How to Start up Your Small Business on a Small Budget

Small business start-ups often ask me how they can launch their business with little or no money. Having started up four successful businesses myself, and having coached hundreds of small business owners, this is what I’ve learned.

You can’t start up a business, even home based, with no money. If you’re not willing to invest in your dream, why would others want to support you or invest in your products? However, if you know you have the courage, determination and motivation to go for it, here are some tips that will help you start a business on a very moderate budget.

How much do I need?

First, make a commitment to set up your business the right way. Once you’ve chosen a well-researched, profitable niche that you’re passionate about, the tips below will help you understand the start-up process. They’re meant for micro, solo and home based business owners and independent service professionals. Those opening a retail store or leasing office space will experience much higher start up costs.

· Set up a sustainable legal entity that will grow with you. Choosing the right legal entity will protect you from legal liability and give you the best tax advantages. You can do this easily for less than $500 if you’re willing to do some of the work yourself.

· Find the right banking relationship. You’ll need a business account. Since bank fees and services vary widely, shop around and see where you can get free business checking.

· Find quality, low cost options for your initial marketing materials. At a minimum, you’ll need a logo, business cards and a website--even if you’re planning just on online business. With the right knowledge and resources, you can get all of this accomplished for under $2,000. Be cautious however, because you need to learn how to create a polished branding package and website that will generate lots of leads and sales. Too many start ups pay for a boring website that gets little or no traffic, or marketing materials that they outgrow too quickly. It’s important to avoid these costly mistakes.

· Determine how much your marketing budget will be for the first six months. Try allocating 5% to 7% of your estimated first year’s gross revenues. The secret is to create a plan that will give you a return on investment for every penny you spend. You’ll only do that by:

Ø Figuring out the most direct way to reach your target clients. Example: say you want to reach new homeowners; putting an ad in the local paper is way too general. Don’t spend on marketing that reaches too broad an audience.

Ø Figuring out the most cost effective ways to reach them. Marketing online is still the best deal around. But there are many highly effective cost free and low cost offline marketing ideas that really work.

Ø Maximizing every marketing dollar and having a strategy that compels people to take action. People rarely buy until they trust you, so your marketing goal should be to generate qualified leads. Then you can convert them into paying clients. Master this and your business will really grow.

Your initial marketing budget could conceivably be under $1,000. If you use it wisely, measure and track your results, change or eliminate ineffective marketing, and keep putting a percentage of sales back into your marketing, it’ll finance itself.

· Technology – you’ll need to purchase some software and online services, like web hosting, a data base program, accounting software, an auto responder and perhaps other industry specific software. Shop around --lots of software can be purchased for less on E-bay. Buying a slightly older version is fine to get you started.

Where can I get the money to fund my start up?

Check out this subject on my blog ( Most funding options involve an element of risk, but taking calculated risks is part of business ownership. Here are some ideas:

· Home equity loan

· Personal savings

· Low interest credit cards

· Loans from family and friends (protect the relationship by signing a contract)

· Credit union or personal bank loans or lines of credit

· SBA loans –these are usually for larger amounts

· Venture and private investor funding (you better have a top notch business plan)

· –a perfect choice for micro loans. (

These tips should give you some insight into the basic small business start up process. For additional help and a program that offers step-by-step personal guidance that will save you time, money and struggle, go to There you can download a free e-book, How to Start and Build a Profitable Business in One Year or Less.


Janis Pettit ( is a successful entrepreneur and highly regarded small business growth and marketing expert and coach who has helped hundreds of small and solo business owners worldwide reach their profit and personal goals and create a solid 6-figure personal income. Learn how to make your small business website a client magnet and receive a free audio and e-book, 10 Low or No Cost Ways to Drive Qualified Traffic to Your Small Business Website at http://Ma...

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