in: Career, Career & Wealth, Featured

• Last updated: July 8, 2023

How to Start a Business with Limited Funds

Vintage man sitting in office room.

Editor’s note: This is a guest post from Joel Ohman.

From early adventure seekers trekking through the Wild West to strike it rich to modern day Web 2.0 startup founders, there is something almost inherently manly about the urge to start a business and especially to start a business with next to nothing in your pocket. Yes, it’s perfectly fine to work for “the man” and never even peek your head outside of your cubicle, but I would venture that we all have heard that little voice inside tell us at least once in our lives to “Grow a little hair on your chest! You should be ‘the man’ – you’re better than your boss,” right? Before you think that you need to drain your bank account, beg your family and friends for seed money, or rob a bank to make your dreams of starting your own business a reality, let’s take a look at some different practical tips for starting a business even with limited financial resources.

Legalese & Logos: Skip It!

Probably the biggest hang up for many aspiring entrepreneurs is that they get so caught up with “normal” business startup things like incorporating/forming an LLC, deciding on a company name, choosing a logo, renting an office, purchasing business insurance, etc. that they waste all of their precious startup capital and time setting up a creature that looks just like a business, but the animal has no life because they didn’t devote any time to the primary business model. Would you rather have a feisty, angry, ornery, and growing bear cub or a stuffed grizzly bear posed stationary by the fireplace?

If you have a limited budget, please do yourself a favor and commit to building out the primary business model instead of spending all of your time doing taxidermy to make your business look like its large and in charge. This may sound like heresy as “normal” business startup things are indeed important things to consider, but when you’re just starting out with a very limited budget–skip it!

Forget about spending valuable time and money trying to decide whether you should form your business as an LLC, C Corporation, S Corporation, LLC Envelope, Partnership, etc. and just start working on your business immediately. There are many reasons why forming a business entity is a smart idea, but there is certainly no formal requirement for you to do so. You can simply start your business 30 seconds from now; in the absence of any kind of formal business entity, it will just be labeled a sole proprietorship for tax purposes.

The same also goes for renting office space, designing business cards, taking out an ad in the yellow pages, etc. Countless new entrepreneurs have wasted cash by the bucketful by paying money for all of the stuff that “normal” businesses do without even bothering to consider if any of those options have a positive ROI for their business.

Do you want to rent office space so that you will feel better about explaining your new business venture to friends and family? (Wow, he must be doing well!) If you can accomplish the same things for a lot less money with a home office then why not do it? Throw out all of your preconceived notions about what a business “should” look like to people and concentrate on the primary functions of your business in the beginning.

Accountants will spend weeks getting their accounting system set up just right, graphic designers will spend weeks on designing the perfect logo, computer programmers will spend weeks coding and endlessly tweaking their website, etc. Just STOP! Ignore all of the periphery and concentrate on only doing the primary focus of your business model so that you can get money in the door and test out the soundness of your business idea for as little start up cash as possible.

Choose Your Niche Carefully

If you are looking for some unbridled optimism and a big rainbow coated, sparkly, you-can-do-anything speech about your new business idea, then look elsewhere because you ain’t gonna find it here. There are certain constraints that a lack of money will place on the types of businesses that you will be able to start, BUT all that means is that you will have to really focus on the kinds of niches that will make sense for your limited budget.

Any type of business that is heavily capital intensive is probably a no-go. If your business requires a large factory, lots of expensive equipment, and a large labor force right from the get-go then you should probably head back to the drawing board for a different business idea. However, the great thing about starting a business in 2010 is that for less than it costs to buy a new Blu-Ray player, you can have all of the startup money you need to start a number of top notch business ideas – especially businesses that are online based.

In years past, if you didn’t have money to pay for office space right smack dab on Main Street, or in more recent years, if you didn’t have money to buy a load of advertising in the Yellow Pages, then you were flat out of luck because you may have had a small business but none of your customers were ever going to even find out about you. The beauty of starting a business today is that within minutes of setting up your own website or blog you can be interacting with potential customers and selling your products or services online to people all over the world. Which brings us to the next very important point: it’s going take a lot of hard work.

No Money? You Better Be Able to Work Hard

You can start a very successful business without having a lot of startup money. You can start a very successful business without being a super hard worker. You can be successful without having one of those things but not both. With the exception of the ultra-skillful, natural born geniuses, if you want your business to be a success and you don’t have a lot of start up cash, then it is absolutely essential that you have a very strong work ethic (Free Hint of the Day: if you have to ask yourself right now if you deserve to fall into the genius category then the answer is that you don’t ).

It won’t always be easy to lift yourself up by your own bootstraps and soldier on even when you feel as if you are not seeing results as quickly as you would like, but power through “The Dip”and you might just be surprised at how rich the vein of gold is that you strike.

Namby pamby’s who whine because they just got home from working a 10 hour day at the office for their “day job” and would rather watch American Idol than work on their startup business will likely fail. Don’t be that namby pamby.

Practical Options for Getting Off the Ground

If have a limited budget, are already convinced that you are in the right business niche, and you know that you are committed to working long hard hours on your business, then here are some practical options that you should consider exploring as you move forward with your startup idea:

“Double Up” – This is a sound risk management strategy and is efficient as a very economical business startup option as well. “Doubling Up” simply means that if you’re already working at a “J-O-B” (as many entrepreneurs and would be entrepreneurs call the idea of working for someone else) then continue to work in your job but tack on the extra career of starting your business on the side. Yes, your family time, recreation time, personal time, and maybe even personal hygiene time will suffer the consequences, but the two enormous advantages to starting a business with the “Double Up” strategy is that you have a steady stream of income flowing in from your day job, and you get the opportunity to test out your business idea in a risk efficient way to see if it’s a winner.

“Partner Up” – If you have a good business idea and no money, then a great business partner for you could potentially be someone with a lot of money and an interest in starting (or just financing) a new business. How do you find these types of people you say? If your new business idea is in the same industry as your current career then you may already have some existing contacts that have the funds, the desire, and even more importantly, the know-how to evaluate your business idea and potentially even offer more than just financial help. If you do not have any existing contacts in your industry, then barring a rich uncle that you are on good terms with, your best bet is likely to seek out an audience with local angel investor clubs, other local business people, or the big boys from the venture capital firms.

“Charge Up” – If you ask very successful entrepreneurs how they financed the beginnings of their businesses, the majority will tell you that they used personal credit cards and not a more traditional source of “big business” funds like a bank loan, angel investment, or venture capital cash infusion. In fact, according to the Kauffman Foundation, the percentage of one person startups that used credit cards to finance their new business was 60.8%. Am I saying that using a credit card to finance your business startup costs is a smart idea? For most people the answer is a resounding “No.” However, almost every Fortune 500 company uses some sort of debt to leverage and accelerate their growth, and if your business model is sound, and your startup’s ROI is high enough, then maybe a low interest rate credit card could be an option to consider as a last resort source of seed money.

Top 10 Money Saving Business Startup Action Items

  1. If you absolutely must form a business entity right away, then use as they offer free basic document filing to form your LLC or corporation (but you will have to pay any fees due to the state).
  2. Apply for an Employer Identification Number (EIN) yourself in just a few minutes using the IRS EIN online application (, CPA’s, and others charge upwards of $100 to do what you could do in 5 minutes).
  3. Pass on buying expensive accounting software and opt to use QuickBooks Online(starts at $9.95/month), FreshBooks (basic account is free)
  4. Read the 10 rules for choosing a domain name and then buy a cheap domain name at GoDaddy.
  5. If you have left your job and are currently paying for COBRA health insurance then shop around and compare some of the various individual health insurance providers to see if you can find a cheaper plan (COBRA is usually quite pricey compared to an individual health plan purchased on the open market).
  6. If your business requires a logo right away, hold a logo design competition at
  7. If you need to accept credit cards then try PayPal or Google Checkout instead of paying for a pricier merchant account.
  8. Get 250 free business cards at Vista Print.
  9. Get reliable shared web hosting with a free one click installation of WordPress at (plans start at $4.95/month).
  10. Get free conference calling at

Taking the Plunge

If you are waiting for the stars to align, the winning lottery ticket to fall into your lap, or others to create your destiny for you, then you will likely end up 25 years from now in the same place as you are right now. There are always a thousand and one different reasons that can flood through your mind and tell you to just play it safe and ignore that entrepreneurial urge inside of you to start your own business. Don’t let a lack of money be one of those reasons.

Listen to our podcast on being an entrepreneur without quitting your day job: 


Joel Ohman is a Certified Financial Planner™ with an entrepreneurial bent. He owns 4 companies and is currently working on a number of different web related projects including consumer comparison websites for credit cards and car insurance.

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