shoestring budget

How to Start Your Business on a Shoestring Budget

Starting a business is the American dream. However, many of would have to start on a shoestring budget. I’m here to tell you that you don’t need to wait. After all, who wouldn’t want to:

  • Be their own boss
  • Call their own shots
  • Take off when they want
  • Vacation when they want
  • Have enough money and time to live the life they choose
  • Answer to no one except themselves.

I have been an entrepreneur since 1992 and have opened many different types of businesses. One important thing I’ve learned is that there are many ways to get started in business. And they don’t have to cost an arm and a leg.

How Much Money Do You Need? 

Before starting any business, it is imperative you make a business plan. The largest and most valuable part of your business plan is the financial section. This section tells you how much capital you are going to need, both to get started and provide working capital while you get up and running.

Money needs are very important. Many businesses fail not because they are not good ideas, but because there was not enough money to sustain the start up.

Here is an example of some of the capital needs your business might have

  1. Business License
  2. Assumed Name Filing
  3. Resell Permit – (if your state collects sales tax you may need to pay the State Board of Equalization a deposit.)
  4. Incorporation or Partnership Fees
  5. Inventory (clothing, information, electronics, jewelry, software)
  6. Computer
  7. Equipment & Machinery
  8. Rental space (office, warehouse, retail, etc.)
  9. Operating expenses: (utilities, merchant fees, cell phones, internet, web hosting, consulting, education, advertising, bags, boxes, etc.)
  10. Domain Name
  11. Website Hosting
  12. Website Design & Software Fees
  13. Legal Fees
  14. Employees
  15. Insurance

How do you figure out what these costs will be?

Research, research and more research. 

To Start, You Will Be Making Contact With: 

  • State Board of Equalization Office
  • Secretary of State
  • Manufacturing companies (see
  • Trade shows (do Google search to find relevant ones)
  • Insurance companies (get several quotes)
  • Leasing agents – ask about rental rates, lease terms and additional charges like (taxes, insurance, water, trash and sewer or common area maintenance charges)
  • Lawyers (lease review, incorporation, franchise doc review, etc.)
  • CPA or bookkeeper (to set up your business)
  • Website developer (to set up your website)

Talk to as many people as you possibly can. Find out what their fees are, minimum order quantities (MOQ’s) and begin to build the financial section of your plan. This way you will have a very good idea of how much capital you need.

After you have done your research, figured out what you are going to need and how much (use a range) those items are going to cost you, it is time to look for low-cost solutions. Below are some of the items I discovered and used myself and they do work.

Some Low-Cost Solutions

  1. Instead of attending expensive trade shows, many times you can go through the venue’s website for past events. Purchase online access to seminars they had. Most importantly see the vendor list.
    I like to visit the vendor list and click through to their websites to check them out. If I like their merchandise, I make contact there. This is a good way to find relevant vendors for your business, without actually attending an expensive trade show. Once you can afford to go to shows, however, I highly recommend you do so.
  2. Start your business as a sole proprietorship. You will need a business license, DBA and bank account. As soon as you are able, convert your business to a corporation or LLC for asset protection
  3. If you need a resell permit, the state can charge a deposit to ensure you will send sales taxes to them. In my case, I was required to give the state $5,000 as a new startup deposit. I learned later I could have instead posted a $500 bond, which I did. At that point, the state refunded my $5,000. So be sure to ask if you can post a bond instead if your state requires a sales tax deposit.
  4. If you do need an attorney for something, use websites like whenever possible.
  5. File for your LLC or DBA direct with your state’s secretary of state. Beware of unscrupulous internet companies offering to file for you for hundreds of dollars. It is simple to file yourself so start with your secretary of state.

Inventory and Supplies

  1. When buying inventory, always negotiate minimum order quantities, or MOQ. Manufacturers will always want to sell you higher amounts and will request higher MOQ’s. Simply tell them you are new and would like to place a test order. Usually they will agree.
  2. Establish net 30 terms whenever possible, which give you 30 days to pay the vendor. Ask what terms they offer and apply. If your credit is not great, see if someone will cosign for you. Many vendors use factor companies. Ask who their factor is and apply with them to get terms.
  3. If you can’t afford inventory, use drop shipping companies. They manufacture, store and ship products for their clients. You offer it for sale and notify the drop ship company when you make a sale and collect the customer’s payment. The drop shipper sends out the product and charges your credit card for the inventory and drop ship fee. You keep the difference. Your profit margins will be less doing business this way, but it is a great solution to getting started on a shoestring budget.
  4. Use a computer, iPad or phone you already have and upgrade when you are able.
  5. Purchase used or refurbished computer equipment at far less than the cost of new equipment.
  6. Lease equipment to get started. This allows you to make payments and keep your capital in the bank.
  7. Start your business with the minimum equipment or machinery necessary and build as you go. You do NOT have to start out with everything. Buying equipment as needed can help you get started for less in the beginning.
  8. Check Craigslist for moving and store closing sales. Find used equipment, office supplies and fixtures this way. Be creative and have fun with it. You never know what golden nuggets you may find.

Finding a Space to Work From

  1. If possible, work from home and avoid the cost of leasing expensive space
  2. Sublease space from someone who has more than they can use. Perhaps they have 2,500 sq. ft. building but are using only 2,000 of it. Or maybe they have an office available for rent. Check Craigslist. This could be what you need to get started.
  3. For retail, can you begin with a kiosk? Opening a retail store is costly. But renting a kiosk can be far more affordable. Usually malls provide the kiosk and you provide the inventory, cash register and sign. I have seen amazing retailers start this way and move into full scale stores when they are able.
  4. Find a built-out store (where a former tenant moved or closed) and move right in. I have done this myself. It is a wonderful way to start your business for a lot less expense. Sign the lease, put up a sign and bring your inventory and credit card reader and you are in business. Be in business in weeks, not months—at a fraction of the cost.
  5. Always ask the landlord for T.I. (tenant improvement) money. This is usually a dollar amount per square foot the landlord credits the tenant to build the store. It is not FREE. You will pay the landlord back over the lease with your rent payments. However, it is a great solution for those with little startup capital.

Insurance and Other Expenses

  1. Compare insurance quotes. Only pay for what you need. Pay monthly and ask for higher deductibles to bring down the premiums. Once you are able, you can lower deductibles, take advantage of annual payments plans, and so on.
  2. Merchant card service fees can vary. Be sure to get several quotes and inquire with your merchant service provider at least annually to see if they can lower your processing rate. It took me 6 years to learn I could reevaluate my rate biannually. Once I did, this saved me thousands of dollars annually.
  3. Instead of ordering custom bags and boxes with huge minimum orders, order a case or two of plain bags and/or boxes and some great logo stickers that fit on both items. Make them as you go and order custom work when you are able.
  4. Legal fees are expensive but necessary. If you are signing a franchise agreement or signing a lease, etc., you need a lawyer. Do you have a lawyer friend or family member who could review the documents for a reduced fee? Can you barter with a lawyer for their services? For example, if you design websites or are a social media wiz, can you work on their site or handle their social media in trade?
  5. Watch YouTube videos. I have learned so much watching these videos. Whenever I get stuck on something (QuickBooks, MailChimp, iPhone, etc.,) I do a YouTube search and usually figure it out immediately. I used to pay consultants $50/hour or more to help me. Now I just watch YouTube videos.
  6. Employees can be costly. Can you run your business alone at first? I also recommend using services like and to hire freelancers instead of employees whenever possible.
  7. Website design doesn’t have to be expensive anymore. With sites like WordPress and Shopify you can do a lot of the work yourself. Again, freelancers from sites like and can help you get a website built very affordably.

Be Creative

Creativity is your friend when getting started on a shoestring budget. You might have to be willing to not have things be perfect from Day One. However, starting a business on a shoestring budget is doable. The hard part is jumping in and getting started. Once you do that, you will be on your way. You can fix things over time.

If you encounter any legal problems with your business, you may ask for legal advice from a local lawyer.

Here’s an Example

When I opened my clothing store, I did not have enough money to fill the store with inventory. So I bought a few BIG pieces of inexpensive furniture at garage sale. I covered them with dresses, handbags and jewelry and used them in an interesting way to fill up the space.

They gave the store a wonderful eclectic look, and customers loved it. Also, I purchased a large piece of velvet fabric and curtained off a section of the store to close it off. As I began making money, I built up my inventory level until I could fill up and open the curtained area. It worked perfectly.

If I had waited to have enough money to fill the store to its proper level, I probably would have never opened.

Start Now and Follow Your Dreams

Thank you for reading my Business Opportunities blog. I enjoy sharing my ideas and experiences with you to help you follow your entrepreneurship dreams.

If this article helped you, or might help someone you know, please share it. Email your comments, questions and suggestions to [email protected].