Nearly every small business owner has stories to share about how they started out on shoestring and managed to survive their first years by being creative with limited cash. If you’re one of those entrepreneurs who wants to know how to grow your small business on a budget, there’s hope.
Bootstrapping your small business through these lean years might seem unappealing, but by using some good information here and doing a little research of your own there, you’ll soon see your small business growth take off.
We break down some of the best ways to grow your small business’s operations, sales, financing, and product development to help you build a sustainable business.
Part 1: How to Grow Your Small Business by Making the Most of Your Operations
Many business advisors will tell you that your most valuable resource is your personnel. And although that may be true, in the early stages of business when the budget is lean, you have to find creative ways to operate with a small team—or even no team at all—and still get the job done.
Invest in Cost-Saving Small Business Apps
In today’s “There’s an app for that” environment, the tasks that once required several employees can now be automated using software.
Although many small business owners are comfortable using software for office communication, inventory management, and accounting, many overlook some of the best business apps that can address employee payroll, staffing, and scheduling, among other essential (and often otherwise expensive) operations.
When trying to discover how to grow your small business on a budget, limited staff and lower cost are both requirements. With that in mind, here are a few examples of useful apps and softwares that can help you do more with less:
- Gusto for payroll and benefits management
- Hootsuite for social media scheduling
- QuickBooks for small business accounting
- Trello for project management and workflows
- TurboTax for fiscal year end tax accounting
- When I Work for shift-worker scheduling
- Zapier to connect various softwares and create automated processes
Outsource Strategically to 1099 Contractors
If you have a specific project that requires specialized skills, expert competencies, or perhaps a seasonal project that requires temporary help, a 1099 contract employee could be a cost-effective option to consider.
Although the hourly rate of a 1099 contractor might seem expensive at first glance, when you compare the entire costs of hiring a full-time employee, the contractor might be the less expensive of the two depending on your needs.
Keep in mind that contract workers are fully responsible for all their own expenses, including all taxes. This means you have no obligation for federal, state, or local taxes, social security or Medicare benefits, Worker’s Compensation insurance, or unemployment taxes. All the tax expenses are the responsibility of the independent contractor. (That said, there are other liabilities around independent contractors—so make sure you’re aware of them.)
When trying to keep down personnel expenses, 1099 contractors can be a cost-effective alternative to hiring full time employees.
Take Advantage of Free Business Development Resources
When looking for assistance on how to make your small business grow on a budget, no one knows more about what you’re going through than other small business owners who have walked in your shoes and become successful. Learning from those who have experience can be invaluable.
In addition to joining local trade groups and small business networking groups, explore these organizations that were created to give support and assistance to small business owners and entrepreneurs like you.
SCORE Business Mentors: As a resource partner of the US Small Business Administration (SBA), SCORE is a nationwide network of volunteer business mentors. Since 1964, the program has provided mentors, workshops, webinars, and educational resources on all aspects of starting and operating a small business.
Small Business Development Centers: Also operated in partnership with the SBA, there are more than 900 SBDC service sites nationwide at which business professionals share their expertise through training and counseling. Each SBDC is built and managed to meet the local business trends and evolving needs of the community in which it serves.
Chambers of Commerce: Your local Chamber of Commerce has its proverbial finger on the pulse of commerce in your area. They should have plenty of information on topics like demographics, marketing strategies, building planning and development, and business networking groups just to name a few.
Part 2: How to Grow Your Small Business by Maximizing Your Budget
The most obvious answer to the dilemma of how to grow your small business on a budget is to more effectively use the money available to you. That sounds simple, of course, but you likely already know how difficult it can be in the day-to-day of operating a small business.
There are some tried-and-true actions you can take to help make the most of every dollar your small business produces.
Set Your Budget and Stick to It
When you’re looking to make your small business grow on a budget, every single penny counts. So, making sure that the budget you create is realistic is critical to your success. This means going through your business plan with a fine-toothed comb. Look at every expense item and then make an honest evaluation of what’s really necessary.
Once you’ve created this realistic budget, make the commitment to stick to it. This might take more discipline than you think. Being tempted by what would be nice to have instead of what is strictly necessary can sometimes be hard to resist. But by keeping your eye on the goal you set for the future of your business growth, you’ll be able to avoid this pitfall.
Identify Available Business Tax Deductions
Taking advantage of business tax deductions is another way to grow your small business on a budget.
Many expenses are deductible (including business loan interest!), but they might be subject to amount or timing limitations. Deductions may also be restricted based on the type of business entity you own—a sole proprietorship, an LLC, an S-Corp, or a C-Corp. You can find details on these tax deductions or restrictions at IRS.gov or by consulting your business accountant.
Make Strategic Use of Small Business Financing
You might not think of going into debt as the best answer for how to grow your small business on a budget. But if you’re careful about your choices and responsible with managing the repayment, not only will it help your immediate financial need, it will also help you build a solid business credit history.
Here are some small business funding options you may want to consider:
Term Loan: Traditional loan where a lender loans you a lump sum of cash up front in return for a promise to repay the total, along with interest and fees, in equal installments over a predetermined period of time. Usually 3 to 5 years.
Short-Term Loan: Similar to the term loan, only shorter in duration, usually 3 to 18 months. Payments are made on a weekly or even a daily basis.
Business Line of Credit: Pool of funds pre-approved by the lender with a maximum credit limit. You can then draw funds out of this pool as you need them and only pay interest on the amount you use at any given time.
Business Credit Card: Maybe not the first option that comes to mind when thinking about how to grow your small business on a budget—but very useful when handled responsibly. Some business credit cards even offer 0% APR introductory interest rates for 12 or even 15 months, making this a very cost-effective way to borrow money for your business.
Part 3: How to Grow Your Small Business by Bootstrapping Your Marketing Strategy
Your business can only experience the growth you’re hoping for if potential customers can find you and learn about your product or service. Marketing and advertising are the avenues to make your small business grow by attracting new customers.
It isn’t unusual for larger businesses to allocate a significant percentage of their annual budget to marketing and advertising plans. But if you have easy access to a computer and are willing to do a little research, there are ways to get your business name and product brand out there without blowing the budget.
Refine or Update Your Online Presence
Some of the least expensive marketing you can do for your growing business happens online. If you haven’t already established a website and social media presence, now is the time.
Yet despite being cost effective, online marketing isn’t necessarily easy. It requires time and energy. Regardless, you can accomplish a lot without spending a fortune.
Ask for customer reviews and put call to action buttons requesting contact information on your website to build an email list of qualified leads, then communicate regularly with those contacts to build trust. Having your business listed in directories like Google My Business, Yelp, and YellowPages.com—and regularly engaging with reviewers on these sites—will also help to build your business’s credibility and online footprint.
Give Something Away
Everybody loves to get free items, so create some good will by running a promotional business giveaway with items that will encourage new customers or return business. Discount coupons or percentages off of purchase are good ways to draw in business that don’t actually have an immediate effect on your cash flow.
Encourage Referrals from Colleagues and Customers
Referrals are the highest form of compliment but many business owners simply forget to ask for them. If your customers are happy with your product and service, ask them to tell their friends and family as well as leave a positive review online. People are more inclined to do business with someone they have heard about from a friend or relative than a stranger they picked at random.
Likewise, ask your business colleagues to do the same. If possible, offer to reciprocate and give referrals for them as well. Encourage your local business community to come together in support of one another.
Part 4: How to Grow Your Small Business by Developing to Scale
When you began your small business journey, you had a product or service that excited you. You identified your target market; created a lean, but workable budget; and began the process of developing that product for marketing to your perfect customer.
As you expand into new products, of course, take care to also maintain quality control of your current products and service in the interim. This can be a challenging balance, but it’s critical to your business’s long-term stability.
Have a Clear Vision and Stay Focused
Once you’re out in the small business market dealing with customers, suppliers, competitors and all the other distractions, it can be easy to lose sight of your original goal. By trying to expand and accommodate too many new ideas, your original product or service can begin to suffer in quality.
Keep in mind that maintaining high quality is the key to ensuring consistent growth. Until your business has reached the point where cash flow is available to fund additional product improvement or development, stay focused on your original vision and watch it grow.
Pay Attention to Customer Feedback
Customers are the reason you’re in business, right? Their feedback is an essential tool for evaluating how well your business is doing providing the quality product or service you advertise. And although it may take more time and energy than you seem to have some days, it’s important that you stay in touch with how your customers are responding.
An occasional negative review is to be expected and should be handled with diplomacy. But if that one negative review turns into a trend it could be a symptom of something larger that needs to be resolved quickly and efficiently.
Stay Aware of Industry Trends
Trends are constantly changing in the business world. Knowing how to make your small business grow will require being aware of what those changing trends are in your market.
There are a number of ways to stay current on what’s happening in your particular industry. Attend trade shows and conferences; join local business networking groups; join industry-specific online groups. The more you reach out to other small business owners like yourself, the more contacts you’ve made for the future.
Part 5: How to Grow Your Small Business by Keeping Your Focus on Customer Service
You can produce the best product in the world or provide the most necessary service available, but if your delivery and follow through don’t meet expectations of quality customer service, you won’t see significant growth.
Customers always have choices available for whatever product you provide. If you want to set yourself apart from others without spending large amounts on marketing gimmicks, excellent customer service is the best way to do just that. Developing genuine relationships with your customers will ensure that they become repeat customers.
And the best part? Loyal customers become your best advertising and marketing tools and they’re free. Free is great for a tight budget.
Growing Your Business on a Budget Means Being Proactive
Don’t assume that the same old business practice of spend money to make money always has to be followed in order to be successful.
If you’re flexible and willing to seek advice from professionals who have been where you are, the experience you gain while watching your small business grow will be invaluable in the years to come.