How To Start A Business With A Small Budget?

How to start a small business with a small budget

Table of Contents

The best ways to start a business with a small budget requires you as a business owner to leverage your network, build a business around your budget, choose your business idea wisely, avoid unnecessary expenses, save money on expenses where possible, avoid utilising expensive debts, use sweat equity and be creative with marketing.

The common thinking is that starting a business is extremely capital intensive but that doesn’t have to be the case. The capital intensive nature of a business will depend on various factors such as the business model, industry, location, and the minimum overheads required to run the business. If you intend to start a business with a small shoestring budget, it is best to map these potential issues prior to getting started.

Leverage your network

Use your friends and family if they have some skills or things that you can reasonably ask for. No-one is recommending that you take advantage and abuse your family’s generous nature but if there are some skills that a fellow family member has which you need as a one time favour, ask them. Every little bit counts when you’re trying to stretch a small budget.

Does your business need extra storage?

Ask your extended family to see if they have any spare room in their garage. Leases can be one of the largest expenses that a business incurs and when you start out, you won’t have the cash flow to pay for it.

Workaround your budget

Your personal circumstances will dictate whether this business will be run part-time after work hours or full time with your undivided attention. If you are not in a financial position to quit working full time, perhaps it is in your best interest to start a side business. Be realistic and be conservative when you are planning your business. Using pie in the sky revenue and cash flow estimates and underestimating the cost of setting up your business will only work against you when it comes time for you to execute your business plan.

Starting a simple side business might be the best plan for you and there are plenty of side business ideas that can generate six-figure incomes. They are also very cheap to get started.

Read: How to start a side business

Choose your business idea wisely

It is difficult to exit a business or to avoid spending money once you’ve started a capital intensive business and this should be carefully considered prior to starting if you or your business partners lack the funds. Therefore, it is a good idea to build your business around your capital restraints. If you need to continue working when you start your business, start with a business idea that can be a side business at first. If you only have $10,000 as start-up capital, don’t start a business that requires you to spend $100,000 upfront just for equipment alone. Be realistic about what is possible.

Read: 10 six-figure side business ideas

Save money on recurring expenses

There are certain business expenses that your business won’t be able to live without. Find cheaper alternatives. Maybe your business doesn’t need the most expensive tiered plan for accounting software. There are usually always cheaper alternatives and sometimes doing a bit of research online can save you thousands per year. If you are starting on a shoestring budget, it may help saving money on your expenses where possible so that you can achieve more with your limited budget.

Learn how to do it yourself

Starting a business on a budget requires you to get your hands dirty by adding sweat equity. Although it may take some longer than others to pick up some new skills, it can save you thousands of dollars in lieu of hiring a professional. Be careful not to waste too much time. You need to be cautious about the cost of your time and don’t want to spend thousands of hours on something that would’ve cost you only $500 dollars.

Do you need a website?

Learn how to do it yourself and save yourself some money. There are countless guides to set up a simple website on Squarespace, Weebly, or Wix. Learning how to do it will also help you obtain some of the skills needed to improve your website later on down the track when you work on your website’s SEO.

Read: Why small businesses need a website

Be creative with marketing

Marketing is another expense that new business owners regularly underestimate when starting out. Google Ads and Facebook ads are not cheap, especially if you have a limited budget. If there is increased competition for your keywords, you might find that your advertising spend will go up despite traffic staying the same as the cost of ads on these platforms are based on how competitive the keywords are.

How do you marketing on the cheap?

It is free to create a social media account. Using social media to organically grow a following may take time but it is the cheapest way to market a business online. Sitelabs has a list of the top digital marketing strategies ideas for small business.

Read: Why you need social media marketing

Purchase second-hand equipment

If you are not desperate for certain equipment, finding it second-hand equipment from a business that is closing down might be a good idea if you’re on a budget. Getting furniture and other non-mechanical appliances are great as there is a lower risk of it breaking down due to wear and tear. Mechanical equipment and electrical appliances have a higher risk of breaking down but if they’re at a large discount, it may be worthwhile if you’re starting a new business on a budget. You can usually find them here and there on Facebook marketplace/dedicated groups, Gumtree and eBay.


The contents of this article do not constitute advice, are not intended to be a substitute for advice, and should not be relied upon for any such purposes. You should seek advice or other professional advice in relation to any particular matters you or your organisation may have.

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