Successfully Running a Small Business on a "Shoestring"
REYNOLDS, REAP PROGRAM DIRECTOR
The economy in the United States is a major concern
to all citizens in our great country. Everything and
everyone has been negatively impacted in some way. Like
many others, small businesses are feeling the pinch of
the economic downturn.
In this economy, many, if not most, small businesses
are operating on very tight budgets to simply get by.
Some call this “bootstrapping” or operating on a
“shoestring.” In either case, it is possible to
successfully operate a business on a shoestring!
Through both good and bad times, success in operating
a business is not necessarily predicated on a fat
wallet. Rather, it comes from good financial management,
proper planning, and a relentless drive to succeed.
Listed below are several tips for entrepreneurs who
are operating on a tight budget. The tips also apply to
entrepreneurs in the startup phase:
- Put your money where it will bear fruit.
Try to put as much money as possible into working
assets (which bear cash and sales), and as little as
possible into fixed assets. Also, if you have dead
inventory, figure out ways to dispose of it quickly.
- Push the Sales. Continually work at
building sales of your product or service. Be sure
to have a plan in place, and dedicate time each day
to market your business. It’s really easy to get in
a rut and stop effectively marketing your business.
Businesses that stop marketing may soon be out of
business. There are many cost effective ways to do
marketing. If you need help, contact your area REAP
Business Specialist for assistance.
- Be “Lean and Mean.” Businesses operating
on a shoestring do not need any deadweight. Strive
to keep your fixed costs as low as possible, and
spend on items that contribute to your bottom line.
Every dollar in expense should be directly tied to
- Spend a nickel only when you can get a dime
in return. Production is mandatory from all
involved with the business. If you have employees,
“hire slow and fire fast.” The success of your
business relies on all involved, and time is of the
- Master the Financial Tools. As the
business owner, you are responsible for the life and
growth of the business. Through good times and bad,
you must be able to effectively manage all elements
of the business. Having a clear and total
understanding of the finances will give you control
over the direction of the business. It is critical
to understand your cash flow, income, profit and
loss statements, and the overall bookkeeping system.
Having a keen understanding of the money part of
your business will tell you where you’ve been, where
you’re going, and how fast you’re getting there.
- Use Available Resources. Resources like
the REAP program are available to assist startup and
existing small businesses. Many times, entrepreneurs
wait until it’s too late to ask for help. Resources
like REAP are in the business of helping
entrepreneurs through counseling assistance,
training and loan assistance. It is up to the
entrepreneur to ask for help, which will in turn
increase the odds of small business success and
These are just a few thoughts and ideas around the
topic of operating a business on a tight budget. The
REAP Program has Business Specialists located throughout
rural Nebraska. If you need small business counseling, a
loan, business training or other, please contact your
area REAP Business Specialist to set up an appointment.