Starting a business can cost a varying amount of money, depending on a number of factors. It’ll depend on the type of business you’re looking to start, as well as where in the world you’re starting, what supplies you need, whether you’re going to hire, whether you’re going to trade online or offline, and more. However, there are ways you can keep your startup capital fairly low. If you’re worried you’re going to be remortgaging your house or selling your possessions to start your business, don’t. Here’s how to start a business for under $5000.
Choose The Right Kind Of Business To Start
Although there are definitely a few ways you can keep your startup costs low regardless of the type of business you start, the amount you spend will largely depend on the kind of business you start. Fortunately, there are many different businesses you can start for under $5000. Here are some ideas you could look into:
- Auto detailing
- Bed and breakfast
- Cake making
- Candle making
- Card making
- Computer repair
- Event DJ’ing
- Jewelry making
- Personal shopping
- Virtual Assistant
- Web designing
There are so many more ideas you can look at too – check this page for 55 business ideas. The above are just a few ideas. It’s a good idea not to focus too much on the cheapest startup, or the startup you think will make you the most money. It’s important your startup is in alignment with your skills and passions.
Write Out A Detailed Business Plan
Writing out a detailed business plan is going to take a bit of time. After all, it needs to contain a pretty much all information regarding your business. This is where you write down your plans on how you’re going to start, how you’ll expand, how much you think you’ll make, Plan B’s, and so much more. The more detailed, the better. It’ll help you to stay focused for one, and remind you why you’re doing what you’re doing. Of course creating a business plan can be free depending on how you do it, but you should be prepared for it to take a bit of time.
Not only that, a business plan can help you to secure financing down the line, when you are able to show investors that you have your plans together and you’re confident you’ll be able to pay them back.
Below is a list of topics you should address within your business plan:
- Summary – this should be a look at your business overall and a quick idea of your goals and what you’re about.
- Organization and Management – the structure of your business.
- Funding request – you’ll need to research this if you’re looking for funding depending on where you’d like to get it and how much.
- Company description – a more detailed description of your business and how it’s different to other businesses.
- Service or product line – this is all about telling a story of your products and service and who/what they serve.
- Financial projections – these will backup your request for funding, if that’s what you’re looking for.
- Market analysis – you need to have researched the industry, market, and your competitors before you start your business, and record the findings in your plan.
- Appendix – this is optional, but you can put things here such as your resumes, permits, and leases.
Make sure you take your time over your business plan. If you need help, ensure you get it. This is one of the best ways you can get your business off on the right foot and save as much money as possible, as well as secure financing. For more helpful information regarding business plans check out: How Do I Write A Business Plan?, 10 Tips for Developing a Business Plan and How to Write a Business Plan.
Look Into Business Help And Training
Business help and training can get you in the right place mentally to start a business. You can get help with just about anything imaginable, from how to do your business plan to securing your financing.
Just because you’ve had the idea to start a business, doesn’t mean you’re ready. Not everybody has the entrepreneurial skill and mindset, but that doesn’t mean you can’t pick it up. You can find many free courses to help you, and some that will cost you next to nothing to do. You can find these on sites like Udemy and Skillshare. You could potentially do a regular part-time course or even a full-time course, but there are going to be many more fees associated with this than the online options.
It’s a good idea to use as many free resources as you can, and even search on YouTube for people who have done it before you. Entrepreneurs often write books on how they did what they did, so consider picking a few up and following the steps they recommend, too.
Another option is looking for somebody who offers mentoring and training over Skype. This may not be as cheap as the free video tutorials, but it’ll still be cheaper than enrolling in a course or going to a physical mentor. You can talk them through your business, and they can give you personalized advice that’s right for you as an individual and your industry. It’s a good idea to look at testimonials before you decide who to go with. Read Where To Find Help And Training For Starting A Business? for more ideas on locating business help and training.
Ultimately, you’ll learn what you need to learn as you pursue your dream of starting a business, but business help and training can definitely get you there faster, and by spending little cash.
Find The Perfect Business Location
The right business location is going to make a massive difference to how successful your business is. You can’t just assume that you’ll build it and the people will come. You need to make sure your business is in prime location so that staff and consumers can find it with ease. Just as finding the right house is all about the location, so is finding the right business.
There are so many different things to think about when it comes to finding the perfect business location. You’ll also need to ask yourself a number of different questions.
Some things you’ll need to ask yourself include:
- Are there good transport links nearby?
- How much will this building cost to run?
- Will I likely need to move soon – if so, is there a contract I’m signing?
- Are there any problems with the location that could cost me more money in the long run?
Finding a building, then adding your signs and other business features, is not going to be cheap. It could be a good idea to start up in a spare room in your home, the garage/basement, or even your bedroom, if possible. For some business ideas you won’t even need a premises, e.g., dog walking or cleaning. All you’d need is a place to store your materials and other important business stuff.
Sorting out your location isn’t needed if you’re starting online, but if you need a physical premises, it’s going to be a little harder and more expensive. You’ll likely need to look into somewhere as cheap as possible when you’re just starting out, but you should be sure there are no big issues with the place, like repairs that need to be done and hazards that could potentially cause problems.
Always read the small-print of any contract before you sign, too. If you could grow faster than expected and need to move, or it turns out you can’t afford the premises for whatever reason, you’re going to need to leave with no repercussions. The last thing you want to do is fork out money for a place you’re not even using.
Work Out The Legal Structure Of Your New Business
You have a few different options when it comes to the legal structure of your new business. They are as follows:
- Sole proprietorship – this is the basic business structure. You own your business alone and are responsible for assets and liabilities.
- Partnership – there are a few different kinds of partnerships, but this is usually where you own your business with another person.
- Limited liability company – this provides the features of a corporation and the tax efficiencies and flexibility that is more like a partnership.
- Corporation – this is for larger, more established companies.
- S corporation – similar to a C corporation but you will only be taxed on a personal level.
Not only will you need to get this in place, you’ll also need to think about anything else you need operating as that sort of business. You may need different types of insurance, for example. Make sure you do your research to find a trustworthy, affordable company. Read What Is The Best Legal Structure For My Business? for more a detailed explanation of the options.
Register Your Business Name
Registering your business name is a really important step in all of this, and there are a few different ways you can choose to do it. Take a look below to see what the right option for you is:
- File A DBA – this is how you can use your business name without needing to create a corporate identity. You get a DBA for your business name when you are a Sole Proprietorship.
- Create an Official Business Structure – when you form an LLC or Corporation, you’ll automatically have your business name registered with the state. Before your application has been approved, the state will make sure nobody else is using your name. When you’ve been approved, nobody else will be able to come into the state and use your name.
- Get A Trademark – a trademark is the way you protect your business name in all 50 states, if you’re serious about it. You’ll get common law rights to that name, rather than be an actual trademark. You’ll get stronger protection than a common law mark alone. Doing your research on similar business names beforehand is important.
You don’t want to end up getting in trouble for having the same name, or a business name that is deemed too similar to another in the state, or even the country. This is why market research is essential. Make sure you are confident in your business name before your register it. You’ll need to make sure it will suit you years down the line, even when you may have altered what you offer. You also want to make sure you have the domain name for your website! Read How To Check Business Name Availability? for advice on ensuring your business name is available.
Don’t Avoid The Taxman – Register For State And Local Taxes
Avoiding the taxman will only get you in trouble in the long run, so make sure you register for state and local taxes. You must pay certain state and local taxes as well as federal business taxes. A small business usually needs to pay income taxes and employment taxes, too.
- Income Taxes – these are determined by the legal structure of your business.
- Employment Taxes – if you have employees, you’ll be responsible for paying this.
Your tax obligations will vary by location, so you need to make sure you do plenty of research for your area and where you plan on trading You’ll also need to make sure you get the correct business licenses and permits.
One of the best things you’ll invest in as a business starting out, is an accountant. It may seem like an unnecessary expense, but it will take so much of the heat off you when it comes to keeping track of your financial situation. They may also be willing to give you some advice when it comes to having a cash cushion behind your business, dividends, and more.
Use Government Surplus
You want to start a business, but that doesn’t mean you can afford all of your supplies. You don’t necessarily need to buy everything brand new or take out a loan to do it. You can actually use government surplus to save lots of money on your supplies and other things you need.
You can buy all kinds of bits and pieces, from computers to cars. These are items that may have been seized for whatever reason, and have only been lightly used. You will be able to have quality business equipment without spending a fortune.
Lock-in Your Website Domain And Social Media Profiles
In the age of eCommerce and social media your business needs a website and social media profiles to help promote and get in-front of prospects. Having a website is not just for blue-collar type businesses – all businesses regardless of what products or services they provide will benefit from having an Internet presence. Gary Vaynerchuk is a perfect example of how using social media grew his family wine business into a multi-million dollar enterprise and helped Gary to become a global thought-leader. 5 Reasons Why Your Business Needs a Web Site post provides some thoughtful reasons why your business needs a website and Branding Considerations for Your New Business provides advice for addressing business branding.
It’s totally possible to start a business for under $5000. You could even start one using the advice here for under $500!