Starting a business may be less expensive than you’d expect. According to the U.S. Small Business Administration, most small businesses cost $2,000 to $5,000 to get off the ground. If you are strategic about your expenses and able to take advantage of working from home, starting a business on a small budget is feasible. Here are some tips to help you stick to a budget and bring your idea to fruition.
[Read more: 7 Fully Remote Businesses You Can Start]
Work from home
Office space or a storefront lease is one of the biggest line items in a startup budget. If you can avoid this cost altogether by working from home, you can reduce your startup costs significantly.
Note that this approach may limit the type of business you’re able to start. It’s easiest to operate an internet-based business out of your house, as you won’t have to manage foot traffic, find meeting space, or rent or buy a lot of extra furniture. E-commerce and online businesses simply need a strong internet connection, a comfortable workspace, and potentially some floor space or garage space for storing products.
Be sure to check with your local zoning commission about restrictions or rules that apply to running a commercial enterprise out of your home.
Operate as a sole proprietor
Sole proprietorships are free to start and are also the only no-cost operating structure that you can use to launch your business. These business structures are owned by an individual and aren’t separate legal entities. This means that you will personally be liable for the business’s debts; however, you won’t pay anything to get started.
If the risk profile of a sole proprietorship is too high for your taste, a limited liability corporation (LLC) can be formed in most states for less than $100 online — with no legal assistance required.
Dropshipping can be an inexpensive way to start since you won’t need to find space to store goods, worry about as many operational costs or pay upfront for items. You may need to reconsider if dropshipping is the most reliable option as you scale.
Minimize your inventory needs
Inventory is another big cost that can hit your bottom line early in the startup process. If you’re launching an e-commerce or retail business, be conscientious about how much inventory you need upfront.
“Buying products to resell eats up cash quickly,” wrote Small Business Chron. “If you are buying and reselling products, find a source that allows you to dropship the product directly from the source to the customer when they order. You only pay for the product when it is shipped. If the customer pays you first, you will have the money on hand to pay the source.”
Dropshipping is a business practice in which you fulfill orders by purchasing the product from a third party, who then ships the items directly to customers. It can be an inexpensive way to start since you won’t need to find space to store goods, worry about as many operational costs or pay upfront for items. You may need to reconsider if dropshipping is the most reliable option as you scale.
[Read more: 5 Things You Need to Know About Dropshipping]
Use automation to minimize hiring costs
Next to a business lease, employee costs are one of the biggest expenses of starting a new company. You can start running your business without employees to reduce employee-related overhead like payroll, taxes, and benefits. To ensure you can accomplish the tasks that employees might do, you can automate the labor-intensive aspects of running your business, and outsource when necessary.
Many tools can help automate your sales process, e-commerce, customer service and marketing. Platforms like Guru or Fiverr are great resources for finding freelancers who can take on specific tasks, such as logo design or IT support. Sites like Calendly and Uassist.ME offer productivity tools that can make scheduling and administrative tasks seamless, giving you time to focus on high-value tasks.
By making strategic decisions about how you allocate funds in your budget, starting a business with relatively low overhead is achievable. Focus on minimizing your initial outlay and getting sales under your belt before expanding your team, finding an office, and registering as a more complex entity.
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