How you can build a successful small business with minimal startup money
The dream of small business ownership and financial independence is one that has long been out of sight for many individuals. Whether it is the need for hundreds of thousands of dollars in startup capital or the ivy league MBA that many believe is required, the path seems too long and daunting to traverse.
The truth is that there are tens of thousands of entrepreneurs who make a comfortable living from businesses that cost only a few thousand dollars to start.
In this article I’ll explain how building a successful small business is possible, even if you have no prior expertise in running a small business and very little startup capital.
Online Business Models
The idea of starting an online business or even building a website still sounds foreign to many aspiring entrepreneurs. Fortunately, web development has gotten much easier since the early 2000s when you needed to know at least two coding languages (HTML and CSS) in order to build a website and have a third party hosting company that used to be quite costly.
Truth be told that you can become a decent web developer in 3-4 weeks with many online classes, even free courses on YouTube can make you an adequate web designer in a few months. If you take a liking to the web development process, this could be a great service for you to offer to the public and build your business around.
Some online business models don’t even require you to be an adequate web developer. There are ways to make Ecommerce websites with tools like Shopify that are just about as easy as making a Facebook page. In addition, selling products on Amazon does not require a website at all.
We’ll briefly outline some of the most basic online business models, what skill sets are required to make them work and how much startup capital you should have set aside before you begin.
It is no secret that Amazon has virtually taken over the retail industry. Even before COVID-19 Amazon was the largest retailer in the world and was growing it’s revenue at over 20% per year. The vast majority of products that are sold on Amazon are sold by third party sellers. Many of these sellers have their products stored in Amazon’s warehouses. This is how the acronym FBA came about as the products are Fulfilled By Amazon.
The first step to building a business selling on Amazon is to find a great product or products to sell. This could just be a great idea that you have for a product that you’ve had made at a local manufacturing facility. However, most successful FBA sellers will use a tool like Helium 10 or JungleScout. These tools will help you find a product that has sufficient interest from shoppers, fits a price point that you identified and does not have too many competitors. For novice sellers and experts alike, I would recommend using one of these tools.
Once you have found products that you believe will be successful, you’ll need to find a way to have these products created for you. The most popular way to find a manufacturing facility for your products is to search alibaba.com. After finding a product and working with the manufacturer to fine tune it, you’ll need to create an ‘Amazon Seller Central’ account, this is the dashboard where you upload your products for sale, price them, keep inventory count and track your sales.
To start a successful Amazon FBA business you should have at least $10K saved up to start and alot at least 3 months of learning the skills, techniques and building the necessary relationships.
Affiliate marketing is a popular business model amongst entrepreneurs who are already familiar with online marketing. However, most newcomers to doing business online don’t even know that the business model exists, let alone how it works.
Affiliate marketing is fairly simple. A marketer promotes products or services offered by another company. Typically this promotion is through a blog post. This could be a blog about the “Ten best electric toothbrushes.” When someone purchases the toothbrush through the referral link provided in the blog, the author of the blog gets a commission.
While writing a blog post about your favorite services and products may be easy, the difficult part is getting that blog ranked highly in Google so that you actually get traffic to it.
In order to get your blog to rank in Google’s search results, you’ll need to perform Search Engine Optimization (SEO). This means that you’ll be designing your content and presenting it in a way that Google will want to show it to their searchers. You’ll likely also need to promote your content of some websites other than your own and link back to your article. Google sees this as an endorsement of your articles quality and will then rank it higher.
You don’t need any more than $1K saved up to start an affiliate marketing business. However, if you are new to SEO, you may want to take a course which can potentially cost you another $1K-$3K. This will likely be money well spent as affiliate marketing is a proven business model to provide passive income once the website is built and ranked in Google.
Building an expertise in a certain domain and then offering it to the public is one of the most obvious business models that you can pursue. Some of the more common ways that these businesses present themselves is as marketing agencies, web design agencies or consulting services.
If you build skills as a great marketer on Google, Social Media or another channel, you can then offer these services to small businesses for a monthly fee. You can also just opt to offer creative design services or web design services. Most of these skills can be built by watching YouTube tutorials, taking online classes or reading blogs from businesses that are currently in the space.
If you have already developed the skill that you want to offer as a service, all that is left to do is to get your first few clients. This can be done through networking with local businesses that can use your services. You may want to have a small service that you offer for a low price in order to build rapport with your clients and then upsell them to your larger packages. For instance, if you are a web designer, you may want to do logo design for $100 to build a relationship with your customer. Once you deliver that logo, you can then upsell them to your web design or digital marketing package for a higher fee.
Forming a legal entity
If you are new to business, chances are that you have never formed a legal business entity before. The legal formation process can be daunting, but is really more simple than most people think.
The most common business entities that are utilized for small businesses are limited liability companies (LLCs) or S corporations (S corps). While your accountant or tax attorney can advise you on the fine points, just know that you’ll be fine with either of these. Most entrepreneurs opt for the LLC, primarily because it is easy to form in most states and does not have as many management or maintenance requirements as the S corporation does.
Again, you should seek the advice of a tax attorney or CPA for more detailed information. In no way should this be deemed legal advice. You can find both advice and legal templates on LegalZoom and with similar online legal service companies.
Entrepreneur communities and courses
If you are new to the world of entrepreneurship, it will likely prove valuable to find a mentor or a community of folks that are in a similar position as you are. Fortunately, these are available online and in person in many places.
You should be able to find blogs, forums and Facebook communities about various online business models. For folks located in large cities, you may be able to find a meetup group for aspiring entrepreneurs and folks who are trying to build a business similar to yours.
If you are trying to take your skills to the next level, there are several courses that are sold online from folks who have successfully built online businesses and are able to show you the ropes. However, there is a broad spectrum when it comes to how good courses are. Generally speaking, if the folks who are selling the course have been selling courses successfully for 3+ years and are able to show a list of 100+ students who have had success, the course may be worthwhile. For newer courses, there is a chance that they are just selling you a bill of goods and that there is little knowledge or support that goes along with the course.