A small business is a great way to try your hand at entrepreneurship. Costs can be minimal and the return on investment quite high if you are smart about it. In this article, we’ll discuss business ideas for beginners that require minimal investment, including their advantages and disadvantages.
Advantages of Small Business Ownership
- Low start-up capital. Compared to medium and large businesses, a small business can sometimes be started for less than $1,000, sometimes even $0. Thanks to companies that facilitate production and distribution, even a massive product business can be started with just a laptop and an internet connection.
- More control. While any business with fewer than 100 employees is considered a small business, many have fewer than 20 employees. A small team is easier to control. You can get to know each employee personally, and find an approach to working with each individual that suits both of your personalities. A small team also makes it easier to track what is going on, and mitigate problems before they arise.
- Business flexibility. It’s easier for small businesses to add new products or services, and remove legacy products or services. This quick adaptation gives small businesses a distinct advantage in rapidly changing environments.
- Low advertising costs. Often small businesses earn their first customers through relationships or personalized social media outreach. This typically progresses to referrals and later to broader marketing and advertising campaigns. This progression keeps advertising expenses low in the beginning phases of the business.
- Fast operations. Small businesses have a shorter chain of command. This ensures that communication doesn’t need to go through as many people before reaching a decision-maker. This facilitates faster operations and customer service.
Disadvantages of Small Business Ownership
- Limited resources. While small business require less investment, they also don’t typically earn as much as large businesses. This can restrict growth. It can also be fatal to a small business when a larger competitor is able to achieve better marketing results or deliver a better service simply by outspending.
- High competition. When it’s easy to start a business, it’s easy for a lot of competitors to spring up. This can drive down prices and overwork employees. With limited resources, it can be hard for a small business to differentiate.
- Vulnerability during crises. Small businesses usually have fewer assets than larger enterprises. A large organization can afford to lose money for a while in a crisis. However, a small business may not have the savings cushion to deal with price shocks from suppliers.
- High production costs. Small businesses often can’t afford to buy goods in large quantities at wholesale prices. When buying a small quantity, a small business sometimes needs to pay close to retail prices. This puts small businesses at a disadvantage against companies that can place larger orders.
- A lack of professionals. Less funding can lead small businesses to hire employees with little to no experience, and to offer less compensation. This can result in a team of people who don’t perform at the same level as professionals who command higher salaries.
5 Ideas for Beginning Entrepreneurs
The best types of small businesses are those that lean in to the strengths of a small business – more agile decision making, possibly a more committed team, and sometimes more economical operations.
Start by developing a business plan. Decide what you need to earn, and what you can afford to spend to get started. Think about what will be required for you to break even, and what channels you’ll use to get your first customers.
Below are 5 ideas that might work for you.
A surprise box business cultivates a fan following online in a particular niche and delivers a monthly package to customers’ homes filled with “surprise” items related to the business’s theme. Entrepreneurs have started surprise box companies to deliver cookie dough, cocktail mixers, and more.
Key to success in this industry is the ability to identify a niche community and connect with that community (typically on social media). There’s a lot of competition, so only go into this industry if you have a distinct plan of how you’ll set your business apart.
As more people work from home, restaurants are seeking delivery solutions to increase their sales. After experiencing high costs and sometimes inconsistent service from the main delivery platforms, more restaurants are open to hiring a local delivery service.
A food delivery business has little to now startup cost. Each driver in your business can supply their own car. As an entrepreneur, you can start a food delivery business by registering as a LLC, building a website, and reaching out to local restaurants to see which ones are interested in hiring a local delivery service. Because a restaurant can charge a delivery fee, and customers can also be prompted to tip 20% or more, a restaurant can begin using a delivery service without any upfront investment. All the expense is guaranteed to be covered by the delivery service.
You can recruit as many drivers as needed to accommodate all the business you can manage to generate.
Beauty services are in high demand. Since COVID, many people have even taken their beauty business inside their home to cut costs and simplify operations.
If you can afford to buy a beauty franchise, you’ll get all kinds of information and assets to make your business a success using a proven formula. But an alternative route is to get training and then put your skills to work building your business independently.
Many service businesses can be started with very few resources, independently, without any employees, and even without an office. It is, however, essential to find a service that is in demand in your area, and to gain the quality of skill necessary to perform the service at a high level.
Many businesses and residential clients are happy to pay to take cleaning off their agenda. Cleaning businesses provide great recurring revenue, so you can rest assured you’ll earn a steady income once you gain enough clients.
Popular cleaning services include:
- window cleaning
- weekly superficial cleaning
- deep cleaning or refurbishment cleaning
- specialization in upholstery, carpets, or other items that can be difficult to clean
Any area with significant sales activity can be a great place to open a real estate business. Real estate agents play a vital role in transacting property, and have important legal obligations. To be successful, you’ll want to make sure you complete required training, get licensed in your location, and familiarize yourself with your local market.
It can be difficult to determine which service will be in demand. Review your business every quarter and assess what you can improve.
- What’s bringing in the most profit?
- What feedback are you hearing from customers?
- What should you focus on to maximize profits and provide the services that are most in demand?
- Should you add or subtract products and services, or make a significant pivot?
Love your business and believe in it. Set goals, measure progress, and get the help you need to improve your business. Plan ahead for taxes so you can optimize your business with effective tax preparation and planning in 2021. Respect and listen to your customers. Constantly improve your products, and look for new ways to better serve your customers. Lean into your strengths, and be ready for challenges.
Will your business be low-margin, earn a steady income, or change your life? The future of your business is up to you. Hard work, perseverance, and some luck will determine how successful your business becomes.