How to Start a Microbusiness on a Micro-Budget

Americans are starting microbusinesses at record rates. Brookings reports that “17% of the 20 million microbusinesses tracked in the U.S. were started after the onset of the pandemic” and the number of self-employed Americans reached a high not seen since the 2008 financial crisis.

A variety of factors are behind the microbusiness boom, but one big reason is surprisingly simple: It’s a lot easier to start a business nowadays.

Between the growing e-commerce marketplace and a plethora of digital tools for starting and running a business, today’s entrepreneurs face fewer barriers than in the past. In fact, many self-employed business owners start with no outside financing whatsoever.

How do they do it? Kimberly J. Howard, CFP presents some must-have tips and tools for starting a business on a micro-budget.

Start simple

In addition to their smaller size, microbusinesses have simpler operations and requirements than other small businesses.

  • Microbusinesses specialize in small markets. By focusing on a niche or hyperlocal market, microbusinesses avoid direct competition with larger brands.
  • Likewise, microbusinesses stick to a limited product mix or launch with a minimum viable product. An MVP gets startups to market with less time and money and generates vital feedback to inform growth.
  • Unless a microbusiness is seeking outside funding, a one-page business plan that covers finances, marketing, and other basics is adequate for most startups.
  • Most microbusinesses operate as pass-through entities. While sole proprietorships are most common, some microbusiness owners choose a single-member LLC for the liability protection and branding advantages.

Take advantage of affordable resources

Running an efficient business doesn’t have to cost a lot. These are the must-have resources for starting and running a business on a tight budget.

  • The Small Business Administration, SCORE, Small Business Development Centers, and other organizations offer a wealth of free educational resources for entrepreneurs.
  • Microbusiness owners can take advantage of free and low-cost tools for running a business such as accounting, project management, and point-of-sale software.
  • Can’t afford a professional? There are lots of online tools to build your brand for cheap, including website builders, logo generators, and brand style tools.
  • You can also find an online Facebook ad template that can help you put together customized ads for the popular social media platform featuring your business’s logo, photos, choice of fonts, colors, and a library of other graphic assets.

Keep overhead costs low

Microbusinesses also save money on the everyday costs of running a business like office space and payroll.

You don’t need heaps of startup capital to make your self-employment goals a reality. Microbusinesses are lowering the barrier to business ownership for millions of entrepreneurs through lower costs and a streamlined path to startup. If you’ve been looking for your path to business ownership, consider starting a microbusiness of your own — it’s closer than you think!

Kimberly J. Howard, CFP is your go-to source for financial planning advice and financial services. Connect with Kimberly today for more info!

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The Beginning Business Owner’s Guide to Cash Flow

Starting your own business is exciting, but for most first-time entrepreneurs, it’s overwhelming. Even if you create the best business plan and account for every cost, you’re likely to encounter some surprises that can jeopardize your new venture’s cash flow. Planning for potential hiccups is key to maintaining a steady cash flow, and luckily, there are several useful money management strategies you can employ. With the help of the Kimberly J. Howard, CFP Blog, learn how you can sustain your business, manage its finances effectively, and keep its cash flowing steadily.

Minimizing Expense Fluctuations and Optimizing Inventory Management and Invoicing

Cash flow is the total sum of incoming and outgoing payments in a given time period. One of the best ways to keep cash flow positive is to minimize expenses that can have a big impact. Rather than buying equipment, for example, De Dietrich Process Systems explains that you can rent it. This frees up some of your business’ capital, which you can then invest in a high-yield savings account, allowing it to grow further.

Inventory is closely linked to your cash flow, too. Your inventory can be a source of positive cash flow, but accumulating inventory requires an investment of capital. Striking a balance is a skill that eludes many beginning business owners, but, as IndustryWeek points out, you can start by optimizing your inventory management system with specialized software. This can help you manage this essential component of your enterprise without negatively affecting your cash flow.

Keep in mind the role that your clients play in your cash flow. Your revenue depends on timely payments from your customers, and they depend on prompt invoices from you. With an update to your invoicing process, which starts with an invoice template, you can minimize the delay between a transaction and its payment by invoicing your clients with correct and complete information as soon as possible. You can even incentivize prompt payment by offering discounts.

Managing Your Business’ Finances Effectively

When you’re managing a company, you may eventually need access to funding, and financing typically requires the submission of profit and loss statements proving your business’ income. If you don’t invoice your clients consistently and keep accurate financial records, you’ll have difficulty securing funding.

To ensure you have easy access to financial insights, you should invest in a simple solution such as accounting software that monitors cash flow and automatically generates reports. A balance sheet report, for example, is an important document that can help you understand your cash flow more easily. The right accounting system can produce this data so that you don’t have to sit and calculate expenses.

Perhaps the most important cash flow strategy, though, is maintaining consistency. It’s in your business’s best interest — and your clients’, too — to establish clear and consistent policies regarding payments. If you don’t impose payment deadlines and don’t establish expectations with clients, your cash flow will surely suffer.

Keeping a Positive Cash Flow

Running an enterprise involves countless moving parts, and as an entrepreneur, it can be daunting to oversee each of them. It’s important not to lose sight of the most essential tasks, though. You must ensure that your business runs smoothly by managing its cash flow effectively.

With the right software, prompt invoice practices, and accurate financial reports, keeping a positive cash flow should be no problem — even for a beginning business owner. You can be confident in your company’s finances when you have the right tools at your disposal.

The Kimberly J. Howard, CFP Blog shares thoughts, insights and financial planning advice from KJH Financial Services. Reach out to Kimberly today for more info!