Carol Tice - The Pocket Small Business Owners Guide to Starting Your Business on a Shoestring

Carol Tice

Copyright 2013 by Carol Tice

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Published by Allworth Press, an imprint of Skyhorse Publishing, Inc.
307 West 36th Street, 11th Floor, New York, NY 10018.

Allworth Press is a registered trademark of Skyhorse Publishing, Inc., a Delaware corporation.

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Cover design by Brian Peterson

Library of Congress Cataloging-in-Publication Data is available on file.

ISBN: 978-1-62153-239-2

Printed in the United States of America

I once had a good friend come to me all excited because his cousin was going to open an Italian restaurant. He had a great location, an armload of his mothers great Italian recipes, and a fun name: Yo Mamas.

It all sounded wonderful to me. I couldnt wait to go try the cuisine. I followed along eagerly as my friend kept me updated on the restaurants progress.

Unfortunately, there were delays and more delays. The refrigerator cases took forever to arrive. The contractor who was to install the restaurant booths flaked out. The menus were designed, rejected, and redesigned. Unexpected expenses seemed to crop up at every turn.

What was supposed to be a two-month build-out took six months, while Yo Mamas landlord went right on collecting rent payments. Finally, my friend brought me the sad newsYo Mamas had closed without ever opening its doors.

My friends cousin had his entrepreneurial dreams destroyed by the biggest problem afflicting would-be business owners: He overspent and ran out of money.

If what happened to Yo Mamas was a fluke, you wouldnt be reading this. Unfortunately, early death is all too common among business startups. Every year, more than half a million American entrepreneurs start a business, the Small Business Administration (SBA) reports. But many of those businesses dont survive.

SBA data show that three of every ten new businesses close within the first two years. At five years, half the businesses are gone.

Why do these businesses fail? You might chalk it up to management inexperience, inadequate fundraising, or just plain bad luck. But in the end, most businesses close their doors for the same, simple reason Yo Mamas didbecause their owners have run out of money.

In nearly twenty years of talking to entrepreneurs and writing about business, Ive seen this story repeated over and over. Failure to control expenses means too much cash is going out the door while your business is in its critical, formative months. Overspending starves the business of needed capital, forcing you to borrow and fall into debt. Payments to service that debt starve your cash flow further, which limits your growth options and results in fewer sales. The downward spiral is often irreversible.

Consider this book your practical business survival guide.

Whether you are just thinking about starting a business or have taken the plunge already, this book provides scores of ideas and strategies to help you cut costs and keep your business alive. Ive covered how to slash expenses for every aspect of your business, whether you operate a retail, e-commerce, manufacturing, wholesale, or service business.

Many entire books have been written about some of the topics covered here, especially marketing and social-media marketing. My intent with this pocket guide is to give you a basic grounding in the savings opportunities available in every aspect of your budding business, all in one handy volume. By providing tips in each area, Im hoping to help you develop a habit of questioning every expense and looking for free and dirt-cheap alternatives at every turn.

The good news: There has never been a better time to try to start a business on a shoestring. The Internet has brought a wealth of free or cheap resources for entrepreneurs of all stripes. There is also renewed government and charitable interest in supporting and building a thriving small-business sector.

As you build your business, ask yourself: How badly do I want my business to survive? Then, look around and figure out how to cut expenses. The lower your burn rate, the longer you can keep the business alive as it builds to profitability.

If you want the one-line version of what Ill impart in the coming pages, its this: Every time youre about to spend money on your business, ask yourself if there is a way to avoid, reduce, or postpone this cost. Develop this habit, and it will help set you on the road to business success.

This book is full of real examples of cost-cutting successes and failures culled both from my own experiences running several solopreneur, home-based businesses and from my many years as a business reporter, during which I saw too many good businesses go down in flames. I developed a passion for helping businesses grow and thrive along the way, and Im excited to present this extensive collection of money-saving ideas for business owners and aspiring entrepreneurs.

I dedicate this book to my parents, Arlene and Bernie Faber, who taught me the value of a dollar.

Carol Tice

I f you only read one chapter of this book, this one has the potential to save you the most money.

Why? If you start a business and it turns out that there is no market for what you want to sell, every dollar you spend on the business will be wasted.

Its a common flaw of entrepreneurs that you never think this will happen to you. Your idea is inspired! Its genius! Customers will be lining up around the block, for sure. Or so you think. Thats what one new Seattle entrepreneur thought, too, when he started his business in 2010.

The business began when a retired attorney saw a new electric car model that a small engine-maker was introducing to the market. Enchanted by the $11,000 vehicle, the man leased a large storefront on the main drag of his small Seattle town, rolled a couple of the electric cars into the showroom, and waited for the customers to flock. He got a write-up in the local paper. Locals definitely knew he was there.

Three months later, the business had sold exactly zero cars. There were some problems with the car, it turned out. Customers didnt like it muchor not enough to shell out $11,000.

For starters, the car didnt have doors.

It was open on the sides like a golf cart. In the rainy Northwest, no one was going to buy a car without doors. The owner began pressing the manufacturer to add doors to the cars, but the months dragged on, and no doors arrived.