Thinking of the best business to start with little money can be daunting at first, but if you have the fortitude to work hard and smartly, then it’s possible to find success.
Did you know that about 61% of Americans have an idea for starting a business, with about 34% having more than one idea? Unfortunately, the lack of funding makes these ideas a mere dream.
In fact, Zapier reported that 63% of Americans had yet to start their businesses due to funding constraints. After all, starting a company will complicate matters when you’re on a limited budget.
But can you start a business without capital? When you apply hard work, resourcefulness, and strategic thinking, it’s entirely possible. This article provides you with all the answers you need to start the best business with little money.
The best business to start with little money
This requires research. So, we’ve curated a list of business ideas to kick things off. Make sure to consider your skills and what you feel most passionate about.
App development
With increasing technology, developers have plenty of business opportunities. Consider getting into app development if you possess the necessary technical expertise and skills.
Child care service
Parents and guardians constantly need babysitters, whether on weekends for a special time away from the kids or on weekdays during working hours. A childcare service will be an excellent option if you are responsible and have extra time.
Consultant
Do you have expertise in a specific field of work? Consider being a consultant so that you can assist others within that field. An advantage of this business is that it can be home-based. You can also operate on flexible hours and still establish a profitable business.
Accountant
As an accountant, you can create your own accounting business to help different firms based on their demands.
These may include creating annual, quarterly, and monthly income statements, balance sheets, and other financial reports for businesses. Tax accountants have a vast sector of employment in this field.
Blogging
If you are an expert in a particular field and have a knack for writing, why not share your knowledge through a blog? By creating a blog, you can generate income through the advertisements displayed on your blog pages.
Computer repair
Are you looking to establish yourself as the go-to expert for computer repairs? You can target large enterprises, small business owners, and personal computer users.
Start by studying the different types of software systems clients use and investigate their physical components. You should also learn about your market’s internet service providers (ISPs).
While we only mention six business ideas, there are so many more. These include offering virtual assistance, music lessons, event planning services, personal trainer services, graphic design, interior design, and photography services.
How to spend your $5k budget
To ensure you’re fully prepared, here are the startup costs you need to consider to start, grow, and sustain your company.
Technology and equipment
Estimated cost: $500-$1,000
Startup company technology and equipment prices typically include tech products like computers, printers, and software and equipment to carry out services or create products. You may save $200-$400 if you already possess a laptop or printer.
Cybersecurity software will also be necessary to protect your company and customer information. This can cost you anywhere from $40-$100.
If you’re running a content marketing agency, services that provide search engine optimization (SEO) tools will be essential to your business. This will cost a minimum of $200 per month.
Marketing and advertising
Estimated cost: $500-$1,000
Physical marketing materials should cost less than 10% of your business’s budget. These include materials like logos, business cards, signs, and banners. Sometimes, you may find ways to market your business without any money.
The cheapest way to market your business is to build your website to promote your services.
First, you can register for a domain name for $10 per year. You can also purchase standard web hosting at $100 per year with companies like BlueHost. Also, getting an SSL certificate at $10 per year is essential to secure your website with HTTPS protocol and gain customer trust.
Choose a quality premium website theme to create a unique feel for your company website. This should cost between $100-$300, or even free. You can also purchase a premium plugin from $100-$300.
Lastly, you should buy high-quality images to make your site more appealing. You can get royalty-free images through iStockPhoto.com for $50-$200.
Bookkeeping software
Estimated cost: $200-$1,800
Bookkeeping software and accounting services are essential for your business’s long run. This will allow you to keep track of your finances and file taxes easily.
A subscription with QuickBooks’ accounting software per year ranges from $180-$1,800. Alternatively, Sunrise offers free bookkeeping software, and its accounting services cost a minimum of $1,188 per year.
Business insurance
Estimated cost: $500-$3,000
Business insurance will protect you from liability claims and potential property damage costs. Depending on your industry, you may require liability insurance to gain customers.
Business insurance costs vary depending on your business classification, salary and employee totals, types of goods and services sold, and business risks. A sole proprietorship may result in $500 per year, while a small consulting enterprise may need to pay around $3,000 per year.
Permits and licensing
Estimated cost: $50-$300
Both physical and online businesses require different operating licenses. A business operation license costs a minimum of $50. This license is required to operate within your state, county, or city. A seller’s permit is free of cost and allows you to sell products and services online.
You will gain a zoning permit at the expense of $120 or higher if the city approves of your business’s location and if it meets specific requirements. Lastly, you will need a health permit or license to open a cafe, restaurant, or eatery, which will cost around $50.
Start a profitable business for under $5K: Key steps for new entrepreneurs
Do your research
Firstly, find out what you’re good at. Consider what you can do to help others and think about a solution to a problem only you can provide.
Analyze your business ideas. Ask yourself how passionate you are about it. Are your talents relevant to your idea? Will your skillset aid in its success?
Ask your family, friends, and colleagues what they believe you’re best at. Narrow down these points to what catches your interest.
Here are a few ways to help you find a great business idea:
- Research what customer needs are not being met by existing businesses. Find out how you can fill the gap.
- Think about what product or service is missing in our current society.
- Figure out ways to improve and add value to existing products and services.
- Investigate the different markets and determine where your product or service is needed most.
- Consider providing an existing product or service that is not available locally.
Conduct market research
To figure out your business idea’s potential, you must understand the market. So, when you’re sure about your vision, conducting thorough market research on how your business idea corresponds with the industry is crucial. This allows you to see how well your business may perform within that particular market.
Find out who your competitors are and stay updated with their activities. Doing so will allow you to determine whether you can provide your target market with a better cost-effective option. Study your competition to find out if their business idea has holes. This will help you discover a unique selling point.
It is equally important to research your potential customers. Be conscious of their educational levels, age, location, and occupations. Study their buying habits. Use this to determine if they will be willing to pay more for better quality products and services.
More ways to gain customer insight include:
- Looking through similar businesses’ online reviews.
- Asking people to complete poll surveys on social media.
- Posting a questionnaire in social media groups for your potential customers to complete.
- Talking to potential customers directly to find out if their needs aren’t being fulfilled.
By gathering this information, you can understand your target customers’ needs, purchasing habits, and preferences.
Create a business plan
When creating a business plan, you should know what you’re getting into. You must outline your business’s present and future goals based on market research. A business plan will help you establish the direction you want your business to go in.
If it’s your first time writing a business plan, you can start by using a free online template. Template.net provides a variety of free business plan samples that are industry-specific to help guide you in the right direction.
A business plan acts as your resource before starting your business, making it essential to ensure that it is a brief yet actionable plan. You should also include your market analysis, business operation statement, and product or service description.
Outline your business plan to help set short-term and long-term goals. Be sure to include your eventual startup costs too. This serves as a roadmap for the next steps you should take. It also helps you determine whether you should pursue funding or invest more capital while keeping the expenses low.
Explore funding options
It’s possible to start your business with little to no money. However, you will likely incur a few costs at some point. This is especially true when you’re ready to expand your business. Fortunately, there are several other ways for you to fund your startup.
Source: Canva
Friends and family
Do you know a family member or friend that can provide you with enough capital to fund your venture? Draw a business proposal to request their help to raise money for your project. However, when doing business with friends and family, it’s essential to set clear expectations to avoid misunderstandings.
Crowdfunding
Crowdfunding is a great way to raise money for your business if you’re comfortable asking the general online public for help. You can raise money through an equity crowdfunding campaign, donations, rewards, and debt.
Credit cards
Credit cards are the easiest way to gain short-term financing. However, they come with some drawbacks. For one, they can be costly, and high-interest rates often accompany most cash advances. These cash advances may also come with an upfront fee ranging between 3% and 5% where credit cards are concerned.
Retirement plan loans
The IRS allows employees to borrow the lesser of $50,000 or 50% of their vested 401k plan balances. However, the IRS requires you to continue working to receive the loan. If you quit your job and start your business, you should repay this loan within 60 days.
Business loans
Banks and alternative lenders usually provide companies with business loans. However, small business loans typically come with fees, repayment terms, and high-interest rates.
Be sure to do your research on these factors before you choose a lender. A lender will usually consider your business history, ability to repay the loan, credit history, and annual revenue before approving your loan.
Business grants
The government offers business grants as a form of free capital. The intention is to help them continue expanding. However, these grants come with many stipulations and requirements.
They are also difficult to gain because, as you can imagine, the competition is fierce. So it’s best to niche down and only apply for grants related to your business. These often include business grants for minorities or business grants for women.
Home equity loans and home equity lines of credit
This will only be an option if you are a homeowner and have adequate equity in your home. Essentially, your home will act as the collateral for your loan, and you will be responsible for the line of credit or equity loan if your business falls through.
Set up an online presence and marketing collaterals
Fortunately, marketing your business on a budget doesn’t require a ridiculous amount of money. Here are some of the best organic options you can use in your marketing strategy.
Market your business
Knowing your target audience will allow you to market your business with ease. Business-to-business (B2B) audiences are more likely to appreciate white papers and webinars, while younger audiences take more interest in social media pages.
Before starting, understanding how and where you will market the business is essential. All world leaders found a way to communicate their values successfully.
Discover a unique selling proposition and communicate it to the right audience. Before you launch your business, this should be your marketing focus. Poor marketing can lead to failure for new companies.
Create a website
Launching a business website is a great way to gain customers. Using free SEO tools to research industry keywords, you can create optimized content about your product or service, an ‘about us’ page, FAQs, and a contact or sales page. This will allow you to draw in potential customers.
Let’s say, for instance, you incorporate your physical address on your contact page. This is a helpful strategy when people conduct regional searches because it will help you rank in search engine results.
A great tip is to include a blog section on your website where you publish regularly optimized content. Hone your skills by making use of free content marketing courses. These courses are a great way to help you choose a method that works best for your company.
Use social media
Social media plays a massive role in our everyday lives. Create social media accounts that align with the objective of your business. If you’re advertising the selling of food or clothes, Instagram is a better option because it’s suitable for sharing images rather than using a LinkedIn account.
Social media posts are a great way to drive traffic to your online shop or website. Participate in social forums and respond to customer comments. This often takes time and effort to achieve.
Network with other entrepreneurs and small business owners
Join online and in-person communities of like-minded entrepreneurs to benefit from incomparable insight to help you further improve your business.
Invest your time into forging the correct networks. This is the best route when you possess limited funds. There is so much to learn from business owners in the same pursuit.
Even if you own a unique business, you can learn a lot by networking with other entrepreneurs. Many people have gone down a similar road. Learn from them what it takes to create a successful startup.
Helpful networking events you can look into include:
- Meet up groups
- Seminars/webinars
- Conferences
- Events
- Social media groups
- Online forums
Join a local SBA or SCORE community group so that you can stay updated on any events or workshops close to you. Gaining the advice, knowledge, and funding other entrepreneurs offer will not cost you a cent.
Tips when starting a business with less than $5k dollars
Here are a few tips on running a lean business and minimizing risks.
Keep your job
It’s easy to get carried away by the excitement of your business idea. Some people even quit their job to start their sole proprietorship. Don’t be that person.
Be realistic about the situation. In the early stages, it’s wise to run your venture after work, on weekends, and during holidays is best.
Keeping your job eliminates the stress of your livelihood relying on the success of your startup. This also allows you to save your business’s profits – you’ll need extra cash as your business grows!
Keep your job while working smart and hard for your company. Leaving your job will only be an option once the startup begins paying you.
Minimize your spending
If you’re thinking about what business to start with less than $5k, you need to lower costs as much as possible. Start by following these five steps:
- Work from home. If an office, warehouse, or storefront isn’t necessary, do not invest in it. You can save on cash by running your business from home.
- Use free or cheap services. To create a basic website for free, you can use Wix or WordPress and market your startup through Instagram or Facebook. You can also use online accounting and project management tools.
- Only invest in what’s essential. It’s challenging to decide what’s a need and what’s a want when creating a business. Anything that contributes to revenue generation, like training and marketing, is essential.
- Create a spending freeze. Choose a timeframe in which you do not buy products and services that aren’t essential. This can either be a week or one to six months.
- Get used or free equipment. Consider purchasing used office furniture or equipment. Alternatively, you can get a free laptop from online resources.
Gain access to free resources
Source: Canva
Evaluate everything you need to run a business and what you cannot do yourself. Next, all you need to do is search for small business resources.
Whether you need to register your business, write a business plan, create a marketing plan, or research licenses, there’s always a free template, article, or tool available for you to look into.
Some paid business tools also offer free trials for you to try out. This will provide insight into your business’s overall functionality and whether it is worth investing in.
Takeaways: Best Business To Start With Little Money
Starting a business with no money can seem daunting. But if you’re passionate about what you’re building, you’ll discover several ways to make it work. Network actively, be discerning about the different tools you can use, and look for funds everywhere you can to ensure your dream becomes a reality.
The best business to start with little money depends on various factors. But with ingenuity and sound strategy, your business will start on the right foot.