Many successful businesses were started on low budget. The most important thing to understand is that having little capital to invest will initially mean that low returns are likely. This is not a discouragement – it is simple logic. If you can only buy two items of stock to sell, you only make profit on two items.
What is actually important therefore is not how much money you can afford to put into your business but how much you can afford NOT to make.
In the beginning of a low-budget business venture, you may need to put 100% of the profits back into the business. This means no wage for you! If you decide this is not possible and decide to draw a percentage as wages, your business will grow slower and your wages will be probably be quite low.
Another important consideration is whether or not your business idea is actually hindered or destroyed by the lack of budget. There is nothing wrong with starting a consulting business with nothing but your notepad, a pen and a handshake but if you want to open a retail shop and you can’t afford to stock it sufficiently to draw in customers and make sales, you will need to reconsider.
A helpful task is to write down what your ultimately successful business looks like and then to peel back the layers until you have a small but grow-able version of it. For example, your retail store might start as a few items being sold on Ebay each week, or a weekly market stall in your local neighborhood. Use these as learning experiences and marketing opportunities and slowly step your business up as you can afford to.
Also, don’t forget to view your low budget as a great advantage you have over your competitors. Meager funds force you to always be efficient and effective – and a lot more imaginative in your approach to market.