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How to Start Up Your Small Business on a Small Budget

Janis Pettit

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How to Start up Your Small Business on a Small Budget

Small business start-ups often ask me if there is a way to launch their business if they have little or no money. Over the years, having started up a handful of 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 a home based business, with no money. If you’re not willing to invest in your business, your dream, why would others want to support your business or buy your products? That said, if you’re motivated to build a profitable business and you’ve had the courage to choose to work for yourself, here are some tips that will help you start a business on a very moderate budget.

How much do I need?

The tips below are meant for micro, solo and home based business owners and independent service professionals who will not be opening retail store or leasing office space, since start up expenses for those businesses are much higher.

I bet you’re serious about setting up your business the right way. Once you’ve chosen a well-researched, profitable niche that you’re passionate about, these should be your goals during the start-up process. A step-by-step process to achieve these goals, along with the exact resources you’ll need to reach them, is covered in my group-coaching program for start ups called Rev-Up Tactics (

Set up a structure that’s sustainable and will grow with you. That means setting up the right legal entity that will protect you from legal liability and give you the best tax advantages. You can easily do this 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 and the fees banks charge and the services they provide vary widely. You’ll want to shop around and see where you can get free business checking.

Find the best, low cost options for your initial marketing materials. You’ll need a logo, business cards and a website at a minimum. Even if you’re planning on online business only, you’ll still need these. With the right knowledge and resources, you can get all of this accomplished for under $2,000. This is tricky however, because you need to know exactly how to put together a great branding package and a website that will generate lots of leads and sales. I see too many new business owners pay for a website that is no more than a web brochure with no traffic, or marketing materials that they outgrow in a few months time. It’s important to avoid these costly mistakes

Determine how much you’ll put aside as your marketing budget for the first six months. Usually start ups allocate 5% to 7% of their estimated gross revenues for the first year as a marketing budget. The secret is to calculate exactly how you can get a return on investment for every penny you spend. You’ll only know that by:

Figuring out how to reach your target clients directly. For example if you want to reach new homeowners, putting an ad in the local paper is way too general. Don’t pay for marketing that reaches too broad an audience.

Figuring out the least expensive, most 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 can pay off big.

Learn to maximize every marketing dollar and have a strategy that compels people to take actiom. You want qualified leads from your marketing. Then you can convert them into paying clients. Once you become skilled at this 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 marketing that’s not working, and keep putting a percentage of the money you make as a result back into your marketing budget, it’ll finance itself.

Technology – you’ll need to purchase some software and online services, like web hosting, a data base program, accounting software like QuickBooks, an auto responder and perhaps other technology specific to your industry. Shop around and never buy from the first vendor you find. 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?

I’ve recently written about this in my blog (, but here are some resources. Most of these involve an element of risk. If you’re not willing to take some calculated risk, business ownership may not be for you.

Home equity loan
Personal savings
Low interest credit cards
Loans from family and friends (always prepare and sign a contract to protect the relationship)
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) – this is a perfect choice for micro loans and may be perfect for the micro start up. (

Hopefully these tips will help you understand the basics of the small business start up process. For additional help, go to where 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 small business growth and marketing expert who has helped hundreds of small business owners worldwide to reach their profit and personal potential. For a copy of her e-book, How to Start Up and Build a Profitable Small Business in One Year or Less, and more start up help, go to

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