Starting a business requires investment. The level of investment depends on several factors such as the type of business, location, quality of the workforce, and the kind of machines and equipment you want to purchase. Before starting a business, you should also do a cost-benefit analysis.
Before going into the details of low investment business ideas, let us understand the kind of investments you need to do to start a business:
Most of the costs associated with starting a business can be divided into three parts:
One time Fixed Costs (Initial investment) –
This is usually a one-time cost. It involves the cost associated with following items:
Computers or mobiles
Office/Shop Furniture, Interior Designing
Equipment such as refrigerators, ACs, or machineries to manufacture (or prepare) goods or provide services
Power backups (if you plan to use your inverter or GenSets)
Website Development or Technology Development Cost
Other Items that are required for day to day business operations like kitchen utensils, etc.
Brokerage paid for renting an office/shop
Other fixed costs
Recurring Costs – These costs are incurred on a regular basis. There are two types of recurring expenses – Fixed Monthly or Annual costs.
These are further divided into:
Office Space or Shop Rent
Electricity Bill
The Internet and Other Utility bills
Manpower Cost
Website domain and hosting costs (Annual)
Technology Support and maintenance costs
Variable recurring costs
The expenses associated with the cost of goods sold (Any cost that is incurred to sell your product or service). Broadly, it includes following:
Cost of Raw Material (if you sell products)
Contractors (If you sell services and outsource a part of the services you deliver)
Other Major Costs
Business Administrative Expenses
Stationary and Other Supplies
Sales and Marketing
Every new business requires almost a year or two to generate profits. Thus, while calculating investments, you must calculate the cost involved in doing business for at least one year. If your business is not generating enough cash for a year or two, you would not be able to meet your personal as well as business expenses. Therefore, to run the business smoothly, you need to minimize recurring costs, until your firm becomes profitable. Even if your fixed one-time costs are high, you can sustain the business for a long duration, if the recurring costs are low. I have seen many new businesses with high potential shutting down within a year of their establishment. This happens mainly due to unmanageable recurring costs like high rentals or staff salaries.
The chances of success of a new business become much greater when the recurring costs reduce.
With this, here is a list of some low investment business ideas that you can consider for your new venture:
Business Services
If you have expertise in a field, you can provide services in that field and charge for the same. Some of the most demanded services include Report Preparation, Internet Research, Content Writing, Taxation and Accounting, Digital Marketing, Business Consulting, Training, Job Placement, Website Designing, Programming, Graphic and Multimedia, Public Relations, Market Research, and other services.
Initially, you can operate independently from your residence. Once you have a client base, you can hire professionals and move to a professional office to expand your business.
Investment
If you are starting on your own, then there is no investment apart from a computer, mobile phone, and internet expenses.
However, if you want to hire people, then you need to consider the following costs:
Initial Costs
Advance deposits for office rent, brokerage charges, computers, ACs, Office Furniture, and Interior designing, with approximate costs of around $3000-$10,000 depending on the location and number of people you want to hire.
Recurring monthly costs – Office rent and salaries constitute around 50-60% of all the costs per month.
Sales & Marketing – You need to invest in sales and marketing to acquire clients in the long run.
It is easy to start a services business. However, the expansion is equally difficult.
Blogging
You can start a blog in any niche and promote it on social media. If you have good research and social media skills, you can make it big in two to three years. You must have a side income or a full-time job to support your financial requirements for the first two to three years.
Investment
Initial Cost – $300 (for Domain, Hosting, a premium WordPress theme and developer’s fee)
Recurring costs – $50 per annum (In domain and hosting renewals)
Blog promotion – $200-300 per month
There is no limit on how much you can spend to promote a blog. However, avoid paid promotions in the initial few months of blogging. First, try to build a community organically and then use paid promotions to reach more people.
Play School
You can open play schools in residential areas. To begin, you need to have access to a residential space with a minimum carpet area of 750 sqft. It requires one-time investment in building the right ambience and creating education material for children. You also have the option of starting from scratch or taking a franchisee of a reputed brand. Today, many brands are scaling their business aggressively. Thus, you can easily get a Franchise of a well-known brand. In the case of a franchisee, the brands will support you in starting the firm. The chances of success may be higher, but you need to share a part of your revenue with the parent brand.
It makes a great business sense to invest in pre-schools as a one-time investment since it can fetch you a high return over a long period. It is also easy to scale.
Before you make up your mind to start a play school, remember that it requires your undivided attention especially for the safety of the children. It is a lucrative business that comes with a great responsibility.
Investment:
Initial Investment – $5000 – 10,000
Recurring Costs
The monthly rental of premises and staff costs constitute 90% of the total recurring expenses. That means you have no regular expenses other than salary and rents. Since it caters to the local market, below-the-line marketing strategy (pamphlets, newspaper inserts, etc.) will be enough to promote the brand. Also, a differentiated building with prominently visible banners do a great work of promotion of the pre-schools. Thus, sales and marketing expenses are relatively less.
Food Trucks
Food trucks are the professional versions of “thellas” that we see on the street. They provide quality food at affordable rates as they don’t have to pay steep rentals. They also need minimal staffing to manage the stall. Since a Food Truck is a more of a western concept and looks fancier, safe and hygienic – owning them is a matter of prestige. The best part of food trucks is that you can change their location as per your requirements. Thus, you can also use it in the front of a school in the afternoon and on a busy street in the evening. It provides a high return on investment. It is also easier to scale a food truck business than a restaurant.
Investment
Initial Fixed Investment – $5000-10,000
Recurring Costs – Staff and Raw material costs plus some “haftas” and “kharcha paani” to the local policemen based on your relationship with them.
Laundry Services
It requires a high initial investment in staff, machinery, and business promotion. You may also need to invest in pick and drop facility to attract more customers. Since such kinds of services are high in demand, you will find plenty of clients and can recover your costs quickly.
Initial Investment – $7,000-$10,000
Recurring Costs – Staff’s salary and rental of workshops forms a significant part of the cost. Initially, you also need to invest significantly in sales and marketing. Over time, the marketing costs decrease as more customers get to know about your excellent services.
House Cleaning Services
No one wants to waste their weekend in cleaning their house or office. You can open a business in a house cleaning service and start making money from day one. You can get customers via phone, website, or listing yourself on local classified sites and popular marketplaces like Justdial, Haptik, Urbanclap, etc.
Investment
Initial Investment – Nil to $3000
Recurring costs – $200-1000 per month
Tours and Travel
Depending on the level of investment, you can start many types of businesses in tours and travel industry. The industry is expected to grow at a fast pace in future, thanks to Facebook and Instagram.
You can open a travel agency, become an affiliate partner of travel portals (like MakeMyTrip or Yatra) or open a themed stay business in a tourist location. You can also become a tourist guide if you have the time and knowledge of the heritage sites.
If you own a property, you can invest in its interior design to make it tourist friendly and list the property on Airbnb. It will fetch a significantly higher return than a hotel or residential property. The best of this is, your property need not be located in commercial areas. A 1000sqft flat can easily earn anything between $1000-2000 per month or even more depending on location and interior design.
Initial Investment – Not fixed. You can start from zero and make a fortune if you master the art of acquiring customers in tours and travel.
Fitness Centres
Fitness centres such as Gyms and Yoga training are in high demand across the country. To open a gym, you need to invest heavily in the equipment in the beginning. After that, you simply need to maintain the machines and earn a recurring income. To open a Yoga centre, you should either be an expert at it or need to hire a Yoga trainer. It requires less investment as compared to Gym as no equipment items are required.
Average Initial Investment to open a Gym- $5,000 – $15,000
Recurring costs – Rental and maintenance
Ice-cream Parlours
Ice cream will never go out of fashion and so is the business of ice cream. It takes a tiny space and minimal staffing to start an ice cream parlour. You can start with a particular theme of ice cream to differentiate your business from the rest. Although you can start an ice cream shop anywhere, the best place for the same is the areas nearby schools, colleges, cinema halls, or in the malls.
Initial Investment – $1000-3000 (Rental, small ice cream equipment, and a refrigerator)
Recurring costs – Shop rental and cost of ice cream
Its seasonal nature of demand may require you to sell other items, especially during winters.
Waste Management
You hate trash and waste, but once you know the margins in the business of waste management, you won’t like any other business.
You can expect a high return immediately after starting the business. Also, you will never face a lack of customers and always get full support from the local government authorities. Plus, you will get big CSR funds from corporates if you are good in networking. This is the business in which you will either win or win in a big way. There is no loss. You simply need to figure out, where to start.
As an entrepreneur, you need not invest in technology or Research & Development for recycling of the waste. Many companies are already doing it. You can simply become a small part of the entire value chain and then extend your business horizontally to make more profits. For example, there are companies (although small in number) which tie up with corporates and collect garbage paper and send it to a recycling company. Thus, they is a link between a backend and customers. Similarly, you will find a lot of opportunities to make money in the entire value chain of waste management.
Investment – This business requires creativity and innovation more than money. You can become a part of the value chain without investing anything. At the same time, you can also invent a technology that recycles a type of waste efficiently. For this, you may need to invest hundreds of thousands of dollars (if not millions).
Are you looking for an innovative business idea. Go through this list:
15 Unique and Profitable Business Ideas for Better India
Conclusion
The investment required to do a business depends on several factors. However, there are some golden rules that apply to every type of business. Avoid hiring full-time employees unless it is a must to run your business. If at all you need to hire someone, try part-time contractors first. Don’t pay a high rental for a backend office. In the beginning, it is viable to rent an office in a remote area to save on costs. Finally, you should learn all activities of business so that in the case of urgency you can fill the gap. Low investment business ideas become successful only when you start the business with a frugal mentality and don’t overspend to impress your girlfriend, boyfriend, neighbours, or employees.
Do you want to share a business idea that requires low investments? Please share it through comments, and I will update this list. Also, share your opinion and feedback through comments. Subscribe to the newsletter so that you never miss a story.
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