How to start a successful business isn’t going to cost you as much as you think you need. Before I started my first business in 2002, I was a freelancer who did website design — which was another way of saying that I was a student trying to make money designing websites for companies. I had no business nor company, but that was a plus point for some businesses. They were willing to work with freelancers like me because we could charge them a lower fee as a result.
There are risks for businesses to work with freelancers though. For instance, unlike a business, which might care more about their business reputation, some freelancers may not be as reliable. Unlike dealing with a business, freelancers might not issue an invoice, so some freelance work might not be seen as a legitimate business expense.
To legitimise the business and to start attracting more customers, I roped in a close classmate of mine and set up a business together with him. However, we were doing the exact same thing that I was doing when I was a freelancer. The difference was that we had a business name to operate under, and a business bank account. That lent us the legitimacy we were looking for.
I didn’t know the terms back then, but this was known as a service-based business. And it is an awesome way to start a business.
Low Start-up Capital
Since you don’t have any inventory, staff, nor research, your start-up capital is simply the costs that it takes to register your business.
Depending on where you are, business registration costs will differ. In Singapore, a sole-proprietorship or a partnership costs SGD115 (or USD85) to set up. You’ll need other recommended items, but they’re very affordable as well, and completely optional if you’re tight on finances. Namely, a business bank account, and a domain name with web hosting. If you take up a monthly plan, that should cost you about SGD40 a month to get all of that going.
When we started our business, this was what we did. Once we had everything set up, we created our business website and made ourselves look bigger than we were. We added testimonials from my previous freelance projects, and used a family friend’s office as our office address. Our website was worded as though there was an entire army working in the business, instead of just two students.
Reduced Business Risks
In addition, you drastically reduce your business risks because you don’t have research and development costs, tooling and inventory costs, or manpower costs. You’re basically exchanging your time for money, which means you have a very low on-going burn rate.
This allows you to keep costs extremely low until you get your first client and project. Once you close the deal and deliver, you get paid the full sum. After which, you can roll the revenue into growing your business while you continue working on more projects.
Since we were a couple of broke students, we did whatever we could to market our business for free. To get our first clients as a business, we printed flyers and put them inside business books in public libraries. We spammed online forums and free classified ads. Using the phone directory, we cold-called and cold-emailed businesses who had no websites, or had poorly designed websites. And it worked. Through sheer determination, we found our first few clients this way, and it allowed us to seed the growth of the business.
How to Start a Successful Business Now
If you’re looking at how to start a successful business, then there’s no better time to start than now. A service-based business allows you to skip all the risks that a product-based business has. And if you’ve been saying that you don’t have the entrepreneurial skills to start a business, then these businesses would allow you to learn what you need as you go.
There’s really no better way to learn the proper skills than to get your hands dirty. To run a business on your own, you’ll need to know things like SEO, social media marketing, copy-writing, basic website design, financial accounting, budgeting, and the list goes on. Jump in at the deep end, and learn to be an entrepreneur by actually doing it.
The only bad thing about a service-based business is that you’ll never have the scalability that a product-based business has. However, I wouldn’t worry about how to scale up your business so soon. With all the advantages that it has, a service-based business is an excellent way to start your entrepreneurial journey. If you have a passion or skill with a particular service, consider developing it into a business. And that’s how to start a successful business, right now.