How to Start a Small $500 Business
Owning your own business can mean the difference between prosperity and poverty. Janet Attard, author of "Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses With Limited Budgets," states that millions of business owners profit from simple, inexpensive ideas. For $500 or less, you can start a business that will generate additional cash flow and reduce your tax liability. Starting any successful business requires discipline and motivation, but most people can start and run a micro-business in less than five hours a week.
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Instructions
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Add up the cost of everything needed before making the first sale. For example, a greeting card business needs card stock and a computer with a printer. These expenses are called start-up cost.
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Calculate the profit from each unit sold. For muffins you buy and then resell, profit is the difference between the price paid and the price received. For a service, it is the cost of everything needed to provide each unit of service. For example, a quilting workshop earning $100 may require $20 worth of material for demonstrating a technique, for example.
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Calculate how many units per month must be sold to cover all other expenses, called overhead. To break even, a specialty playing cards business with $75 of overhead expenses must sell 75 packs if the price is a dollar more than the amount paid for each one.
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Estimate how many units beyond break-even will be sold in a month. This is your profit. If profits are too low, consider reducing costs or raising prices. If that is not doable, the business is probably not worth starting.
Launch the Business
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Open a separate checking account for your business. Deposit $500 in the account. Use it only for business purposes; do not mingle personal and business finances.
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Spend no more than $250 on start-up expenses. Save the rest for ongoing and emergency expenses.
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Create an inventory. Stock at least a few items so that customers do not have to wait for their order. For service businesses, have everything you need to deliver the service on hand and ready to use.
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Advertise as cheaply as possible. Avoid expensive radio and newspaper ads. Use coupon books, social networking and other inexpensive ways of getting the word out. Hand out your business card wherever you go.
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Follow up each sale with a thank-you note. Referrals are the best source of new customers, and a heartfelt thanks makes people want to refer their friends.
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Tips & Warnings
Make sure you business complies with all local, state and federal laws and regulations.
References
Resources
- Photo Credit business image by peter Hires Images from Fotolia.com
