel’s was a hidden gem for about two years, but the pizza joint soon came to a turning point and now the wait time to get a table on a friday night at Satchel’s is never less than 2 hours long. If you are starting a business that requires a lot of equipment or a store front, don’t buy into the myths about location and flashy looks. You can still find nice things at garage sales, liquidation sales, and business auctions. Try to find an area with cheap rent and let our product or service be your marketing campaign. Pick up the book, Guerilla Marketing by Jay Levinson, for hundreds of great tips for how to market your business for free or almost free.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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Comments

  • John

    Great tips, I do all 4 in your check list. Now only time will tell.

  • http://www.manhattancalumet.com/ Dennis The Menace

    I believe that one of the biggest mistakes that individuals starting a business can make is not trying to find ways of saving money. Saving money on rent advertising labor. Thinking up creative ways of conducting your business or promoting it that cost far less than most of the conventional ways of doing business can greatly increase your odds of succeeding. When small business owners inially begin their business adventure running out of captial or money is very often the biggest reason that many of these businesses fail after of course lack of knowledge about the business they are starting. Another thing to consider is starting a business that does not require a large start up cost. If you can find a business that requires little money to start up and if it fails then you will not have lost a very large amount of money’ and remember their are lots of businesses out their that started out with just hundreds of dollars not thousands.

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