Tips for Successfully Running a Small Business on a "Shoestring" Budget

BY JEFF REYNOLDS, REAP PROGRAM DIRECTOR

The economy in the United States is a major concern to all citizens in our great country. Everything and everyone has been negatively impacted in some way. Like many others, small businesses are feeling the pinch of the economic downturn.

In this economy, many, if not most, small businesses are operating on very tight budgets to simply get by. Some call this “bootstrapping” or operating on a “shoestring.” In either case, it is possible to successfully operate a business on a shoestring!

Through both good and bad times, success in operating a business is not necessarily predicated on a fat wallet. Rather, it comes from good financial management, proper planning, and a relentless drive to succeed.

Listed below are several tips for entrepreneurs who are operating on a tight budget. The tips also apply to entrepreneurs in the startup phase:

• Put your money where it will bear fruit. Try to put as much money as possible into working assets (which bear cash and sales), and as little as possible into fixed assets. Also, if you have dead inventory, figure out ways to dispose of it quickly.
• Push the Sales. Continually work at building sales of your product or service. Be sure to have a plan in place, and dedicate time each day to market your business. It’s really easy to get in a rut and stop effectively marketing your business. Businesses that stop marketing may soon be out of business. There are many cost effective ways to do marketing. If you need help, contact your area REAP Business Specialist for assistance.
• Be “Lean and Mean.” Businesses operating on a shoestring do not need any deadweight. Strive to keep your fixed costs as low as possible, and spend on items that contribute to your bottom line. Every dollar in expense should be directly tied to income.
• Spend a nickel only when you can get a dime in return. Production is mandatory from all involved with the business. If you have employees, “hire slow and fire fast.” The success of your business relies on all involved, and time is of the utmost importance.
• Master the Financial Tools. As the business owner, you are responsible for the life and growth of the business. Through good times and bad, you must be able to effectively manage all elements of the business. Having a clear and total understanding of the finances will give you control over the direction of the business. It is critical to understand your cash flow, income, profit and loss statements, and the overall bookkeeping system. Having a keen understanding of the money part of your business will tell you where you’ve been, where you’re going, and how fast you’re getting there.
• Use Available Resources. Resources like the REAP program are available to assist startup and existing small businesses. Many times, entrepreneurs wait until it’s too late to ask for help. Resources like REAP are in the business of helping entrepreneurs through counseling assistance, training and loan assistance. It is up to the entrepreneur to ask for help, which will in turn increase the odds of small business success and growth.

These are just a few thoughts and ideas around the topic of operating a business on a tight budget. The REAP Program has Business Specialists located throughout rural Nebraska. If you need small business counseling, a loan, business training or other, please contact your area REAP Business Specialist to set up an appointment.