The phrase “lean start-up” is a catch-all for any new business. But just how lean can you be when getting your new business on its feet?
Personal trainer Marie Bean had no cash to get her running business off the ground. The gym she worked at had just closed and Bean was determined to get another job as soon as she could.
So when a former client suggested Bean start a running club and offered herself up as the first customer, the fitness fanatic jumped at the opportunity.
“I really started with nothing, but soon realised that any money I was earning from paying clients needed to go straight back into the business,” she says.
“I knew I had to spend some money on the business to grow it, but I also needed money to live on.”
Lazy Runner, which Bean named after herself, now operates across Victoria, Western Australia, Queensland and from November, Adelaide. Bean says her success proves a business can get starting on little, or no, funding.
“I really do think you can run your business on a shoestring budget and still get it to grow and be successful,” she says.
“Now that my business has really grown, I license my running clubs so other people pay me to use the name and brand to operate their own small business.
“I try to teach them how to keep their running costs low as I know when starting out the costs can skyrocket, so I try to give them the tips of what I did way back in the early days.”
Like many budget-conscious business owners, Bean says she spends little on “the bells and whistles”. This means less on broad-based advertising and more on targeted marketing.
John Bishop, director of non-profit organisation PetRescue, uses the same approach. The pet rehoming services, which saves the lives of animals that would ordinarily be euthanased, runs on an extremely tight budget, says Bishop.
“We have the worst business model ever where we don’t charge anyone anything,” he says.
“We wanted to make it as easy as possible for people looking for a new pet through PetRescue. So one of our primary revenue streams is advertising on our website.”
The organisation’s funds were boosted when Bishop, PetRescue’s only full-time employee, starting taking advantage of Google AdWords to home in on potential pet owners.
“It’s probably the most cost-effective form of advertising for us,” he says.
Whether you have $50 or $50,000 in the business account is irrelevant – what matters most, says small business strategist Stefan Kazakis, is knowing your stuff.
“The biggest drag on most shoestring businesses is not the lack of knowledge or resources, but the lack of direction and determination,” he says.
Kazakis, author of small business advice book From Deadwood to Diamonds, says having passion and clear goals are more valuable than seed funding.
“Clarity is not about dollars and cents and it’s not about how many clients you have,” he says.
“It’s not about your marketing or your cash flow or your balance sheet. All this stuff comes later.
“It’s the heart and soul of why you go into the office every day and the promise you make to your customers.”
Kazakis’ top five tips for making a budget business run smoothly:
1. Define what is your No.1 goal for the first year in business. Get all the information you need to make a clear and confident decision.
2. Go slow to go fast. Slowing down and putting the right systems in place will mean you later go faster than you could ever have imagined. Being organised makes you go fast. Running around trying to do 100 things at once does not make you go fast.
3. Half of something successful is better than 100 per cent of something that’s not. Be prepared to give so that you can have.
4. The five R’s – right people, hired for the right roles, who are clear about their responsibilities, getting paid the right money, will deliver the right results.
5. Identify who is your target market. What do they look like? Where do they hang out? What desired outcome are they looking for? When is their highest level of frustration? Why would they choose you? How do you expect them to do business with you?