How To Start a Business on a Low Budget
Is lack of a budget holding you back from starting a business?
I won’t deny it, running a business can be expensive. As an entrepreneur, you’re responsible for covering the cost of equipment, materials, administrative work (bookkeeping, contracts), as well as marketing, and employee expenses. Plus, self-employed taxes are quite a bit higher.
But you don’t need to start with a big investment to be successful. It’s more sustainable to dream big but start small.
Determine Your Expenses
1.Write down everything that’s required to run your business.
Research the costs and ask for quotes. It often feels less overwhelming to actually know the numbers than to imagine what they will be.
Don’t overlook benefits like health insurance and retirement. You may not need to pay for these now if you plan to keep your job, which I recommend, but it’s a good idea to have a sense of what they will be.
2. Mark what you’re capable of doing yourself and are willing to learn.
Make sure to emphasize tasks that align with your skills and keep in mind the amount of time it would take to implement, especially if you need to learn how to do something.
(Psst! I always recommend managing your own social media.)
Then prioritize these tasks. You don’t have to do everything at once, start with the bare minimum.
3. What’s left is what needs to be hired out.
Want some insight? I share what I recommend hiring out versus doing yourself in Self-Employed School, along with tips and strategies on how to do your own marketing.
Just getting started in business and looking for a roadmap? Check out my Begin Your Business online course. We’ll cover everything from pricing to forming an LLC, assembling your team to getting your first clients, and everything in between.
Tips
Charge Well
My biggest regret when starting my marketing business is undercharging. It severely stunted the growth of my business, and I’m still paying for that mistake.
From $25/hr to $125/hr: My Pricing Journey →
It’s essential to charge well so your business can pay its bills, support an emergency fund, and eventually pay you. Undercharging means you have to work more just to break even, which leads to burn-out and resenting your business.
Pricing can be tricky, which is why we cover several methods in my Begin Your Business online course.
Also avoid bartering and brain pickers.
Invest in a detailed contract and set strong boundaries with clients
My second business regret is not having a more thorough contract.
While you may not end up in court, having a contract to fall back on allows you to enforce your policies with clients.
It’s sad how often people don’t hold up their end of an agreement, take way too long to pay you, or don’t credit your work when they’re supposed to.
Contracts lay out your payment terms, state what’s included in your offer, set project deadlines, enforce your copyright, explain what goes down if the contract isn’t followed, and they protect your business.
In 2023 I discovered The Legal Paige and purchased her website design contract template which expanded my contract from three to eight pages.
My new contract includes a project timeline with fees if it’s not followed, a set number of revisions, accepted forms of communication, and additional clauses I never would have considered.
If your business is a brick-and-mortar, you’re a maker, or another type of business owner, it’s still essential to have policies and terms in place.
Also make sure to have business insurance, establish your business as an LLC, if it makes sense for your situation, and open a business bank account.
Curb Your Spending
Less money out means you need less money coming in to break even. It’s simple, but I’ve seen too many business owners over investing in their businesses or overspending on things they don’t need. Your business doesn’t have to look perfect or be perfect to be functional and even profitable.
5 Reasons Your Business Can’t Afford to Pay You - And How to Change That →
Is Your Spending Aligned With Your Values? →
It can take years before a business is earning enough to support itself and you. Unnecessary spending prolongs that period.
Even experienced business owners are prone to overspending, myself included. Before investing in a service, piece of equipment/software, etc., ask yourself:
1.) Will it directly contribute to the growth of my business?
2.) What’s the return-on-investment (ROI)? How much do I need to work or how many new clients do I need to take on to justify this expense?
3.) Will it improve my efficiency?
Also consider how big you want your business to be. You may be happier with a more simple set-up.
You Don’t Need a Business Coach
I’ve seen businesses spend thousands of dollars on coaching that’s more motivational than results-driven. While having someone to cheer you on is helpful, you need someone who can guide you.
Instead of hiring a coach, work with an advisor from your local Small Business Development Center (SBDC).
The SBDC is a branch of the Small Business Administration, or SBA, and has over 900 service locations throughout the U.S.
An SBDC advisor will offer practical suggestions and action steps on how to grow your business. They’re also master networkers and can point you in the direction of resources, connections, and even grants.
Coaches may be able to do that too, but it’s always more effective to be connected with people and resources local to you.
Plus, talking with an SBDC advisor is free.
Here’s the most memorable piece of advice my SBDC advisor shared with me. →
Your county’s economic development organization may also offer free advising and there are many other amazing non-profit organizations geared towards entrepreneurship that are worth looking into.
Maximize Your Deductions
You’ll learn to love write-offs.
In addition to your cost of goods sold (COGS) and other expenses that are necessary to the running of your business, be sure to track your mileage and take the home office tax deduction, if you qualify.
Just remember, every $1 you have in write-offs does not save you $1 in taxes, which is why it’s best to be wise with your spending.
Focus on Free Marketing
While I do recommend hiring out the design of your website (it’s just too important that it be done well), I recommend managing your own marketing - especially social media.
There are many marketing channels that are free to use, including social media, email, and publicity (ex. writing a press release).
The Most Effective Marketing Channels for Small Business — Ranked →
This Traditional Marketing Method Will Turbocharge Your Business’ Exposure →
Why Email Marketing Is More Effective Than Social Media →
How to Save Time on Social Media →
To better understand each marketing channel, and to create an effective marketing strategy that works with your skills, enroll in my Self-Employed School online course.
It’s not a hinderance to start your business on a low budget. It forces you to prioritize your spending and even be discerning with the work you take on, building your business on a stronger foundation.
Looking for more starting a business advice?
I’ve Been in Business 11 Years: Here’s What I Wish I Did Differently (And What I’d Keep the Same.) →
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Hey there! I’m Meg:
LOVER OF CATS, ROLLER SKATING, AND VW BUGS
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