A small business owner working from a home office

How to Start a Small Business on a Shoestring Budget

A "yes, we're open" sign of a small business

Believe it or not, over 99% of all firms in America are small businesses. Given that owning a small business allows you to be your own boss, set your own hours, and have more freedoms in general, it’s no wonder that people have begun starting up their own operations.

More and more people are starting businesses every day, and many of them are doing it on a very tight budget. So if you’re one of those people who’s been thinking about starting your own business, but have been held back by the fear of not having enough money, don’t worry — you’re definitely not alone.

In this article, we’re going to show you how to start a small business on a shoestring budget. We’ll provide you with some tips and advice on how to get started, as well as some helpful resources that can point you in the right direction. So let’s get started!

Small business 101

So, what exactly constitutes a ‘small business’? The U.S. Small Business Administration (SBA) defines a small business as an independently owned and operated company with fewer than 500 employees. The good news is that this definition encompasses a wide range of businesses, from the mom-and-pop corner store to the high-tech startup.

The bad news is that starting and running a small business can be expensive. Even if you’re able to keep costs down, there are still a number of fixed expenses associated with owning and operating a business.

But don’t let that dissuade you from starting your own small business. With careful planning and some creative thinking, it’s possible to get your business off the ground without spending a fortune.

A small business owner on their phone

What type of business should you start?

In terms of small businesses, there are a million and one possibilities — but some will be more budget-friendly than others!

Service-based businesses: A service-based business is a great option if you want to start your own company on a tight budget. All you need is a computer and an internet connection, and you can start offering your services to clients all over the world.

For example, if you’re a great writer, you could start a content writing business; if you’re an expert in social media, you could offer social media marketing services; or if you’re good at graphic design, you could start a freelance design business.

Online businesses: An online business is another great way to start a business with very little money. You can set up a website for free, and there are many online tools and resources that can help you get started.

One great example of an online business is a blog. You can start a blog for free on websites like WordPress.com or Blogger.com, and you can use your blog to share your thoughts and ideas with the world.

Home-based businesses: A home-based business is an excellent option for starting your business on a budget. All you need is a computer and an internet connection, and you can start offering your services to clients all over the world.

For instance, a home-based business could be a virtual assistant, a freelance writer, or an online marketer.

Retail businesses: A retail business is a great option if you want to start your own business with a limited budget. You can start a retail business with as little as $500, and there are many ways to market your business online and offline.

Clothing stores are an example of retail, as are home decor stores, gift shops, and tech stores.

Food businesses: A food business is a great option if you want to start your own company on a tight budget. You can start a food business with as little as $1,000.

One of the most affordable food businesses is a food truck. Food trucks are becoming increasingly popular, and they can be started for as little as $10,000. If you’re not interested in a food truck, you could also start a restaurant or catering business.

A food truck, one of the most affordable food businesses

Starting your business

Starting a small business can be an extremely rewarding experience, but it’s also important to remember that it’s not always easy. There are a number of things you need to do in order to get your business off the ground, like registering your business name, setting up a business bank account, creating a website and social media profiles, and so on.

But even before you do all of that, you need to figure out how much money you have to work with. This is especially important if you’re starting a business on a shoestring budget.

Calculating your budget

Your first step to starting a small business on a shoestring budget is to determine how much money you will need. This includes both your initial start-up costs and your monthly expenses. Be realistic in your calculations, and remember to account for unforeseen costs.

Once you have an estimate of your budget, break it down into three categories.

  • Fixed costs will remain the same each month, such as your rent or mortgage payment;
  • Variable costs vary depending on how much product or service you sell, such as inventory or advertising;
  • One-time expenses might be the cost of purchasing equipment or hiring a freelancer to help with your launch — anything that is a one-time-only cost.

Planning out your small business

Now that you’ve got the budget side of things sorted out, it’s time to start planning your small business. The first step is to come up with an idea for a product or service that you can offer. To do this, ask yourself some key questions like:

  • What are your passions and strengths?
  • What needs does your community have that aren’t being met?
  • What do you do better than anyone else?

Once you’ve got that figured out, do some research to see if there’s a market for it.

If there is, the next step is to come up with a business plan. This will include details about your product or service, your target market, your marketing strategy, and your financial projections. If you’re not sure how to go about putting together a business plan, there are plenty of resources available online.

A person writing on a notepad

Setting it all up

Once you’ve got your business plan in place, it’s time to start setting up your business. This will include a small checklist of important steps:

  • Registering your business name
  • Setting up a bank account
  • Getting a business license
  • Purchasing any necessary software or supplies, or hiring employees

If you’re starting a small business on a shoestring budget, you’ll likely have to do most of the work yourself. However, there are some resources available to help you out. The Small Business Administration offers free counseling and training programs, and there are also plenty of online resources available.

How to make your business affordable

Now we come to the crux of the topic: how exactly can you start your business on a low budget, and what are some of the tips that will get you there?

Planning is key

One of the main reasons businesses fail is because they do not have a solid business plan in place. This is especially true when starting a small business on a shoestring budget.

Make sure you take the time to research your industry, target market, and competitors. This information will help you determine the feasibility of your business and what steps you need to take to get started.

Choose the right business

Not all businesses are created equal when it comes to start-up costs. If you’re looking to keep your expenses low, it’s important to choose a business that doesn’t require a lot of up-front investment. For example, a home-based business or a service-based business typically has lower start-up costs than a traditional brick-and-mortar business.

Use technology

With the advent of the internet, there are now many tools and resources at your disposal that didn’t exist a few years ago. Utilize online services such as Skype, Google Docs, and Evernote to keep your costs down. You can also find templates for all kinds of business documents online, which will save you the cost of hiring a graphic designer or an attorney.

Consider a home office

If you can work from home, you’ll save on the cost of renting office space. And there are plenty of tax deductions available to home-based businesses.

A small business owner working in a home office


One of the best ways to promote your business and get leads is to network with other business owners. Attend local business meetings, or join an online group related to your industry.

Start small and use what’s available

When starting a new business, it’s best to start small and gradually grow your operation. This will help you manage your finances and avoid any potential financial disasters.

There are also a number of free resources available to small business owners, including online tools, templates and support groups. Take advantage of these resources to help keep your costs down.

It’s important to remember that most businesses require at least a small upfront investment to get going — but with the right preparation, and by using the above tips to keep your costs down, your endeavor is likely to be worthwhile!

Bottom line

If you are looking to start your own small business, keep in mind that there are a million different options out there. Don’t be afraid to think outside the box — especially when it comes to being strategic with money.

Hopefully, the information above has given you an idea of how to start a small business on a shoestring budget. Considering the freedom, flexibility, and higher profits you can gain from starting one, it’s really a no-brainer. What are you waiting for?