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Businesses You Can Start for Under $5K

How to Start a Business on the Cheap

The biggest thing holding most people back from starting their own business is money. But the truth is, you don’t have to have a lot of money to start a business. “If I get one more stinking, whining email about how impossible it is to start a business without any money, I am going to explode!” entrepreneur Mike Michalowicz wrote in his book, “The Toilet Paper Entrepreneur.” In fact, Michalowicz argues that having the money could actually be bad when you’re starting a business. “The lack of mone
Photo: Tetra Images | Getty Images

The biggest thing holding most people back from starting their own business is money. But the truth is, you don’t have to have a lot of money to start a business.

“If I get one more stinking, whining email about how impossible it is to start a business without any money, I am going to explode!” entrepreneur Mike Michalowicz wrote in his book, “The Toilet Paper Entrepreneur.”

In fact, Michalowicz argues that having the money could actually be bad when you’re starting a business.

“The lack of money is actually advantageous,” he said. “I’ve seen better businesses start off with no money than those with a lot of money. If you have no money, it forces you start asking better questions, which leads you to better answers.”

“If you have the ability to send me an email, you clearly have access to a computer or cell phone — more than enough tools to get started,” he wrote in the book.

In fact, there are many businesses you can start for under $5,000. Buying a franchise isn't one of them: Most fast-food franchises cost $100,000 or more to start and with some, you need at least half of that in cash.

Consider the story of Stewart Vernon of Macon, Georgia, who used a few thousand dollars he’d saved up in college to buy a truck and some chemicals , and opened a pool-cleaning business. Every year for the first four years he doubled his revenue; he became a millionaire by 25. He has now turned the business into a franchise.

Or, the story of Dave Petrillo and Dave Jackson, two twenty-something engineers who have been friends since childhood, who invented Coffee Joulies, stainless steel beans that instantly cool down your coffee and then keep it hot for up to five hours. They didn’t have a lot of money to start their business, so they bought some supplies and made prototypes in Petrillo’s parents’ basement and then put their product on a grassroots-fundraising site. They set a goal of raising about $9,000 . The product was such a hit, they made over $300,000 and recently moved to Oneida, NY, where they’ve contracted an old silverware factory to crank out Coffee Joulies to meet the booming demand.

Michalowicz says you can start just about any business for under $5,000.

“I would even argue you could start your own airline for under $5,000! People might say, ‘A jet costs $50 million, no way!’ but maybe you start out teaching flying lessons or opening a business that caters to the airline industry, then build up your business until you have enough to buy that first plane.”

Whether you’re selling products or services, your biggest expenses will be space and salaries, said Michalowicz, who learned the hard way about blowing too much money too soon . He picked up a few tips for saving money along the way. For example, redirecting phone numbers. He thumbed through the phone book and called the number of every competitor. If any were disconnected, he would call the phone company and ask for that number.

“I had no money to advertise but I thought, ‘I need my phone ringing now!’” he said.

And, when he needed an attorney but had no money to hire one, he contacted a business-law professor and offered to allow the class to use his business as a case study , in exchange for the students drafting his legal work and having the professor look them over to make sure they were done properly.

Jill Bliss, who sells posters and stationery online and in stores, has her own money-saving strategy: Recycling. Whatever doesn’t sell, she recycles and turns into something else.

Feeling inspired? Here are 10 businesses you can start for under $5,000.

By Cindy Perman26 May 2011


Consulting

Consulting is probably the easiest business to start on the cheap, because you’re selling your expertise, be it in human resources, technology, the environment, social media or whatever, and you can launch the business from home. Consulting is big business: Companies are expected to spend more than $360 billion on consulting services this year, according to Overhead costs will include business cards, marketing and any required certification. Plus, Michalowicz notes, most people forget that when
Photo: John Lund | Marc Romanelli | Blend Images | Getty Images

Consulting is probably the easiest business to start on the cheap, because you’re selling your expertise, be it in human resources, technology, the environment, social media or whatever, and you can launch the business from home. Consulting is big business: Companies are expected to spend more than $360 billion on consulting services this year, according to Plunkett Research.

Overhead costs will include business cards, marketing and any required certification. Plus, Michalowicz notes, most people forget that when you work from home, your utility bills jump — and it’s more wear and tear on your car, driving to clients’ offices, meetings or networking events.


Selling an Invention

The Coffee Joulies guys are a testament to the fact that you don’t need a ton of money bring your product to market. They spent $4,000 of their own money to have a local machine shop make a mold for them and then just started cranking out prototypes of Coffee Joulies (pictured left) by hand in one of their parents’ basements. They raised more than $300,000 on grassroots-fundraising site Kickstarter.com, which helped them take their business to the next level — mass production.Other ways to sell
Photo: joulies.com

The Coffee Joulies guys are a testament to the fact that you don’t need a ton of money bring your product to market. They spent $4,000 of their own money to have a local machine shop make a mold for them and then just started cranking out prototypes of Coffee Joulies (pictured left) by hand in one of their parents’ basements. They raised more than $300,000 on grassroots-fundraising site Kickstarter.com, which helped them take their business to the next level — mass production.

Other ways to sell an invention without a lot of money include entering an inventors' contest, like those held by the Future Business Leaders of America,By Kids for Kids,MIT,FIRST and Intel. Or, some catalogs will allow you to submit your inventions directly to them for consideration. The Walter Drake catalog, for example, will even help you develop and tweak your product to take it from a rough prototype to a polished ready-for-market form if they think you have a good idea.


Selling a Hand-Made Product

Here’s how simple and inexpensive selling a creative product can be: 10-year-old Maddie Bradshaw took out $300 of her birthday and tooth-fairy money to buy supplies for her product, bedazzled bottle cap accessories. The product was so successful, she was a millionaire by age 13!Today, there are a variety of sites that can help artisans sell their hand-made products including jewelry, stationery, bags and clothing, such as and Jill Bliss sells her products on sites like theseas well as in stor
Photo: etsy.com

Here’s how simple and inexpensive selling a creative product can be: 10-year-old Maddie Bradshaw took out $300 of her birthday and tooth-fairy money to buy supplies for her product, SnapCaps, bedazzled bottle cap accessories. The product was so successful, she was a millionaire by age 13!

Today, there are a variety of sites that can help artisans sell their hand-made products including jewelry, stationery, bags and clothing, such as Etsy,Artfire and Boticca.

Jill Bliss sells her products on sites like these, as well as in stores and on her own website,JillBliss.com.Her business has grown large enough that she has a fulfillment house taking orders and packaging them, but she still has to find new shops and sites to work with on her own.  If she reads or hears about a store she thinks might be a good fit, she sends them a postcard or pops in with some samples, and then follows up. “A personal connection works better than cold-calling or emailing,” she said. “Old-fashioned relationship-building and maintenance is key.”


Vending Machine

When you walk past a vending machine you might not think, “Wow, great business opportunity!” but it’s actually a profitable business that’s inexpensive to start. You can buy a used soda machine for $800 to $1,000 or a used snack machine for $1,200, according to Chris Robertson, author of New machines can run you $2,000 to $4,000.The most profitable items tend to be Coke, Diet Coke and bottled water, Robertson says. And, in some places, you can buy a bottle of water for as low as 17 cents a bottl
Photo: Eri Morita | Stone | Getty Images

When you walk past a vending machine you might not think, “Wow, great business opportunity!” but it’s actually a profitable business that’s inexpensive to start. You can buy a used soda machine for $800 to $1,000 or a used snack machine for $1,200, according to Chris Robertson, author of “Vending Business Tactics.”New machines can run you $2,000 to $4,000.

The most profitable items tend to be Coke, Diet Coke and bottled water, Robertson says. And, in some places, you can buy a bottle of water for as low as 17 cents a bottle and then turn around and sell it for $1, so the margins are nice.

Some property owners might charge you 10 to 15 percent of your sales to put your machine on their property, but that’s not always the case, Robertson says. If they do, you just up the price from $1 to $1.25.


App Development

If you make an app, sell it for $1.99 on iTunes and it sells a modest 1,000 copies, BAM! There’s $2,000. Apps require a lot of upfront work but can bring in hundreds of thousands of dollars in revenue very quickly. If you’re making iPhone apps, you have to register with Apple as a developer, download a software-development kit specifically for the iPhone as well as Xcode, which helps you put it all together and then debug it. You will also need to learn Objective-C language, which most people do
Photo: Getty Images

If you make an app, sell it for $1.99 on iTunes and it sells a modest 1,000 copies, BAM! There’s $2,000. Apps require a lot of upfront work but can bring in hundreds of thousands of dollars in revenue very quickly. If you’re making iPhone apps, you have to register with Apple as a developer, download a software-development kit specifically for the iPhone as well as Xcode, which helps you put it all together and then debug it. You will also need to learn Objective-C language, which most people don’t do in a day. To this point, all of that is free, but then Apple charges you $99 per year to upload your app to the iTunes store. That may seem like a lot but, as Beth Ritter-Guth points out on MakeUseOf.com, it gives you access to the cool club that is iPhone app makers, who can help you test your app. She also points out that, if you were selling crafts at a craft fair, you’d have to pay to rent a table there, too.

Smartphone-app development has also spawned a cottage industry of app consultants who, for $999 to $2,000, will help you take your app from an idea to a revenue stream. Ritter-Guth recommends the tutorials on ManiacDev.com.And, of course, there’s always YouTube!


Web Design

If you are one of the people who have managed to teach yourself how to build a web page, then you could be tapping those skills to make extra revenue building websites for people who either don’t have the time, aptitude or interest in learning how to do it themselves. The great things about a web-design business are that you can do it from home using tools you already have (i.e., save on overhead); your clients don’t have to be near you so your potential client base is the entire globe; and just
Photo: Daisuke Morita | Photodisc | Getty Images

If you are one of the people who have managed to teach yourself how to build a web page, then you could be tapping those skills to make extra revenue building websites for people who either don’t have the time, aptitude or interest in learning how to do it themselves. The great things about a web-design business are that you can do it from home using tools you already have (i.e., save on overhead); your clients don’t have to be near you so your potential client base is the entire globe; and just about everyone these days wants a web site. That’s a pretty compelling business model. Jennifer Czawlytko, author of the eBook, “A Bizy’s Guide to Creating Success in Web Design,” said in an interview that she started her web-design business with $100. She didn’t take any college courses or pay for online courses — she learned everything she needed to know from a few books , such as Laura LeMay’s “Teach Yourself Web Design in 21 Days,” free online tutorials and frankly just viewing the HTML coding for other websites.

Web designers usually charge $50 or more per hour. It’s important to have a solid estimate of how long a site will take to build, so you don’t wind up working for peanuts or fighting with a client for more money mid-project.


Online Travel

You don’t need a travel-agent license or certification to be a travel agent, though some local governments do require you to register to operate a home-based business – mostly for tax purposes, according to Kelly Monaghan of . However, some agents like to be certified through the or some other organization in order to have some instant credibility with clients. If you are working out of your home, the biggest expense is downloading computer-reservation system software. You can do online travel
Photo: singlestravelintl.com

You don’t need a travel-agent license or certification to be a travel agent, though some local governments do require you to register to operate a home-based business – mostly for tax purposes, according to Kelly Monaghan of HomeTravelAgency.com. However, some agents like to be certified through the Travel Institute or some other organization in order to have some instant credibility with clients. If you are working out of your home, the biggest expense is downloading computer-reservation system software. You can do online travel as part-time supplemental income or as a full-time job. You might want to find a niche, like Tammy Weiler, the president of fun and adventure (yes, that's how she refers to her role) for Single Travels International (website pictured left). Even part-time, Monaghan says, you can make $500 or more commission on each sale, not to mention all the points. Monaghan estimates she earns well over 100,000 points a year!


Party Planning

Party planning requires a lot of flair — not capital — to start up. It is possible to be certified through the , but not necessary. To be a good party planner, first and foremost you need to be a good manager, as you you’re going to have to juggle everything from the invitations to caterer and florist, the decorations — even the clean-up. That’s a lot of moving parts and a lot that can go wrong, so you have to be good on the fly. That being said, a good party planner can earn $1,000 or more per
Photo: Jim Vecchione | Workbook Stock | Getty Images

Party planning requires a lot of flair — not capital — to start up. It is possible to be certified through the International Special Events Society, but not necessary. To be a good party planner, first and foremost you need to be a good manager, as you you’re going to have to juggle everything from the invitations to caterer and florist, the decorations — even the clean-up. That’s a lot of moving parts and a lot that can go wrong, so you have to be good on the fly. That being said, a good party planner can earn $1,000 or more per event, or 5 to 10 percent of the party budget. Being around parties 24-7 may sound like fun, but remember, it probably means working a lot of nights and weekends.


Selling Second-Hand Goods

Thanks to the Internet, you no longer have to open a consignment shop to make a buck in the second-hand market — you can start one for as low as zero dollars. It can be as easy as making the rounds in upscale neighborhoods on garbage day or hitting garage sales to pick up everything from furniture to electronics, toys and bicycles — and reselling them on sites like or . Imagine if you sold five items a week at $50 a pop: that’s $250 extra a week and $1,000 a month. If you want to take the busin
Photo: Allison Michael Orenstein | The Image Bank | Getty Images

Thanks to the Internet, you no longer have to open a consignment shop to make a buck in the second-hand market — you can start one for as low as zero dollars. It can be as easy as making the rounds in upscale neighborhoods on garbage day or hitting garage sales to pick up everything from furniture to electronics, toys and bicycles — and reselling them on sites like eBay or Craigslist. Imagine if you sold five items a week at $50 a pop: that’s $250 extra a week and $1,000 a month. If you want to take the business to the next level, you can take out an ad in the local paper offering to sell people’s stuff on consignment, which, according to Cliff Ennico, author of “The eBay Seller’s Tax and Legal Answer Handbook,” can earn you a 30 to 50 percent of total sales. If you have a computer, you already have all the tools you need — just don’t forget to research prices to make sure you’re not overpricing or cutting yourself short on profits. And watch those eBay rates.

Even if you don’t plan to make a full-time business of selling second-hand items, it’s a great way to start building capital for savings, to pay off bills — or even starting another business.


Tutoring

You don’t have to be a teacher or certified tutor to start a tutoring businessbut it certainly helps. The first thing a parent is going to ask is, why are you qualified to teach my kid? The most important step in becoming a tutor is to figure out what you’re qualified to tutor and then build out a curriculum around that. You might want to apply to work at a tutoring center in your area firstto build up some experience. A tutoring business costs little to nothing to start,and there’s very little
Photo: Susan Barr | Workbook Stock | Getty Images

You don’t have to be a teacher or certified tutor to start a tutoring business, but it certainly helps. The first thing a parent is going to ask is, why are you qualified to teach my kid? The most important step in becoming a tutor is to figure out what you’re qualified to tutor and then build out a curriculum around that. You might want to apply to work at a tutoring center in your area first, to build up some experience. A tutoring business costs little to nothing to start,and there’s very little overhead, since you will most likely be tutoring either at your home or the client’s home. The biggest expense is most likely marketing materials. Tutors can make about $25 to $75 an hour. The most in-demand subject for tutoring? Math, according to Beth Lewis, a teacher and part-time tutor, who also writes for About.com.