How to start a business for $3,000

By Ann Meyer

Founder Lindsay Saewitz of CitySwarm takes a do-it-yourself approach

Lindsay Saewitz, founder of CitySwarm, has cut costs by taking a do-it-yourself approach. Photo courtesy of CitySwarm

Lindsay Saewitz might not fit the stereotype of a risk-taking entrepreneur, yet she chucked a job hunt in favor of launching CitySwarm last fall.

Her new events business aims to provide engaging experiences to young professionals in their 20s and 30s, Saewitz said.

She came up with the business idea after organizing events that attracted 100 or more young alumni of the University of Michigan, her alma mater. “People are looking for things to do,” she said.

A do-it-yourself approach

So Saewitz put aside a job search that wasn’t leading to an events position and started CitySwarm with about $3,000 in savings, including $2,000 for business insurance. She cut start-up costs by taking a do-it-yourself approach.

Building a business through so-called bootstrapping, where entrepreneurs use their own funds and look for ways to save money while building sales, is a tried-and-true approach. Some business owners use it because they can’t get capital from other sources, while others appreciate the freedom it provides them.

 A San Francisco startup profiled in The New York Times has launched three commercial products since April 2010 without taking outside capital because the founders wanted the ability to experiment. While the company, called Irrational Design, acknowledges its marketing budget is limited, it is comfortable with a longer timeframe to profitability, co-founder Jared Cosulich told the Times.

Sustained growth through sales

In Skokie, family owned Jelmar, the maker of CLR and Tarn-X cleaning products, took its first loan recently, after growing slowly but steadily for 60 years, said Alison Gutterman, president. The company prided itself on having no debt, but will use the financing to expand into corporate sales, Gutterman said.

Jelmar, which has annual sales of about $50 million, has kept its headcount low, by outsourcing product manufacturing to other companies. The result has been a profitable business that is a leader in its niche, Gutterman said.

At a time when loans and other capital are difficult to secure, many entrepreneurs have no choice but to grow slowly.

Low-cost solutions

Here’s how Saewitz  launched her business for little more than pocket change:

  • Saewitz built her website, http://www.cityswarmchicago.com/, using the free service, Weebly.com, though she opted to spend $30 a year to remove the Weebly footer, she said.
  • She made her own logo using drawing tools on Microsoft’s PowerPoint software, then saving her work as a JPEG file, she said.
  • She obtained low-cost legal advice through a business law clinic run by Loyola University’s School of Law, where a professor and third-year student helped her establish her business as a limited liability company and draft terms of service and a privacy policy for her site.
  • She uses a third-party provider, Eventbrite, to process event responses and payments. The provider required no upfront fee, though it takes a percentage of each transaction, Saewitz said.
  • She does her own social media outreach, using Facebook, Twitter and a blog to announce events.
  • She relies on public relations to get events listed in Metromix and other publications. Saewitz said she has scoured the Internet for other  companies’  press releases and media kits and tapped her network of friends and colleagues to help spread the word. According to her own research, 40 percent of those who came to a recent event learned of it through an item in Metromix.
  • She uses MailChimp to send out a weekly newsletter to her contacts of 900 or so.
  • She  networks regularly in person.

To attract customers, Saewitz is keeping prices low. One of her first events was an art class at a Gold Coast art studio generally not open to the public. For $35, guests received two hours of drawing instruction with a live model, supplies and a $10 voucher for an open studio session. Saewitz said 17 people attended.

Spreading the word

Saewitz hopes to offer eight events a month, but currently is offering about four per month until she generates more volume, she said. “My immediate challenge is getting the word out because I don’t have money to spend on advertising,” she said.

Saewitz plans to create additional revenue streams, but is taking it one step at a time. “I’m kind of just going for it,” she said. “I decided there’s no way for me to know how it’s going to turn out unless I do it.”

Over time, she is considering expanding to other demographic groups. In the future, she said, “My biggest challenge is going to be taking it to the next level.”

This story was updated at 4:30 p.m. Feb. 18 to correct the spelling of Lindsay Saewitz’ first name. SmallBusinessChicago regrets the initial error.

Posted by on Feb 18th, 2011 and filed under Financial, News, Special Reports. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

Leave a Reply