5 Tips for Starting a Business with Small Capital
Netgenz - Business | Along with the development of the era, entrepreneurship is now not only favored by those who have been established. With less capital, a millennial can increase his business wings. For those of you who want to start a business with a small capital, the CEO and Co-Founder of Money Livestock, Raymond Chin, shares a guide to forming a business with low capital, which is only Rp. 1 million.
Here are 5 Tips for Starting a Business with Small Capital
1. Define a Business Idea
To start a business with low capital, Raymond recommends not to stay silent on physical stores. "If we have little capital, it is impossible for us to open a restaurant or office. Make sure the products are marketed digitally and we don't have to have stock of goods," said Raymond on his YouTube channel.
"Generally, business ideas come out every day. The idea can be big, for example opening a restaurant. But in practice we cook in our own kitchen and sell it online," he explained.
Regarding the selection of business ideas, he suggested witnessing the opportunities of the activities every day. For example, selling basreng (fried meatballs).
Because the capital is small, market research and competitor research must be carried out so that a business person can determine the type of product and marketing tactics. "Market research, for example, basreng, see if there are some people who are looking for basreng. Then watch on the food delivery program, whether many are selling basreng or not," said the young investor.
And for the competitor research stage, Raymond relies on a concept. "Look for information on competing products, starting with the product, price, and service. The concept is ATM (Watch, Follow, and Modify) their products," said Raymond.
Of the 100% capital, the share for the product is used about 40%. For a case study of selling basreng, for example, it means that the distributed capital is Rp. 400 thousand.
Raymond reminded me, to try not to make a lot of product stock because the products marketed are not sure to sell well. "Because small capital has to look at cash flow, it's better for the pre-order mechanism or per batch. Small capital should not expect large stock. Make sure to get a healthy profit," continued Raymond.
For the marketing budget, Raymond shares 40% of his capital. But for marketing, you should not focus on promos, but by completing several factors that will later stick through the products offered.
"When the product is ready, it continues to marketing. The budget is small, the capital cannot be passed on to distribution or promotions. It is better for the foundation, for example, designs, symbols, packages, and so on. It will be more useful for later," he said.
In the past, 20% of the capital was used for operations. However, not to pay employees, but to collect financial data and bailout funds.
With a business capital formation of 40% for products, 40% for marketing, and 20% for operations, Raymond is confident that his strategy to start a business with small capital can generate a lot of money. "Anyway, the key to a small capital business depends on cash flow," concluded Raymond Chin.