“You don’t have to be big to start, but you have to start to be big.”
The first small business myth I want to debunk is that you have to start big and hit the market in grand style. Small businesses have scaled up to fortune 500 companies. Start small but do not stay small. You do not need large capital to start, but you need capital to grow the business. Do not let the lack of capital hinder you. Also, read our article on businesses to avoid when starting small. You can start with one product and add other options. As a matter of fact, launching with a little capital is an advantage in an unstable economic and political environment.
Here are the advantages of starting small.
1. You will not have to quit your job yet
When you start small you do not have to quit your job immediately because the business will not demand so much initially,. Here are two options. You can outsource most of your production, see also our article on the basic guide to outsourcing. You may need a few partners and staff who can work full time in the business.
2. Your mistakes will not cost that much
We all know someone who took a massive loan to start a business and ended up financially wrecked when the business failed. The probability of a new business failing is huge because of several factors such as the inexperience of the team, using an untested business model, cash flow management, and other factors. As such, the business failure would not cost you a fortune and you can easily shut down or change the services you provide. The miracle of starting small is that you do not lose so much money, and better still, you leave with a valuable experience. You can test run your product on a small scale first before increasing the production size. This allows you to experiment with different products and services until you discover the winning product.
3. Free Location
When you start small you can fit your business into your house whichever way, you need a roof over your head, business or no business. Hence, your cost of location is free. You can dedicate a room in your house to the business or use your parlour. But ensure that you are able to demarcate your business space from the living area and also set house rules to avoid having a casual office space. See also our article on how to stay motivated while working from home.
4. No fear of Loss
We all get so emotional when the stakes are high. A small loss in the huge capital can make the founder hysterical and lose confidence in himself. This causes the entrepreneur not to take risks or behave in ways that could prevent the business from growing. Consider venturing into a business that will not require taking up a bank loan and incurring huge interest rates unless the business model or product has been tested in the market.
5. It gives you Flexibility
When you make strategic or product changes to a small business they do not cost so much. If a product performs badly in the market, you can easily ditch that product or service and try a new one without letting go of staff who would be made redundant or be burdened with selling out the large inventory of products. When I had to shut down my one-month-old children’s book retail business in 2009 and relocate for a year, I simply found a partner who bought over my stock and took over my client base in exchange for a percentage of her profits. This took me less than two weeks to conclude. That is one advantage of starting small.
So what are you waiting for? Start with what you have. It is actually an advantage!