Call me old-fashioned, but I subscribe to the belief that in order to launch a business, one needs to either be in possession of massive financial reserves or apply for a bank loan of more than $25,000.
Apparently, I’m living in the dark ages. With some research, I’ve found that many, many small business owners launch without crazy cash under the mattress or credit scores in the 700s. I spoke with two of these entrepreneurs to find out how they did it on (gasp!) less than $1,000. To see how small businesses spend their money, check out this infographic.
A few years ago, self-professed foodie Marisa Voorhees was dealt a huge blow when diagnosed with allergies to wheat, gluten and dairy products.
“I was crushed and then completely shocked when my doctor looked at me and said, ‘That’s gotta suck, what are you going to eat now?’” she says.
Fired up, Voorhees, a Chicago resident, became determined to find as much information as she could on how to eat, what to eat and a general community to commiserate with. She didn’t come up with much, and was further discouraged when laid off from her full-time job soon after her diagnosis.
Living on unemployment and driven to better her situation, in March she branded herself ‘The Food-Sensitive Foodie’ and launched MV, Inc., a cooking and health coaching company, designed to encourage and educate those with food allergies.
“I was not one of those people who was prepared to be laid off or had savings; I walked into this company with nothing but an idea,” she says.
How did she make a go of the business?
First, she bartered. Voorhees likes to cook, so she offered vendors (even her personal hair stylist) food in exchange for services.
Second, she asked everyone she knew to help her, and enlisted an uncle to build her site, a cousin to design the layout and friends to write for her.
Third, and most importantly, she says, she was open to feedback.
“Starting a business can be a very emotional thing, but I found that negative comments were where I got some of my best ideas on how to improve my business,” she says.
Today, MV, Inc. is thriving and Voorhees is also working as an independent small-party caterer and teaching in-home cooking lessons.
She offers three tips for cash-strapped entrepreneurs:
1. Establish your line
Voorhees says it is vital to determine your service offerings and come up with a mission statement.
“Mission statements are so important because tons of things will soon come at you and you need to be able to filter them out depending on your values and mission,” she says.
Tell everyone about your business idea, she says. This includes family, friends and acquaintances. You never know who may have a need for your services or a connection to someone who does.
3. Be patient
When working with unpaid helpers or those in a barter agreement, you are working on their time, not yours.
“Be willing to work with their schedule,” suggests Voorhees.
In 1981, Shel Horowitz launched a writing business with $200 and an IBM typewriter. He specialized in typing term papers for college students in his home state of Massachusetts.
“Back then, a lot of people did not type, so they would give me a stack of yellow lined paper with written copy and I would type it up for them at $6 per hour,” he says.
His business evolved over the years from term papers to resume writing to books to speaking. Today, he is a well-known speaker and writer of eight books, including Guerrilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet.
The IBM/$200 route may have worked in 1981, but how can today’s entrepreneurs launch a business on a shoestring budget?
Horowitz offers a few tips:
1. Write press releases
Create a press release anytime you put out a new product or service, receive formal recognition, organize an event, or develop a partnership with a well-known business, he recommends.
“Post regularly to free press release sites, and make sure the story is interesting enough that the reporter or reader will want to keep reading,” he says.
2. Form partnerships
Ever noticed how FedEx has drop-off boxes sitting in front of most U.S. Post Offices? This is because the USPS partners with FedEx to deliver expedited mail, Horowitz says. “They are competing, but very much helping each other out.”
Think of businesses that could use your help and approach them, and get creative. In several of Horowitz’s speeches, he cites a spa in business with a local car dealer. Each time someone brings in a car for an oil change, they are given a coupon for a discounted 40-minute massage.
3. Become a public speaker
Public speaking is a great way to get your name out there, and every community has opportunities to stand up in front of a crowd.
“When you are starting out, approach organizations that are unable to pay for speakers—like your local chamber of commerce or Rotary Club—then think about what you can offer your audience and talk about it; for example, a women’s boutique owner may present on how to shop cheaply and efficiently,” he says.