How to Start a Business For Under $5,000
There are many types of businesses that you can start for less than $5000.00. The cost of starting a business can vary greatly depending on several factors. These include the type of business you want to start, your location, necessary supplies, hiring needs, and whether you plan to operate online or offline.
Additionally, when it comes to reducing startup expenses, there are several areas you can focus on. You can start your business without breaking the bank by carefully planning and budgeting, seeking out cost-effective solutions, and utilizing resources like small business grants and loans.
In this article, we look at the type of business you can start for under $5000 and how to reduce costs once your startup is operational.
Choose The Right Kind Of Business To Start
Although there are 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, you can start many different businesses for under $5000. Here are some ideas you could look into:
- Bed and breakfast
- Computer repair
- Event DJ’ing
- Jewelry making
- Personal shopping
- Virtual Assistant
You can look at so many more ideas, 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. Your startup must be in alignment with your skills and passions.
Some of the more popular new business ideas include online retail and freelance copywriting though this will change now there is ChatGPT and other AI writers.
Personal training is still popular, as well as business and life coaching. Getting your mobile food truck is the way to go if you’re into food.
Write Out A Detailed Business Plan
Writing out a detailed business plan will take a bit of time. After all, it must contain pretty much all information regarding your business. This is where you write down your goals on how you’ll 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 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.
Also, a business plan can help you secure financing when you can show investors that you have your goals together and are 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 and how much you’d like to get it.
- Company description – a more detailed description of your business and how it’s different from other businesses.
- Service or product line is about telling a story of your products and service and who/what they serve.
- Financial projections will back up 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 with 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, save as much money as possible, and 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 almost 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 entrepreneurial skills and a mindset, but that doesn’t mean you can’t pick it up. You can find many free courses to help you, some of which will cost you nothing.
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 will be many more fees associated with this than the online options.
Using as many free resources as possible is a good idea, and even searching 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.
Free video tutorials
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 more affordable 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 know as you pursue your dream of starting a business, but business help and training can get you there faster and by spending little cash.
Find The Perfect Business Location
The right business location may be your home. Today, many businesses start from the garage or home office, so why not yours too? Some companies need a physical office for customers, like the food truck idea or a retail store for walk-in customers.
There are many different things to consider when finding the perfect business location. You’ll also need to ask yourself several other questions.
Some things you’ll need to ask yourself include the following:
- Are there good transport links nearby?
- How much will this building cost?
- 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 will not 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. You won’t need premises for business ideas, e.g., dog walking or cleaning. You only need a place to store your materials and other critical business stuff.
Sorting out your location isn’t needed if you’re starting online, but it will be a little more complex and expensive if you need physical premises. You’ll likely need to look into somewhere as cheap as possible when you’re just starting, but you should be sure there are no significant issues with the place, like repairs that need to be done and hazards that could 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 you can’t afford the premises for whatever reason, you will need to leave without repercussions. The last thing you want to do is fork out money for a place you’re not using.
Business Legal Structure
You have a few different options regarding the legal structure of your new business:
This is the primary business structure. You own your business alone and are responsible for assets and liabilities.
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.
This business entity is for larger, more established companies.
Similar to a C corporation, you will only be taxed on a personal level.
Not only will you need to get this in place, but 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 a more detailed explanation of the options.
Register Your Business Name
Registering your business name is a significant 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 (doing business as)
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, your business name will automatically be registered with the state. Before your application is approved, the state will ensure nobody else is using your name. Nobody else can come into the state and use your name when you’ve been approved.
Get A Trademark
A trademark is a 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 a trademark. You’ll get more robust protection than an ordinary law mark alone. Doing your research on similar business names beforehand is essential.
You don’t want to get in trouble for having the same name or a business name deemed too similar to another in the state or even the country. This is why market research is essential. Be confident in your business name before registering it. You’ll need to make sure it will be relevant years down the line, even when you may have altered what you offer.
Get the website’s domain name! 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 register for state and local taxes. You must pay certain state and local taxes and federal business taxes. A small business usually needs to pay income and employment taxes, too.
- Income Taxes – the legal structure of your business determines these.
- Employment Taxes – if you have employees, you’ll be responsible for paying this.
Your tax obligations will vary by location, so you must do plenty of research for your area and where you plan on trading. You’ll also need to get the correct business licenses and permits.
One of the best things you’ll invest in as a business starting is an accountant. It may seem unnecessary, but keeping track of your financial situation will take so much of the heat off you. They may also be willing to advise you on 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 use government surplus to save money on supplies and other necessities.
You can buy all kinds of bits and pieces, from computers to cars. These items 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 Website Domain And Social Media Profiles
In the eCommerce and social media age, 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 industries – all businesses, regardless of their products or services, will benefit from an Internet presence.
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 possible to start a business for under $5000. You could even begin using the advice here for under $500!