Start now - pay later! [2006]
- Date : (2006-01-04)
- Author : SAIE
__ “Start now. Pay later”__ or How to get going with as little of my own money as possible.
Some of the world’s most successful entrepreneurs use very little of their own money to run their business ventures. Over time they have developed their skill at getting other people interested in their ideas to a fine art. They have now grown their reputations to the point where others are keen to invest in any new project that they come up with. Unfortunately we are not that famous or successful yet, but there are still clever ways of using as little of your own money as possible when you start your business ventures.
Great entrepreneurs know from long experience that it is very easy to spend money at the beginning of a project but much harder to earn it back again. Often they will refuse to fund big start-up costs. From their experience they know that most successful businesses start with very little and build as they go. Mark Shuttleworth, South Africa’s young business success story, started his computer software business in a garage and sold it after a few years for literally Billions of Rand. He is now keen to support other South Africans to do the same kind of things in the computer software industry, but his message is very clear. “New businesses should only get enough start-up money for computers and bread and water,” Mark explained, “the rest they must make for themselves as they go along.”
Linda wants to open his own hairdressing salon. He has been running his business from home, but now wants to be more visible to potential clients. He could go to a shopping centre and hire a shop and then pay for the shop to be fitted out. He could easily find that he has spent over R 200 000 of his own money on shop fitting and a deposit and the first month’s rental before he sees his first paying customer.
But Linda is smart. He has had some experience of running a salon with others before. They got their fingers burned when they went into premises without signing a proper lease agreement. When the landlord, seeing their success, increased the rental three times within the first year to almost double what they had been paying at first, they knew that they were beaten and closed down.
Linda now wants to open his own salon, without spending any money of his own so that he can lower his risk. How can he do it? Is it possible?
When we spoke to Linda he said that he had seen a shop in a busy street that had been standing empty for a long time. It was just the right sort of place and many people passed by the front door each day. “I have done my investigations and found out who the landlord is, I am going to offer to sign a five year lease so that I know exactly what I am going to pay each month for the next five years.” He explained. “I have learned my lesson, I do not want any rental surprises in the future!” Linda then explained what he was going to ask the landlord to do for him, after all he was offering to pay rent for a shop that had been earning nothing for a few years! “I am going to suggest to the landlord that I am prepared to pay a slightly higher rental if he upgrades the shop for me and puts in the fittings I need, in addition I am going to ask that I do not have to pay rent for the first two months as I settle in to the new premises.” Linda’s proposals to the Landlord make good business sense. Instead of paying out over R 200 000 of his own money to set up the shop, he is going to have 2 months rent-free in his new premises before he has to start paying anything!
There are many ways to cut costs when starting your business. You need to ask yourself……
• Do I absolutely have to buy or pay for this item now or can it wait?
• Can I borrow or hire the equipment I need?
• Can I work from home instead of paying rent?
• Can I share space with someone else for a while?
• Can I get materials on account from a supplier and pay for them after I have been paid?
If you sit down and work through each item you need to start your business and ask yourself “How can I find a way of not paying for this now?” you will be well on the way to running a lower risk business.
When I started out in business, I spent a great deal of time researching every detail that might be pertinent to the deal I was interested in making. I still do the same today. People often comment on how quickly I operate, but the reason I can move quickly is that I’ve done the background work first, which no one usually sees. I prepare myself thoroughly, and then when it is time to move ahead, I am ready to sprint.
Donald Trump – The man who says “You’re Fired” on The Apprentice
