Many people find the thought of starting a business daunting enough to not even humor the idea. I’m here to tell you that founding your own business is not as difficult as it you might imagine, especially if you already have connections in the business world. My partner, Nolan, and I started Frost Marketing Group while we were still in high school, knowing absolutely nobody in the market we were entering. We got our first client within a month. Of course, there are not many high school students that can get a loan or have enough capital to start a standard company, but our low cost business model allowed us to limit our costs to just absolute necessities.
A low cost startup refers to the startup business model of limiting all expenses to only what is absolutely necessary. Using this method, it may take longer to grow a business, but with such low expenses, the return on investment is astronomical. When starting this marketing company, we decided to put the low cost startup model to the test, and we each invested just $100. Starting a company with just $200 in a bank account may seem difficult, but if budgeted correctly, that $200 will last much longer than you think.
We filed our DBA with the Secretary of State, opened a business checking account, made our own website, bought Adobe Creative Cloud to create content, and we still had enough capital from our initial investment of $200 to comfortably plan for future costs. We could have run our business for months without a client, but luckily this did not have to be the case as we became a profitable company after a few weeks, before either of us had graduated high school. We gained all of our company’s value through our own work and ideas using a business model called the lean startup.
The lean startup is a type of low cost business model that puts emphasis on product development changes and consumer feedback. Generating ideas is very important as the business owners must create value from just their own transferrable skills and product ideas; without a consistent stream of valuable ideas and plans, the lean startup process can’t be utilized to its full potential.
When a brainstorming session spits out a potentially good idea, the next step is to put the idea to the test and generate customer feedback. The product idea you choose to pursue is considered a minimum viable product (MVP), or a product idea that has potential upside. The business must then take this MVP to consumer testing to obtain valuable feedback and make changes to the product before it returns to consumer testing. This loop of consumer opinions and minor changes continues until the product is ready to be brought to the market.
Using the lean startup model requires you to constantly search for new potential clients and leads as to not lose any potential revenue. With such low capital invested, your business can become profitable with the first customer, and every dollar of revenue after that is almost pure profit, and “pure profit” are two words that everyone wants associated with their business.
Hopefully this post helps inspires many of you to create your own business, and if you have any additional questions or comments, please feel free to leave them below!