4 Tips To Run A Retail Business With Low Budget
How can you penetrate into the market with a low budget? Here are 3 tips you can adopt.
Many people have great business ideas, but not everyone has the financial ability to fund one. Unless you’re backed by an investor, or with a well to do background, we know how capital-intensive starting a business can be.
Starting a business on a low budget doesn’t necessarily translate to cutting costs where you shouldn’t. And though I can’t promise a business that makes millions of money, I can share a few tips to kick start one:
1. Proof of Concept (POC) Your Idea
Before you officially launch your business, develop a proof of concept (POC). To simply put, POC is an in-principle business model where you test if your product idea is feasible – yes, without the product and the money.
For example, I was once compelled by the idea of a subscription menswear t-shirt business in Singapore. To test whether there was a market demand, I briefly conceptualised and came up with a logo, website, and marketing materials. The business ran for 2 months before I decided to wrap it up.
The idea proved to be infeasible by the end of the experiment. While there were some pre-orders that came in, the demand in Singapore was too low to sustain the business. The business model, which was a subscription-based service, had to have high demand before it could take off. One such successful example you may know of is Style Theory.
POC saved me a lot of time and money. While it may seem like my initial efforts have gone to waste, I actually dodged a bullet by retreating from a business idea with few prospective customers.
2. The 80/20 Rule
You may have seen this rule somewhere, perhaps in regards to time management, to financial management, or even to relationship management. But this 80/20 rule is the rule of thumb to running a cost-effective business.
When I first started my brand, the biggest mistake was to use up 70% of my capital for production. It was an amateurish decision. Needless to say, I was left with little to market my clothes.
The 80/20 rule is no secret: delegate 20% of your finances to production and the remaining 80% for marketing purposes. If you’re running a low to mid-tier fashion business, this should be a nice balance. But if you’re like me, running a luxury brand may require a slightly different ratio. I increased my marketing finances to 90%, with just 10% left to produce my clothes.
With that said, the 80/20 rule serves as a gauge. As the business grows, you’ll figure what works best for your company.
3. Keep your inventory level low
At this point, you may be wondering if there are enough instocks for sale. Don’t worry about it just yet; if people love your products, they’ll be willing to wait.
Pre-orders are a great way to gauge your demands. Initially, I kept switching between a ready stock model and a pre-order model. But as my business grew, I learnt that the latter is arguably the best way for me to keep my inventory low.
When you have little inventory, you wouldn’t worry about desperately clearing piling stocks or the production money that have gone to waste. Thus, this also allows even greater cash flow for your business.
4. Use social media as your source of sales
The biggest mistake I've made was running my social media with no strategy in mind. When I first started, I was just posting according to when I'm free. There was not a proper marketing strategy when I launched a new arrival or when there's a sale coming up.
With no proper plan, your product/offer will not get the attention it deserves which will lead to 0 sales (This happens pretty common than you think).
My business grew from 0 to making 5 digits per annum after I established a social media marketing plan fit for my brand.
Take a look at how our app can help your business grow on social media.
While it isn’t impossible, there’s no denying that having a low budget can be challenging. These tips are effective when you apply them at your business’ initial stages. Remember to start small and be smart about managing your finances. If you need an advice in running social media strategy, drop me an email
and we can chat then!