30 Most Profitable Businesses With Low Startup Costs

In this article, we look at the 30 most profitable businesses with low startup costs. To skip our detailed analysis, you can see the 10 Most Profitable Businesses With Low Startup Costs.

The enormous expenditures connected with starting a business are the #1 reason why many people with an entrepreneurial spirit do not follow their business goals. However, there are many companies that you can start today with minimum investment if you are motivated and willing to put in some good old-fashioned hard work.

These 30 unique business ideas can help spark your entrepreneurial spirit if you want to start a low-cost business with high profits. Everyone wants to be their own boss and start their own company, but the first thing that comes to mind when starting a business is the initial capital required. Entrepreneurs desire to own a firm with big returns but with low investment but most successful small business ideas often require a lot of industry research.

Market Overview

In 2022, Americans established 5 million new businesses as the United States continued to see an increase in entrepreneurship in the years following the COVID-19 pandemic. Although the surge in new business development has persisted, the economy has dramatically transformed in recent years. Inflation has had a larger impact on family budgets and the possibility of an economic downturn has prompted businesses to prepare for an uncertain climate.

These factors influenced entrepreneurs in 2022 who are intending to start profitable business with low initial capital. According to US Census Bureau data, new business applications increased by 44% from 2019 to 2022, with the largest growth occurring in southern states.

While many businesses launched at the outset of the pandemic, such as food and beverage, the market has experienced a shift to remote working conditions in recent years. With remote work becoming the norm, transitioning from a freelancer to an entrepreneur may be easier. Freelancers thinking to start their business with little money in hand can find work from Fiverr International Ltd. (NYSE:FVRR), Upwork Inc. (NASDAQ:UPWK), Shopify Inc. (NYSE:SHOP), or Amazon.com Inc. (NASDAQ:AMZN). Those looking for remote work can take a look at our most profitable businesses to start from home, which can help in guiding a better decision.

In 2022, 41% of business owners established a business to supplement their household income or because they were concerned about their financial security, up from 24% the previous year. These concerns have particularly motivated the 27% of businesses that began as side hustles, with 56% of business owners stating that they started their businesses due to financial concerns.

Furthermore, layoffs have contributed to increased entrepreneurial activity, and some remnants of “The Great Resignation” are still present, with people reconsidering “climbing the corporate ladder” in favor of having a lifestyle business or simply taking some time to explore freelance opportunities before finding a new job. As workers reevaluated their career paths in the aftermath of the pandemic, the proportion of individuals quitting their jobs to establish their own businesses increased from 36% in 2021 to 49% in 2022. Among the age group of 25 to 34, younger employees were the most likely to leave their job, primarily to focus on starting a successful yet cheap business.

Methodology

We have followed the same methodology as in our list of the most profitable small businesses in 2023. Our list exclusively features businesses that are both inexpensive to start and highly profitable. We made sure to focus on cheap businesses to start under $10,000. We have ranked the businesses in ascending order of high net profit margin, indicating the highest profitability. We’ve arrived at these net margins after averaging net margins for these businesses from multiple sources such as NYU Stern School of Business, CSIMarket and Step by Step Business, among many others.

Here is our list of the most profitable businesses with low startup costs:

30. Home-Based Catering

Average Net Margin: 7.50%

Home-based catering is one of the most profitable businesses with low startup costs, as low as $356. The initial capital required for setting up your venture relies on the scale you aim to achieve. If you commence with smaller events manageable by yourself, beginning with a smaller financial investment is feasible.

29. Cable TV Operator

Average Net Margin: 7.91%

The cable TV industry is highly lucrative due to its ability to generate higher average revenue per user (ARPU) and offer a wider range of services such as internet and telephone, thereby increasing the potential amount a subscriber might pay.

28. Online Language Institute

Average Net Margin:  8.67%

A well-managed and effectively marketed online language institute has the potential to be a profitable venture. Online language classes cater to diverse needs and purposes, with English and Spanish being particularly popular and financially rewarding. It is one of the most profitable businesses with low initial investment.

27. E-commerce

Average Net Margin: 10%

As online retail purchases continue to surge, it is projected that by 2026, approximately 24% of all retail transactions will occur online. Consequently, it is expected that e-commerce sales will also experience a significant increase. Without creating a website, individuals can initiate their e-commerce operations by utilizing established platforms like Amazon.com Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), and Walmart Inc. (NYSE:WMT), among others. Taking an insight from 20 most profitable products to sell online in 2023, you can boost your e-commerce business quickly.

26. Email Marketing

Average Net Margin: 12.33%

With strong email writing skills, an individual can establish an email marketing business. PeoplePerHour and clients at Upwork Inc. (NASDAQ:UPWK) usually seek assistance with their email strategies. The average startup costs for such a business is approximately $1,000, which includes expenses of $300-$400 for email marketing tools and $400- $500 for other software.

25. Property Management

Average Net Margin: 12.67%

Property management qualifies for our list of the most profitable businesses with low initial costs. With an average startup cost of $500-$10,000, individuals can explore part-time employment as property managers or establish their own property management enterprise.

24. Tour Provider/Guide

Average Net Margin: 12.70%

Many independent local tour guides begin their journey by posting their services and rates on tour guide websites. However, before embarking on their research for enticing destinations, it is important for tour guides to acquire the necessary licensing. One can typically earn between $20 and $100 per hour as a tour guide.

23. Graphic Design Service

Average Net Margin: 13.5%

Profitable business ideas in graphic design share common prerequisites, like appealing samples for clients, proficiency in graphic design software, and more. Platforms such as Fiverr International Ltd. (NYSE:FVRR) or Upwork Inc. (NASDAQ:UPWK) can be utilized to find clients. The initial-investment requirements for establishing a graphic design business can amount to an average capital cost of $1,290 ($30-$35 monthly subscription fees of buying premium graphic-designing software, $300-$500 advertising, and $300-$400 for a website, among other smaller expenses).

22. Software and Application Provider

Average Net Margin: 14.61%

It is expected that the software market would maintain its strong foothold in the coming years due to the ongoing adoption of cloud-based solutions and the growing utilization of AI and ML technologies. With an estimated annual growth rate (CAGR 2023-2028) of 5.42%, the market volume is expected to increase lucratively by 2028.

21. Auto Detailing/Wash

Average Net Margin: 15%

Auto detailing is another one of the profitable businesses to start with low initial costs. The carwash business is already a multi-billion-dollar sector with growth potential. Considering the increasing number of vehicles per household daily, starting a car wash and detailing business could be lucrative.

20. Digital Marketing Services

Average Net Margin: 15%

Remote operation allows digital marketing agencies to generate significant profits. Both small and large enterprises must stay updated on the latest online marketing trends. Adapting to digital changes is essential for businesses to maintain relevance, visibility, and influence in their target markets.

19. Retail Distribution

Average Net Margin: 16.50%

The primary purpose of a retail distribution business is to buy products in large quantities from manufacturers and then sell them to retailers in smaller quantities for resale to end customers. In 2022, earnings in the retail distribution industry witnessed an 8% growth, projected to grow at an annual rate of 5% in the coming years.

18. Information Services

Average Net Margin: 16.60%

This particular category encompasses businesses offering information-related services, like data analytics and cloud computing. The business has an average startup cost of $3,000 on the lower end (the main cost for the information system being around $1100-$1500), the global information services market experienced growth from $147.7 billion in 2022 to $156.5 billion in 2023, achieving a CAGR of 6%. Projections indicate that the market will reach $191.06 billion by 2027.

17. Social Media Management

Average Net Margin: 16.61%

After COVID-19, companies are increasingly willing to invest significant amounts in their products and services promotion through various social media platforms. Instagram, in particular, has been identified as the platform with the highest ROI and is expected to experience substantial growth in 2023. According to Global Market Insights Inc., this market is estimated to exceed a valuation of $110 billion by 2032.

16. Dropshipping Business

Average Net Margin: 17.50%

Dropshipping is a business idea that requires an average initial capital of somewhere around $245, making it an inexpensive and convenient business. In dropshipping, inventory is stored and shipped to customers by a third-party supplier on your behalf. An individual can also dropship products from Walmart Inc. (NYSE:WMT) to Shopify Inc. (NYSE:SHOP) through various apps, like AmaZone DropShipper + Walmart.

15. Event Management

Average Net Margin: 20%

Event Management is another one of the most profitable businesses with low initial costs. The global event management industry is projected to achieve a market size of around $1.5 trillion by 2028. By 2030, the share of U.S. event management market is projected to reach $510.9 billion. Despite facing challenges from the pandemic, the event management industry continues to grow.

14. Cleaning Services

Average Net Margin: 20.75%

The startup costs for a household cleaning business can be as low as $2,900, covering expenses for vacuum cleaners, cleaning supplies, and other necessary equipment. In the US, the average rate of the cleaning companies is approximately $237.5 per visit, per Forbes, making it one of the country’s largest and most competitive sectors. All these factors make cleaning services one of the most profitable businesses with low startup costs.

13. Errand/Concierge Service

Average Net Margin: 21.40%

Personal shopper services, including tasks like grocery shopping, drugstore and post office runs, and dry cleaning pickup, are part of the Errand/Concierge Service industry. Business concierge services have experienced an annualized revenue growth of 8.6% over the past five years, and with a projected CAGR of 8.07%, its market could reach to over USD 900 million by 2028.

12. Accounting Services

Average Net Margin: 22.01%

With an accounting degree/certification, accounting software, and obtaining a business license, individuals can initiate their own accounting service business with an average initial cost of $300-$1,000. Common services include bookkeeping, financial statement and tax preparation, auditing, and more.

11. In-Home Caregiving Service

Average Net Margin: 23%

Starting an in-home care services business for seniors can be achieved with as little as $150-$700, requiring a high school diploma, CPR certification, a clean driving record, and a valid driver’s license. This presents a promising opportunity due to the anticipated shortage of over 100,000 caregivers for the elderly in the coming years.

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Disclosure: None. 30 Most Profitable Businesses With Low Startup Costs is originally published on Insider Monkey.