15 Ways to Launch a Start-Up on a Budget (Plus a Free Budget Calculator)

The pandemic ushered in a surge of start-ups and new businesses, and the trend continues throughout 2022. Are you one of the 17 million people planning on launching a start-up this year? Read on for expenses to plan on and how to keep costs low.

According to the U.S. Small Business Administration, most brand new businesses cost around $2,000 to $5,000 to start. To keep your start-up on the low end of that figure, there are a few strategic choices you can make. Here are the areas you need to budget for as a start-up, and a list of ways to save money.

Rent

This is one of the biggest expenses for businesses. You can cut out the entirety of this expense by working from home. If you already migrated to the WFH lifestyle during the pandemic, you’re already one step ahead.

Utilities

Budget around $2 per square foot of office space for utilities. If you’re working from home you can save money here, but should still plan on an increase. For example, you may want to upgrade your internet speed or cell phone plan.

Permits and Fees

Make sure you research all the appropriate permits and fees for your industry. If you can, operate as a sole proprieter, it’s the only no-cost operating structure. Or form an LLC, which has fees of under $300 for the majority of states.

Equipment and Technology

Use equipment and supplies you already own wherever possible. This includes your laptop, cell phone, vehicle, and office furniture. Facebook Marketplace can be a great resource for finding pre-owned industry equipment. And keep track of everything you use for your business for tax deductions.

For technology expenses like your website and POS system, use services that simplify and integrate technology to save money. Many payment processors (like Square) will work for ecommerce and brick and mortar POS systems. And website providers like Squarespace roll ecommerce, domain names, and hosting into one reasonable monthly fee.

Inventory

Set aside 17% to 25% of your budget for inventory. This may vary based on your industry. According to NerdWallet: “When you’re first starting out, consider securing more inventory. You’ll want to attract customers and generate as much revenue as you can in your company’s early stages.”

To lower inventory costs, reach out to wholesalers and compare prices. You can also try dropshipping to save money on inventory and shipping.

Employee Expenses

Before hiring an employee, see if there’s a way you can automate the task. For sales, you can use CRM software that has email templates and appointment scheduling. You can DIY logo and graphic design with a website like Canva. Drag and drop website builders like Squarespace may be simple enough for you to make your own website.

You may also be able to hire a freelancer to take care of tasks that you aren’t ready to hire an employee for just yet.

Marketing

There are many ways to do digital marketing yourself for free. Social media pages and posts are free to run, and advertising can be affordable. Services like Hootsuite can automate digital marketing and free up your time as well. Mailchimp for email marketing is a great option. And don’t forget the power of word-of-mouth. Asking for reviews from your customers is one of the most powerful marketing tools. And it’s totally free.

15 Ways to Save Money Launching a Startup:

Working from home instead of renting office space.
Operate as a sole proprieter, it’s the only no-cost operating structure.
Or form an LLC, which has fees of under $300 for the majority of states.
Use digital conferencing tools like Zoom instead of renting a meeting space.
Use your own furniture, equipment, and supplies and keep track of their usage for tax deductions.
Search Facebook Marketplace for pre-owned industry equipment.
Sell products with ecommerce instead of a brick-and-mortar store.
Use a wholesaler for product inventory.
Try dropshipping.
DIY your logo and graphic design with a service like Canva.
Create your own website with a drag and drop builder like Squarespace.
Use a CRM for sales that has automations for appointment scheduling, emails, and task lists.
Outsource to freelancers before hiring employees.
Automate everything with free marketing tools like Hootsuite and Mailchimp.
Set up a Google Business profile and Yelp page and ask customers for reviews.

Sample Start-up Budget Calculator

https://www.sba.gov/sites/default/files/2020-08/Startup%20Costs%20Worksheet-508.pdf