There’s never been a better time to start a business — and the good news is, you don’t need a large budget to get started. 

In the U.S. alone, over five million business applications were filed in 2023, according to the U.S. Census Bureau. Many of them were solo business owners looking to launch their dream company on a shoestring budget. 

But before you fill out an application, it’s important to have a full view of the steps to start a business on a budget. 

From business plan creation to understanding the legal requirements to securing small business funding, it’s essential to cover every step  — and learn where you can save some dollars. That’s why we put together a comprehensive guide to starting a small business on a budget. 

Table of Contents:

• Refine Your Business Idea
• Write a Budget-Friendly Business Plan
• Choose a Low-Cost Business Structure 
• Register Your Business and Get Licenses on a Budget
• Understand Your Business Budget and Financials 
• Build a Brand and Online Presence for Free 
• Plan a Low-Cost Launch For Your Business 
• Grow and Scale Your Business with Cost-Effective Strategies 

How to Start a Business on a Budget: A Step-by-Step Guide

Ready to start your entrepreneurial journey without draining your savings? Follow these steps to kick off your business on a tight budget and set yourself up for long-term success. 

#1. Refine Your Business Idea

You may already have a business idea. Or perhaps all you know is that you’re ready to be an entrepreneur. Either way, you need to refine your business niche before you can do anything else. 

If you’re unsure what your business should be, list your passions and skills and cross-reference those with what’s in demand. Next, conduct market research to see what products or services are already out there and how you could structure your business to meet demand. 

For example, maybe you want to start a landscaping business in California. After researching other landscaping businesses in your area, you might discover that most are geared toward residential customers. You could then focus your business on commercial landscaping to fill a gap in the market. 

You’ll also need to identify your unique selling proposition (USP). This is what makes you stand out compared to similar businesses. 

Once you’ve landed on an idea, test its potential. You can start by asking friends and family for their input. Or, take it a step further by conducting a focus group with people in your target audience. 

Serious about starting a business? Check out our in-depth business starter guides: 

• How to Start a Cleaning Business 
• How to Start a Landscaping Business 
• How to Start a Graphic Design Business
• How to Start a Photography Business
• How to Start a Consulting Business
• How to Start a Digital Marketing Agency
• How to Start a Personal Training Business
• How to Start a Tutoring Business
• How to Start a Handyman Business

Budgeting Tip: It’s a good idea to research the startup costs for your business idea. For example, some businesses like consulting take little startup costs  — all you need is a good laptop and access to WiFi to start your business. But for businesses like landscaping, car detailing, or photography, you might need to invest in specialized equipment or tools before you even start. 

#2. Write a Budget-Friendly Business Plan

One of the most important steps in starting a business is creating a business plan, but you don’t need to spend money on fancy software or consultants to do so.

Your business plan should outline key elements such as your mission, business model, target audience, and financial projections — all of which can be done without spending a cent. Focus on starting lean and exploring low-cost ways to reach your market.

Key components of a business plan include:

• Executive summary
• Product or service description
• Target customer demographics 
• Marketing strategy 
• Financial projections

You can find plenty of free business plan templates online, including this one from the US Small Business Administration (SBA). 

#3. Choose a Low-Cost Business Structure

Next, decide what type of business structure you want to form. It’s important to remember that the type of business structure you choose will impact how you file taxes, so if you’re looking to save money, you’ll want to consider cost-effective structures like a sole proprietorship or LLC. 

It’s a good idea to consult with a CPA to figure out the best structure for your business. 

The most common types of business structures include: 

• Sole proprietorship
• Limited liability company (LLC) 
• Partnership
• Corporation
• S-Corporation (S-Corp)

Each of these structures has its pros and cons, so it’s important to weigh them carefully before making your selection. Also filing fees for LLCs vary by state, so check what the minimum cost is where you live.

For instance, if you’re running a service business as an individual, like a photographer or graphic designer, it would make sense to register as a sole proprietor. If you’re teaming up with a partner to open a restaurant, you might want to register the business as a partnership or an LLC. 

Again, it’s best to consult a CPA or business formation service to choose the right one for your situation. 

#4. Register Your Business and Get Licenses on a Budget

While registering your business may come with some unavoidable fees, there are ways to keep costs low. 

Consider handling the paperwork yourself instead of hiring a service to do it for you. Look into local resources, like small business development centers or nonprofits, which often offer free help with business registration and licensing.

Additionally, some business types may not require extensive permits or licenses, especially if you’re offering digital services like graphic design or virtual assistance.

In general, these are the steps required to register your business depending on your location and business structure:

• Register your business: File your business registration with the federal, state, and local entities as required. You can hire a business registration service to do this for you.
• Apply for an EIN: You’ll also need an Employer Identification Number (EIN). An EIN is required for federal tax registration and allows you to pay taxes, set up a business bank account, and hire employees.
• Get necessary licenses and permits: Certain licenses and permits are required depending on your industry. Research which ones you need to make sure you can legally operate. 

#5. Understand Your Business Budget and Financials

To set your business up for success, you need to be on top of your financials from the beginning. 

Start by setting your budget and estimating your startup costs so you know how much capital you need to launch. Having an estimate will help you determine whether you have enough cash to bootstrap or if you need to secure funding down the road. Small businesses have several funding options, from finding investors to getting a bank loan or even turning to the community with crowdfunding. 

No matter how you plan to secure funds, you must set up a business bank account to manage your financials. Having a separate account from your personal financials helps keep everything organized and easier to manage — this is especially helpful come tax time. 

Budgeting Tip: Many banks offer free business bank accounts or free trials of their services. It’s worth shopping around before you sign up for a business account. 

#6. Build a Brand and Website For Free (or Very Cheap!)

Now for the fun part: building your website. 

Setting up your website is a big part of setting up your business and preparing to launch. A website is a place where people learn more about the business, your services, and how they can contact you.

It also legitimizes your new business, letting potential customers know they can trust you for the service they’re looking for. 

Web developers and designers can cost thousands of dollars and can even take months to publish. As a new business owner, especially on a budget, that’s not ideal. That’s where Durable’s AI Website Builder comes in. 

With Durable, you don’t need to break the bank to have a professional website. Everything you need to go live comes with your Durable subscription. Durable generates your entire website for you. It writes your copy, including alt descriptions and SEO-optimized content, generates images, automates blog posts, and generates full sections and pages for you.

You also get a custom domain, enhanced security, analytics, and custom branding. 

Another way to save money is by creating your brand with Durable’s Brand Builder. With one tap, you can generate a logo, brand colors, and fonts.

Next, it’s time to develop a marketing strategy. A budget-friendly business marketing strategy can include any or all of the following:

• SEO
• Content marketing (like blogs, newsletters and e-books)
• Social media marketing 
• Email marketing 

Start with a few marketing channels to see what performs best with your target customers. For example, if you launch a roofing business in Georgia, you might choose to set up a blog on your website to create valuable, educational content that your customers are searching for. 

As you grow, you can invest in more advanced tools and marketing strategies, but you can get started without spending much.

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#7. Plan a Low-Cost Launch For Your Business

Ready to launch? 

First, decide if you want to do a soft launch or a hard launch. A soft launch lets you test the waters without pouring money into a full-scale launch. You can announce your business to your network or a small group and gather feedback. A hard launch means you’re officially open to the public for business and usually includes an announcement. 

Either way, you’ll want to generate buzz once your business officially launches. There are a few cost-saving ways you can create momentum. Start by reaching out to your network or anyone who helped test your product. Share some assets with them and ask if they can share the news when you officially launch. And, of course, share the launch news on social media, your website, and your email list. 

It’s also a good idea to have a customer acquisition plan in place before launching. This plan outlines how you plan to reach and sell to new customers. If you’re launching a local service business, this could mean going door-to-door to hand out flyers and meeting customers face to face. You could also offer an introductory discount or promotion to your first customers to incentivize early sales without expensive ad campaigns.

#8. Grow and Scale Your Business

Launching a business is an exciting time. But it’s only the beginning —  growing your business on a budget means getting creative. 

As you continue to grow, you can explore low-cost marketing channels, like content marketing, email newsletters, and social media outreach, which don’t require large budgets. Focus on organic traffic and build relationships with your customers through value-driven content.

It’s important to keep track of milestones, performance, and everything in between. Some notable moments may include when you make your first sale, when you hit $10K in revenue, or when you’ve generated 100 customer reviews. 

Set goals when you launch so you have metrics to compare to as you grow. 

Another thing to keep in mind is how you can leverage technology to scale. As your business grows, you’ll inevitably get busier. 

Don’t be afraid to bring in low-cost small business AI tools to help automate some of your repetitive or administrative tasks. 

Take the First Step Toward Entrepreneurship

Starting a business doesn’t have to be expensive. By refining your business idea, using free resources, and choosing cost-effective AI tools, you can launch and grow your business without needing large capital upfront.

To recap, here are the steps to take if you’re ready to start a business:

• Refine your business idea
• Write a business plan
• Choose a business structure
• Register your business
• Understand your financials 
• Build a brand and online presence 
• Launch your business
• Grow and scale 

Starting a business is an exciting adventure. You should be proud of yourself for researching and taking the right steps. Now, you’re ready to launch your grand business idea into the world. 

Durable can help you get your business off the ground and online in seconds, especially with a low budget.

From building your brand identity to setting up a website and managing leads, Durable’s AI-powered tools can help you get your business up, running affordably, and growing as soon as you’re ready.