Category Archives: Getting Started

Self-employment Tips: the Missing Manual

Normally when you start a new job, you get an employee manual that gives you rules, procedures and other useful bits of information. But when you’re self-employed, you get no manual. No one gives you tips for the newly self-employed.

Fortunately, we now have Google, and any specific problem (How do I register as an S-corp?) can be pretty easily answered.

The tricky bit is those things that Google can’t answer, because you don’t think to ask. Things that have changed from the world of other-employment, but no one told you that they changed.

So here I present my 10 most important self-employment tips: what I wish people had told me when I became self-employed.

“Productivity” is measured differently

This is really obvious when you think about it, but you have to stop and think about it.

When you were employed, someone else was measuring whether you were being “productive”. And just between you and me: I know that you weren’t always productive when you looked busy. At 3 PM on a Friday, you were just moving the mouse around, or fiddling with files, or writing useless memos. It’s OK – we all do it.

But there’s no need to do it now. Now you’re the one measuring productivity. And that means that you get to decide what counts as “productive”.

Surfing the web doing mostly useless internet “research”? Probably not productive.

Taking 30 minutes off to go for a walk / do some yoga / sip tea and contemplate the direction of your business? Probably productive.

Resources for Further Reading: What is Productive?

More is not always better

It’s easy to feel like you’re not doing enough. Like you’re not good enough. Like you can’t be charging very much for this, because somebody else does it “better”.

Odds are good that your old employer was intent on being everything to everyone. On shipping products with hundreds of features, that did everything you could possibly desire. Back in the days when a single doodad could cost a week’s worth of wages, and nobody could reach customers except through mass markets, that kind of thinking made sense.

But now you can make profitable products that cost as little as 30-seconds worth of wages. And you can target amazingly specific markets, like people who have WordPress blogs and want blue backgrounds with dark blue text or people who think that pictures of cats with misspelled captions are the very pinnacle of humor. So the one-size-fits all product doesn’t make sense any more. Their products are not better. They’re just bigger

Resources for Further Reading:
Opportunity cost: More Is Not Always Better
Who’s the Best?
Risky Compared to What?

Don’t sell to everyone

This is a corollary of the above. If there’s no one definition of best because everyone has their own opinions about what’s important, then there are some people for whom your product is the best. There are also some people for whom your product is not the best.

Ignore those people.

There is no obligation to try to sell to everyone. There is no benefit to trying to sell to everyone. It wastes your time and annoys the prospects. Don’t worry about people who don’t like your product; focus on finding the people who do. Everyone will be happier.

(Side note: it also follows that you’re allowed to fire customers. When you were an employee, your employer got the to make the decision about which customers were worth dealing with, and you had to work with whoever they sent to you. Now that decision is yours. Someone aggravating you so much that you don’t want to work with them? Say, “I’m sorry, but I don’t believe I’ll be able to meet your needs, so I’ll have to decline. I hope you’re able to find someone who can help you.” You don’t have to work with anyone.)

Resources for Further Reading
Target Market: Who are your clients?
Target Market: Segmentation
Target Market: Getting to Know Them

You’re now in sales

OK, actually, lots of people told me that. I even, at some level believed them. But not deep down. I still hoped that, somehow, people would just show up on my doorstep without being asked.

I don’t expect that my saying it again will convince you any better than anyone else’s has, so I won’t try. But when you wake up one morning and say “OMG! I’m in sales!”, here are some resources for you to browse.

Resources for Further Reading
The Hardest Thing You’ll Do
You’re Great at Sales
Are Marketing And Sales Unethical?
Do You Suck?

The decisions you’re making now aren’t actually that important

This attitude probably actually came from school; at least that’s where I got it from. In the US school system, you’re given one try. One essay on Pride and Prejudice, one guess on the history test. If you get it wrong, you fail. So making the right decision becomes hugely important. Your employer may or may not have had this sort of culture, but odds are good that they didn’t do much to discourage it.

Which is sad, because the real world works almost NOTHING like that. In the real world you get almost infinite guesses. There’s nothing wrong with guess-and-check: it’s called testing, and it’s recommended by every intelligent marketer, SEO, and business coach.

Experiment with your business’ name. Experiment with your products’ names. Experiment with your business model. Experiment with your web page. Experiment with your sales techniques. Experiment with your prices.

Don’t know what to do? Pick something and try it. You can always change it later.

Resources for Further Reading
Flickr used to be an MMORPG
Play it safe.. and experiment
Picking a name
This ain’t middle school

Lack of instant success is NOT failure

This is a corollary to the above. We got our definition of failure from school, where, if you’ve failed the first time, you’ve failed forever.

The real world, as noted above, works nothing like that. You try something. It doesn’t work as well as you’d like. Maybe it doesn’t work at all. You have not failed. Your first try failed. You get as many guesses as you want.

I mean, imagine you’re in math class and the teacher says that on this test, you can retake it as many times as you want, and whichever you want to count towards your grade will be the one that counts. Furthermore, you can have your previous graded tests with you when you take the text the next time. How could you possibly fail? There’s only one way, really, and that’s to quit while you’re behind.

That’s how the real world works. You cannot fail except by choosing to give up and stop trying. Hey, wait, other people have already said that.

I know that seems obvious at this point. That’s ‘cuz I’m very persuasive. After your first failure, it won’t feel so obvious. All the cultural and educational conditioning will kick in, and you’ll feel like a pathetic, suicidal, good-for-nothing loser. But that perception will be wrong, so try to remember that, and come back here if you need some inspirational reading.

Resources for Further Reading
Lack of instant success is NOT failure
Think You’re Not an Expert?

Your definition of risk has changed

The philosophy of US educational system and of US corporate culture can be pretty well summed up as follows: Don’t Make Waves.

We’re trained to shut up and keep our heads down. Write the same tired essay about how the fall of the Roman Empire was due to decreased democratic principles. Don’t nag the teachers about obvious exceptions to the broad statements they’re making. That’s how you avoid failing.

That doesn’t work here. Your biggest risk is not that you’ll irritate someone. Your biggest risk is that no one will realize you exist. That no one will think your product is good enough to bother with. That every single competitor will be a better choice than you are for some reason.

If you do something crazy, you have a chance of being awesome. If you do nothing crazy, you’ll drown quietly in a sea of mediocrity.

Resources for Further Reading
Who’s the Best?
Risky Compared to What?
Dangerous or Gutsy?
When More Volatile is Less Risky
Examples: When Predictable is Risky


In every organization, there must be someone who knows what’s happening and why. Employees can simply rely on the Strategic Planning department of their company, but your organization now consists of you. No more just muddling along waiting for someone to tell you what to do. It’s now your job to decide what to do, how to do it, and then to get it done.

So you really need to start planning. I don’t care if you plan your days out in a little hour-by-hour grid — that sort of planning seems to work well for some and horribly for others, and I trust you to make your own decisions. But you really need to have some idea of what you hope to accomplish in (a) your lifetime, (b) this year, and (c) this month. It serves all sorts of useful purposes: it helps you define “productive”; it helps you decide who to sell to; it helps you identify opportunities vs distractions; it helps you assess risk. It helps you actually to be productive. There’s really no substitute for it.

Trust me on this. Plan.

Resources for Further Reading
Annual Planning: What do you want to accomplish this year?
Monthly Planning

No Kamikaze Pricing

Hey, odds are good that you were getting paid a lot less per hour at your last job. “Standard market price” feels like a heck of a raise. OK, so it’s what your boss was charging for your time — which is part of why you decided to become self-employed — so you were always worth that much, right? But it feels like a lot, and maybe you don’t quite feel like you’re worth that much, and anyway if your prices are lower, you’ll get lots of customers, right?

Well…. no.

There are several problems with that:

  1. You can’t profit at that price There’s a reason your boss was charging that much for your time: it’s what they had to charge in order to buy supplies, pay overhead, and still pay you. By the time all the business expenses are paid out, you’ll be making basically the same amount as you did before. Did you really want to take a pay cut?
  2. Customers will think you’re sleazy If you’re significantly below market price, customers aren’t going to look at your prices and think Wow, what a bargain!. They’re going to look at your prices and think Wow, how is this guy staying in business? Is he staying in business? Maybe it’s just a scam; he’s going to take my money and skip town. Or maybe he just does shoddy work, so he doesn’t have as high of costs. Either way, I certainly can’t get anything good for that price. I’ll stick with the big-box corporate competitor.
  3. You’ll be locked into price wars If you do manage to make sales, you won’t have gotten them on the basis of your stellar workmanship or awesome customer service: they’ll be based on your prices. If you raise your prices, you’ll lose all your customers. You’ll be stuck forever at the bottom of the barrel.
  4. You’ll get the worst customers There are always customers who are willing to risk shoddy worksmanship and sleazy business in order to save a few bucks. But they’re not the people who will happily pay for good work. They’re the people who resent every penny they pay you. Who will ask for discounts on above-average work. Who, when you give them a 10% discount, will ask for 20%. Who will complain about your prices and your work. Who will demand refunds on “faulty” products that aren’t faulty. Who will put off paying you until you’ve asked politely 3 times and less politely another 4. Easiest way to avoid those customers? Raise your prices.
  5. You can’t out-WalMart Walmart The big box stores can always be cheaper than you can; they’ve got better efficiencies of scale. So all you can do is trigger a price war that you’re guaranteed to lose.
  6. Charge what the market will bear. No kamikaze pricing.

    Resources for Further Reading
    Are you using kamikaze pricing?

    Most businesses fail.. but most jobs succeed

    When you decided to become self-employed, or possibly when you very first brought up the possibility, some “friend” said to you: “You know 95% of businesses fail in their first 5 years, right?”.

    Subtext: Who the hell do you think you are? How dare you think you’re good enough to move out of the employment hellhole? Stay here and suffer with the rest of us, like a Real Man!

    The statistic is accurate, but the conclusion drawn from it (that you should just give up now and not even try) is entirely false.

    First off, we use definitions of “failure” for businesses that we wouldn’t use for anything else.

    Secondly, “failure” of a business doesn’t mean that the owner went bankrupt and starved on the street: it means that the owner had to make another guess and try again. Remember the infinite math tests?

    Thirdly, many “failed” businesses supported their owners & their owners’ families for years before they “failed”.

    Fourthly, that statistic conflates true “Business” ownership with being self-employed, and so the 95% failure rate is a purely meaningless number. It’s not only lumping in apples and oranges but also bananas and pears and pineapples in an attempt to scare you out of making an intelligent, challenging, fun, and generous choice.

    Maybe you can’t do this. But maybe you can. Don’t let some loser scare you off with an invisible mallet.

    Resources for Further Reading
    Most Businesses Fail… But Most Jobs Succeed
    80% of New Employees Fail Within the First 5 Years
    You’re Not In It For the Money
    The Invisible Mallet

    What do you wish someone had told you when you became self-employed?

Managing Cashflow

When you watch a video on YouTube, you sometimes realize that your computer connection is too inconsistent for streaming video; a few seconds in, the video suddenly stops, and you get a little loading symbol. The solution to this, as everyone knows, is to pause the video for a bit, while the “loading” bar gets ahead of you. You don’t have to let it load the entire video before you start; you just have to let it get far enough ahead of you that when the internet suddenly slows to zero, you still have enough video loaded in buffer to carry you through until the internet picks back up again.

When you listen to music online, through Pandora or your favorite radio station’s website, the program automatically does the same thing. In fact, that’s what takes up most of the time while you wait for Pandora to start: it’s getting enough of the song loaded in buffer that you can listen to your music uninterrupted.

Most electronic devices these days have a capacitor built in, so that if the power coming from the outlet drops suddenly, the computer/stereo/whatever isn’t harmed.

It Averages Out

What all of these have in common is that the stream is on average powerful enough to run whatever it’s supposed to do. If your internet connection is slower than the video, you do have to wait for the whole video to load; if you’re in the middle of a brown-out, the electricity coming from you wall won’t power the computer at all. But usually the problem is just how much is coming at any given time; you have peaks and dips, but they even out to enough to do what you want it to.

So you make a little “pool” — the electricity goes into the pool, and you pull your electricity from the pool rather than directly from the wall. When the quantity of electricity drops, the level of the pool drops, but the amount of electricity you pull from the pool can stay the same. When you get a power surge it puts extra electricity in the pool, but the amount of electricity you pull from the pool can stay the same.

How Capacitors and Buffers Apply to Business

If you’re going to self-monetize through non-employment, you’ll have to handle the one disadvantage that all other methods of monetization share: the money doesn’t come in nice, even, equal amounts on a regular basis. You’ll have months when you get only $100, and months when you get $5,000. So you need to be prepared to deal with this.

Step 1: Make yourself a buffer
The solution that works really well for other situations like this, as we’ve seen, is to make a “pool”. Maybe a savings account, or keep your checking account at a certain level, or whatever works for you. But you need to put the income from your business into this pool, and pull your paycheck from the business out of this pool, at the same amount each month.

Step 2: Make sure your averages are OK.
This is hard to do before you set up your business, but keep an eye on how much you seem to be getting in. If your monthly expenses are higher than your average income, then you’re in the same situation as the video on a slow internet connection: you may seem OK for a while, but there will come a point when you just stop dead. So be prepared to be flexible on your expenses, until you have a good idea of what your average will come out to be.

Risk Analysis

When you’re writing a business plan, one of the things your investors would like to know is how much risk you’re taking. It’s possible that you might also want to know.

A brief diversion into game theory

As I type this, I’m sitting at a tournament of Magic: The Gathering, semi-eavesdropping on a conversation between two of the lowest-ranking players in the tournament.

“That takes you to 10 life. Then next turn I can draw a Chalice and you won’t be able to play your cards, and I’ll win.”

It’s a good strategy as far as it goes. Chalice of the Void is a good card, and it does cause a lot of problems for his opponent’s deck. But he’s relying on an awful lot of luck. What if next turn he doesn’t draw a Chalice? What if his opponent has a way to get around the Chalice and still play cards? What if his opponent wins this turn, and he never gets a chance to draw a card? If any one of those things goes wrong, he’s in trouble.

A Pithy Mantra for Strategy

In The Vor Game (a wonderful series if you’re into philosophical sci-fi), Miles Vorkosigan is given advice on planning a military campaign:
“The key of strategy, little Vor, is not to choose a path to victory, but to choose so that all paths lead to a victory. Ideally.”

That is, it’s good to have a plan based on what you think is most likely to happen. But it’s better to have a plan for anything that might happen… and best to have a such a plan that leads to success in all cases.

OK, so I should…?

Make a plan

While you put together your plans, write down the things you know for sure. This is mostly confined to things that you’re going to do (you can be pretty confident that you’re going to run an ad in the newspaper or that you’re going to pay your workers $7/hour), but may include information you have from others on what they’re going to do.

Take a guess…

Then, for each thing you have to guess, make your best guess based on the data you have. This could include the number of customers you’ll get (based on the number of people who will see your ad or the number of people who drive by this location), the weather where your products are made (based on NOAA’s forecasts), or whatever. Calculate how you’d do if those numbers were correct. Will you be making money? Will you be making enough money?

…and cut it in half…

Now take all of those numbers, and cut them in half. Assume you’ll get half as many customers, or that they’ll pay only half as much as you thought, or that you’ll only get half as much product as you expected. How would you do if those numbers were correct? Will you still be making money? If not, how much do you lose? What can you change in your plan to accommodate and mitigate those problems?

…and double it

Now take your original best-guess numbers and double them. Assume you’ll get twice as many customers as you thought, or that you’ll get twice as much product as you expected. How would you do if those numbers were correct? Would you be able to meet demand? Would you have enough employees? Would you have space to hold the extra inventory? If not, what can you change in your plan to accommodate and mitigate those problems?

And synthesize it all together

You don’t want to act as if your half-as-much or your twice-as-much numbers are accurate when your best guess puts it right in-between. It’s silly to cut expenses for a customer drop you haven’t seen: all you do is guarantee that your customers will in fact drop. And it’s silly to buy storage space for inventory you don’t have; it may never come.

But if you know what you would have to do, you can keep yourself more flexible. You can buy your advertising in 3-month chunks instead of paying for the full year upfront (in case you need to cut expenses). You can keep an extra $1000 on hand to pay for a storage unit if necessary. And the things that remain the same in all three plans you can implement with confidence.

Risk Analysis, not Risk Elimination

Depending on your business, your industry, and your situation, your half-as-many numbers may look pretty bad. Your twice-as-many numbers may also. This method doesn’t guarantee that you’ll have no risk. It only tells you how much risk you’re taking on, letting you know upfront what you might be getting yourself into. You have to decide for yourself if you’re ok with those consequences.

Resources for Further Reading
My Business Plan Isn’t Feasible
Tactics vs Strategy

Getting Started: Finding Customers

So you’ve decided what to do, you’ve planned a monetization mix, and perhaps even written a business plan. Now what?

If you’re in the business of selling products, you need to figure out how to get your products made, and how to get them to customers. But if you’re selling your time, you can’t even really do that; the first thing you need is for a customer to tell you what they want so that you can get started on making it happen. And for that, you need a customer.

This is a place where my bias my affect how useful my advice is: I’ve only ever seen this done in a US suburb, and these methods may not work as well in other settings. If that’s the case, hopefully this will at least give you ideas.

Make it possible to find you

Sometimes you’ll talk to exactly the right person at exactly the time they most need you. This is awesome… but rare. It’s more likely that you talk to someone who may need you in the future, or someone who doesn’t need you now, but knows someone who does, or someone who knows someone who might need you in the future.

In these cases, you have to give them some way to get back to you. The traditional method for handling this is the business card: you give it to them, and they file it in their call-when-we’re-redecorating file, or give it to someone they know. Your business may be better suited to brochures, or magnets, or tiny DVDs, but you need to give them some way of finding you again when they want to. And it’s probably a good idea to have a couple of business cards anyway, because it’s so very much the standard of business interaction.

Tell People

Tell everyone…

Now that you don’t have to rely on telling exactly the right people at exactly the right time, it’s time to tell everyone you know. If you’re already involved in social media, then post a twitter update, write a blog post, and share a note in Facebook. Tell everyone what you’re doing, and why (people feel more comfortable saying, “I have a friend who started her own design business because she wanted to give better service than her boss was letting her give” than saying, “You should use my friend’s design business because… um… she’s m friend.. and.. she’s… really cool.”)

You may not be comfortable telling everyone… I understand, and I sympathize. Whether your friends think you should keep your nice respectable job, or your parents think you’re not really qualified to run a business (though they’d never say it out loud), or your wacko uncle thinks all capitalists are evil manipulative bastards, there can be reasons that telling everyone would make your life very uncomfortable. Read The Invisible Mallet, and think about what you’re afraid of. Then use your best judgement… but know that the more people who know of your business, the more people can send you customers.

…with special attention for the important people

This is not “important” people in the sense of people with highfalutin’ titles or political sway. This is the people who are most likely to tell other people about you.

Do you have a friend who starts up a conversation with everyone they meet? They’d be perfect. Do you know a dentist, or a hairdresser, or someone else who has to make conversation with their customers while they’re working? Also good. Is there someone in your circle who’s the go-to guy whenever someone needs a recommendation for a plumber or a new dishwasher? Try to get on his recommendation list.

Set up a time to meet with them — maybe over coffee, or at their shop, or whatever’s convenient for them. Tell them what you do, what kinds of problems you can help with, and what kinds of customers you’re looking for. Emphasize that you’re not asking them to sell for you, and certainly don’t want them to recommend you to anyone who couldn’t benefit from your services. You only want to let them know what you do so that they can help out anyone who would benefit by knowing you. If it makes sense, you could offer them a discount or a free service so that they can judge for themselves how good you are. Answer any questions they have, and leave them some business cards. Offer to help them in some way by taking their business cards and promoting their services, by giving them some free consulting, or just ask them what they’d like.

Look for people who need you

Check out Craigslist employment ads and gig ads. Look for people who want someone to do what you’re already doing. Contact them and see if they’d be interested in your services.

My cousin works as a virtual assistant; many people on Craigslist are looking to hire personal assistants for their business, but many would prefer someone who works from home, doesn’t require regular or guaranteed hours, and isn’t asking for benefits. A perfect match!

My partner’s computer-repair business got started when he found an existing computer-repair business that was overwhelmed with customers and needed someone to whom to send the overflow. He got a chance to build up his business and find clients, and they got to please their customers without having to hire a full-time employee.

Start looking at your promotional budget

All of that was stuff that costs only time, and hopefully has gotten you started. If you have some money, there are a couple more options to examine.

Join a networking group

In my area anyway, networking groups are run by the Chamber of Commerce, and you must be a member of the chamber to join. This can be a worthwhile expense because the networking groups are full of people who meet the criteria described above: they meet and talk to a lot of people, and they’re looking for ways to help their clients out.

Buy some advertising

What kind of advertising depends on your business, your area, and your monetization mix. If you have a good website, you may do best with pay-per-click ads from Google; restaurants like billboards; and many plumbers are still doing well with the Yellow Pages. It will take some experimentation to find what works for you. Do some research on what your clients read, where they drive, and how they do research; pick something that looks likely and fits your budget, and give it a shot.

Work on your other monetization methods

In my monetization mix case study, I talked about how your monetization methods should all reinforce and support each other. Once you’ve handed out business cards and everyone knows what you do, and until it’s time to check in again for a periodic update, the best thing you can do to get customers is to get your blog up and running, or your ebook ready to sell, or you YouTube videos ready for viewing.

My Business Plan Isn’t Feasible!

Yesterday we discussed how to make a basic business plan for your own use, and how to determine whether your business idea is feasible.

Sometimes it isn’t.

The three criteria I listed yesterday for a feasible business were:

1) Pricing has to be competitive.
2) Estimates for customers-per-month must be higher than the break-even point.
3) You must be able to get enough start-up capital.

If you fail on one of those criteria, despair not. You still have a chance, you’ll just need to get more creative. Get paper and pencil, pull out your brainstorming hat, call up your favorite brainstorming buddies, and think about how you can change your numbers.


As I explained in the previous post, your prices don’t necessarily have to be lower than your competitors’, they just have to be justifiable in the consumers’ minds. This may mean higher prices but better service, or higher prices but more convenience or whatever.

But it has to be somewhere in the vicinity of your competitors. If the prices you have to charge are significantly higher than the prices of others, your customers are going to go elsewhere.

So if making a profit requires you to charge too much, you have two choices: lower your costs, or justify the higher price with a competitive advantage.

Lowering costs
Can you get a better price if you get your materials from somewhere else? Do some comparison shopping online, or see if you can get a bulk discount.
Can you reduce or eliminate sales bonuses?
Can you make delivery cheaper?
Can you negotiate with your suppliers for a lower cost?

Improving Competitive Advantage
What else could you offer to your customers that would make it worthwhile to buy from you? A sympathetic ear costs nothing, but has always been a competitive advantage for bars. Can you think of a low-cost bonus that you could throw in? Can you keep an informational website? A free information product on how to use your merchandise? A place to use your products?
Good customer service is hard to maintain, but can go a long way towards convincing people to pay more.
If you increased your costs by 10%, could you double the quality (and hence the expected price)?

A friend of mine wants to open a bakery; her husband wants to open an auto-repair shop. Individually, neither store can justify much of a premium over their competitors. But a place where you can sit with a scone and check your email while waiting for your brake repair? That’s worth paying a little more, especially if both the pastries and the repairs are high quality.


The first thing to check is that your estimates are reasonable. I had you calculate a 1% conversion rate on all forms of advertising, which is a nice, safe, conservative estimate, but may be too conservative in some cases. Walk-bys on a mall, for example, usually have closer to a 15% conversion rate, with 20-50% of those who walk into the store buying something, so that could bring up your expected monthly customers. Talk to someone in your industry, or do some web research, to get more accurate estimates of monthly customer numbers.

If you believe that your estimates are accurate, the easiest way to improve your break-even point is to increase your gross margin, either by raising your price or lowering your cost (or both). If your price analysis indicates that you could charge even a dollar or two more per item, it can have a huge effect on your break-even point.

But if you’ve already been wrestling with the above steps to get your price lower, then raising it isn’t an option. In that case your best bet is to reduce your fixed monthly costs (overhead). Could you take a smaller salary? Could you make do with one fewer employee? What if you closed in the middle of the day, or didn’t open until early afternoon? Could you negotiate a lower rent, or change locations to one that has a lower rent? Would energy-efficient appliances help with the utilities bills? Could you forgo the data package on your smart phone? Are there any advertising methods that aren’t bringing in enough customers to justify the expense? What else can you do to lower your monthly bills?

Start-up Capital

The easiest way to reduce your start-up capital is to sort your list of requirements into two categories:
1) Things I must have to open the business, and
2) Things that would be nice, but could be purchased later as we grow.

It used to be that starting a business at all took hundreds of thousands of dollars, and so a few thousand dollars for leather office chairs, subscriptions to the Wall Street Journal, real linen table cloths, and so on… wasn’t that big a deal.

But today businesses can be started with less than $100, and easily less than $1000. So it’s more important to look down your list and figure out what the bare necessities are. Pulling things off the list and putting them in an appendix of “Things to buy as soon as possible” can reduce required start-up capital in a hurry.

If your pared-down list is still too big, you have two options: you can change the business model, or you can look into scary capital sources like bank loans or venture capitalists.

Some businesses are just inherently capital-intensive. Restaurants really do take that much money to start, and there’s no way around it. A retail store can be the same way. But closely-related businesses might be much cheaper: a catering business run from your home (with the plan to open a restaurant from the catering profits) or an online store (with plans to open a physical location ASAP) can be started with 1/10 the start-up costs.

Or you can take what you’ve got here, turn it into a full-blown business plan, and take it to the bank or to a venture capitalist. I can’t give you much advice on these, because I’ve never started a business for which they were necessary, but they can be a very effective way both to raise capital and to learn a lot about business.

Resources For Further Reading
Creating a Competitive Advantage
How to Raise Start-up Capital
LowCost Startup Ideas