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How much money do you need to start a business?


How much money do you need to start a business? The good news is, it is not as much as you think; all thanks to the amazingly affordable business services.


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How much money do you need to start a business? – The Summary

  • According to the studies, ten years ago, the average cost for a small startup business was around $30,000.
  • 42% of the 2018 America’s best 5000 businesses have started under $5000.
  • Today, according to the founders of most of the recent startups, the money you need to start a business off the ground is just a few hundreds of dollars.
  • In some cases (especially for service businesses), you don’t even need a single dollar to start turning the wheels.
  • Thanks to the rise of low-cost business services like PayPal, Shopify, Woo-commerce, Squarespace, Slack, Amazon, etc. the money you need to start a business has drastically reduced, over the past 10 years.
  • Also, thanks to the startup funding services like Kickstarter or Indiegogo, even funding a large business has become much easier.
  • In this article, we will give you a whole list of low-cost business services that you can use to start your business with the lesser initial investment.

How much money do you need to start a business? – Answer from the CEO’s

42% of the 2018 INC.5000 CEOs have mentioned that they have started their businesses under $5000.

That means, 42% of America’s best 5000 businesses have started under $5000 😎 Let us keep this as a benchmark, and try to go into the details.

Most of the times, you do not need even $5000 to start a business. If you decide to start an e-commerce business, just a couple of hundred dollars will be enough to start a business. Especially, if you use a Dropshipping model to source products, you will only need money to build a website and for marketing.

And, if you start a service business, there are plenty of online platforms, where you can list your services for free.

Additional Reads:


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Product-based businesses Vs. Service businesses

The amount of money you need to start a new business varies a lot depending on your business model and niche.

Selling products

If you are going to start a product-based business, you may have to spend a little more. If you are planning to manufacture the product you sell, it can be much more expensive to start.

You will need money for raw-material, space, initial inventory and many other things. But, if you need to limit your initial budget, you can choose either dropshipping or white label products at the beginning.

This will eliminate the cost of inventory and manufacturing. Earlier I wrote a guide to start selling makeup online. There I have discussed these different options. If interested, you can take a look there.

Selling services

Starting a service business is much cheaper and easier than starting a product based business.

If you already have the expertise for the service that you are going to provide, it can be just a matter of time to list your service on a free service-based market places.

Most of the service marketplaces (like Fiverr, up work, etc.), do not charge you to create a listing. They will only take a commission after you make a sale.


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Business services are getting cheaper and more accessible

Building websites, billing, payment gateways, advertising and even the funding for new business are getting cheaper and more and more accessible every single day.

Thanks to the rise of the internet and open source software, the money you need to start a new business has been drastically reduced over the past 10 years. And, most importantly, these services have become more user-friendly, and even a person without knowledge about web development can use them.

Here is a list of low-cost business services that you can use to start your business for a less amount of money

1. Financing your business and payment handling

If you need some support to find money to start a business, you can try Kickstarter or Indiegogo for crowdfunding. Also, business services like Lending club and Cabbage offer small loans to get your business off the ground.

You can use Payment gateways like PayPal or Stripe for payment processing, and you can use service like Gusto for the payroll processing.

2. Web designing services for your business

If you just need a website for your business, you can simply use a CMS like WordPress, Wix or Weebly to build your own website. You don’t need to be a web developer to create a website using these services.

But, if you need to go little further and add e-commerce shop section for your business, you can use WordPress+woo-commerce or Shopify to build your web service.

3. Marketplaces for your business

If you are selling products, you can use eBay, Amazon or Etsy to list your products and reach a wide audience.

If you are selling services, you can list your services on service-based marketplaces like Fiverr, Freelancer or Upwork.

Additional Reading: How to sell on eBay

4. Marketing your business

SOCIAL MEDIA!!! All thanks to the social media channels, marketing has never been this easy. You can build your business marketing on social media channels like Facebook, Instagram Twitter or YouTube. Also, email marketing will not cost you a lot to get started.

5. Handling communications for your business

Give your old phone a rest, and move into WhatsApp, Facebook Messenger, Google’s chat or email to handle customer services.

Also, you can use services like Slack to communicate among your team.

6. Customer management services for your business

CRM (Or, customer relationship management) service have come a long way providing outstanding services to keep your customers engaged in your business.

You can use Hubspot or SugarCRM for this purpose.


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Do have an idea about how much money you need to start a business?

Hope the above info helps to understand how much money you need to start a business.

Back in 2011, I have started my first successful online dropshipping store from around $100. That business is generating about $2000 per month now. So, you don’t need a lot of money to start a new business.

Share your experience, comment below, Cheers 🙂

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