Start a business with $500: Ideas and tactics
We get asked often, “Can you start a business with just $500?” The short answer is, “Yes, there are several businesses you can start with $500 or less.” The real question should be, “How can I launch a successful business with just $500?”
That’s what we’re going to discuss in this article.
Because it’s not always necessary to invest thousands of dollars, take out a loan, or quit your job to start a business.
We’ll begin with advice on where to begin if you need to start your business on a budget. Ideally, you already have an idea in your head about what niche and market you want to serve. Once you do, we can move on to how to make this business successful on a small budget. This will require tactical acumen and the right mindset.
Where do you start?
Regardless of your money situation, you need to pick the right niche and business idea. If you have a business idea, brainstorm how to get started on a budget. You may find it impossible for the business you want to create. If that’s the case and you’re dead set on that business, worry not because all hope is not lost.
Ask yourself these three questions:
- What business can I start that could act as a stepping stone?
- Can I do this business part-time while still working to gain experience?
- Can I freelance in this industry/niche to gain knowledge and connections?
The affordability of a specific business niche sometimes has more to do with your relevant experience than the business itself. Suppose you find someone else to fund your business, that would offset your investment. You can still bootstrap through strategic partnerships or bartering if you're not lucky enough to have an investor.
We can think of a simple formula for a successful business.
Demand + Expertise + Budget
You can get something off the ground if you have at least two of those things.
Assess your current assets
Another factor you’ll consider when pinching pennies is your human and physical assets. The business you choose to start may get a leg up if you have assets, supplies, or equipment on hand that has value. For example, starting a SAAS company makes more sense than going into landscaping if you're a software engineer. In addition to your assets like computers, your connections may help you secure necessary business tools at a discount or even for free.
Many successful businesses started because an employee decided they could do it better or they could offer a complimentary product/service to the same market.
Have a solid business plan
A tight budget calls for an even stricter business plan. How will you leverage a market’s demand and your expertise to create a financially sustainable business without a budget? Your business plan should detail your steps from day one and through profitability. Know what your startup costs will include and how you’ll find customers. Know how you’ll make your first dollar and how you’ll repeat that process.
Speed is everything in business, and money slows down time. Have a plan to leverage your time to hit milestones as quickly as possible. Remember, just because you’re bootstrapping a business doesn’t mean it should always run on a tight budget. Your goal should be to build a company that makes enough money to invest in its growth.
Start legally, with the right structure
A portion of your budget will go towards starting your business on the right legal footing. A common misconception in entrepreneurship is that starting a business requires a crack squad of lawyers, accountants, and advisors. On the contrary, you’ll be surprised to know the process's simplicity and affordability. If you want to start an LLC, the cost ranges from $0 to $500. States like California have waived the LLC filing fee.
Having an LLC gives you two benefits. One, it provides liability protection if your business gets sued or can’t pay back debts. Second, you get an EIN to open a business bank account. You can separate your business and personal finances and make better budgeting decisions.
Go ahead and deposit your remaining budget into your business bank account.
Use technology to your advantage
When considering starting a business in 2023, you already know that technology will play a factor. If you’re on a tight budget, technology goes from an advantage to a downright necessity. Technology makes it accessible to start, maintain, and grow a business.
So how do you use technology to your advantage?
The best place to start is by finding out what your customers expect from a business in your market. Generally, customers want three things in a product or service.
Fast, affordable, and reliable.
Here are a few ways to make your business faster, more affordable, and more reliable using technology:
- Use video recording software like Loom to record tutorials for your customers so they don’t have to ask customer support for help
- Hire remote workers for tech, marketing, customer service, and even sales roles
- Take your marketing online with a website and social media
- Use project management software to keep your online and offline activities sorted
- Use productivity apps to keep yourself and your team productive
- Automate repetitive tasks using workflow tools like Zapier
Aim for slow and steady growth
The debate about whether to aim for slow and steady growth vs. fast growth is never-ending. In fact, just a few paragraphs ago, we talked about how important moving fast is.
So what gives?
Here’s the easiest way to explain it. You should move fast in your decision-making and set attainable milestones that you can achieve in quick succession. While doing this, you should manage your expectations and know $500 won’t turn you into an overnight success. Part of managing your expectations is how quickly you expect to grow and where you think your business will cap out revenue-wise.
Take a measured approach when investing money into your business and taking risks, but attack your ideas with full vigor.
For what you lack in money, replace with time
One silver lining of starting a business on an extremely tight budget is that you take an extremely streamlined approach. You won’t spend time planning a new office space, looking for employees, or test-driving commercial vehicles. Your singular focus every day is to make your first dollar, then repeat that same process.
Know your numbers
A trap that many business owners fall into is delaying when they start tracking their key financial metrics. Usually, the thought pattern is that they’re not making or spending much money in their business, so there’s no point.
This is a big mistake for two reasons:
- Eventually, you’ll need to know your numbers once tax season comes around. Paying business taxes almost always takes the longest the first time.
- Reason number two, when you know your numbers, you can make calculated decisions in your business. With your key financial metrics, you can determine what’s working, what you’re overspending on, and more.
Know what you’ll invest future profits into
As your business starts to make money, you’ll have a choice to make. Stay lean and focus on the cost-effective strategies that got you to this point. Or, start investing some of your profits into new strategies that could help you grow exponentially faster. When you draw up your business plan, you should detail exactly what levers you’ll pull and when.
At each new level in your business, ask yourself this question. “What’s the one activity or strategy I can focus on to reach the next level?”
Reach a new milestone. Repeat. Reach another milestone. Repeat.
For example, let’s say you reach a $1,000/month revenue through shaking hands and attending networking events. You can then decide to build a website and start investing your time in free marketing, like social media marketing and SEO.
Then, when you reach $2,500/month in revenue, you can hire a skilled contractor to manage this for you part-time.
Then, when you reach $5,000/month in revenue, consider hiring someone to help with low-value activities like cleaning or responding to emails so you can focus on higher-level activities like sales.
ComplYant fits into any small business budget
If you have a passion for enterprise and want to work for yourself, you don’t need a ton of money to start. In fact, if you’re strapped for cash, know that you’re at a familiar starting point for future entrepreneurial successes. Most entrepreneurs start their businesses because of a passion for helping people and a drive to improve their financial situation.
However motivated you are, know that starting a business on a budget is no easy task. The number one reason businesses fail is because they run out of money. So you can see how starting with little of it puts you at a disadvantage. If you’re looking for affordable tools to help you with your business, consider creating an account with ComplYant. Our plans are affordable, and your small investment could save you tons of money in the long run.