7 Best Businesses to Start with 20k

Article Summary:

Believe it or not, $20,000 can be a good amount of capital with which to start a profitable business. You just have to pick one that has low initial overhead costs and capital outlay. Yard work, photography, food trucks, and many online-based businesses can require a small investment but grow exponentially. It’s important to model out the costs, including buffers and break-even costs, when planning to start your own business with less than $20k.

So you want to be an entrepreneur? The long hours, lack of sleep, and stress might be worth it if you can be your own boss and reap the profits. If you have $20,000 in the bank, a head on your shoulders, and courage in your heart, now might be the time to consider branching out on your own. When you’re deciding what type of business to start, you’ll want to ask yourself, “Is there a demand for this?” and “How much will this cost?” Once you establish all of your expenses, it’s important to model out a more detailed cash flow to make sure you have some buffer room. Then you can start to strategize on the best method and time frame to set up shop. Everyone has a unique skill set, so we have rounded up a list of different types of popular businesses that can be affordable to start.

A simple model for our business prospects

For this article, we will map out the operating expenses of seven businesses you could potentially start with $20,000 or less. We’re breaking it down into three main numbers:

  • Initial capital outlay: The amount of money required to buy everything needed to start the business. This includes all materials, ingredients, and machinery, among other items.
  • Monthly expenses: These include expenses such as staff payment (if needed), shipping, and rental property.
  • Sales/income needed to break even: This is the monthly total made from sales or other income. You will need to make this amount to cover your expenses.

To keep it simple, we’re listing just a few key expenses to give you an idea of how these calculations work.

Best businesses to start with 20k

Here are some of our favorite small businesses you could start with a small initial investment and grow exponentially.

1. Food truck or stand

A food truck or stand is an easy way to get into the food and beverage space without having to pay a fortune to rent or buy a brick-and-mortar restaurant. Food stands and trucks can quickly become profitable if your product is in high demand, even just by word of mouth. Below is an example of how a prospective taco stand owner might model the business to take into account initial capital outlay and monthly business costs.

Capital OutlayMonthly Operating Costs
Taco ingredients$1,000Staff$3,000
Taco cart$3,000Taco ingredients$500
Total capital outlay$6,000Total operating costs$4,500
Total + 1 month buffer$10,500Total needed to break even$4,500

There are initial costs to buy the taco stand, ingredients, and machinery that run about $6,000. The monthly running costs are $4,500. Assuming the investor will model the first month out as if they had no income, they will need around $10,500 to start the business. This is for both startup costs as well as a buffer for the first month without income. They will need to make $4,500 in sales or “top-line revenue” to break even on their monthly costs.

2. Dropshipping

Dropshipping is a fairly new concept, at least in contemporary culture, but it is catching on like wildfire. With dropshipping, you buy products wholesale from either suppliers or companies like Amazon and then resell them on your website or via social media. The key here is that you never actually own the inventory; instead, you act as an intermediary between the wholesaler and the customer. You pocket the difference between the wholesale price and what it sells for on your website as a commission. In many cases, the business you work with will give you payment gateway fees for the transaction so that the client can buy from your site. Dropshipping also allows you, in some cases, to obtain multiple free business bank accounts. Here is an example of how a dropshipping business might work.

Capital OutlayMonthly Operating Costs
Web design$3,000Shipping$1,000
Social media add-ons$1,000Web hosting$15
New wardrobe$5,000Rental$1,000
Total capital outlay$9,000Total operating costs$2,015
Total + 1 month buffer$11,015Total needed to break even$2,015

As dropshipping requires you to advertise yourself, you’ll need to spend some money on a high-quality website, social media ads, and a sleek wardrobe before you venture into this space. Once you have those, you might need to pay some shipping costs, but the overhead cost is very low. You only need around $2,000 coming in to break even on this business. You might even consider getting a business credit card down the line.

3. Gardening and yard work

Gardening businesses can be a very lucrative local business, particularly if you have the money to buy the correct equipment right out of the gate. If you have access to wealthy suburban areas to obtain clients, that could help you build a well-paying business. The most expensive aspect of getting this business started is the machinery and the vehicle to transport said machinery from point A to point B.

Capital OutlayMonthly Operating Costs
Total capital outlay$13,000Total operating costs$2,000
Total + 1 month buffer$15,000Total needed to break even$2,000

You can see that although the startup costs are high, the month-to-month overheads are not. Consistent work can turn a profit very quickly and can help you increase the value of the business far and above the initial cash that you put into it.

If you have a great business idea but you don’t have the 20k, you might want to explore getting a business loan. Review some of your options below.

4. Photographer

Photography is a business that is always in demand, as people frequently want professional-grade photos taken of events in their life (weddings, holiday cards, new babies, etc.). Particularly in the Instagram age, where every photo is filtered and posted on social media, having great pictures for your once-in-a-lifetime event can be extremely valuable. Again, a photography business has a high initial outlay but low monthly maintenance and associated costs. We break it down for you below.

Capital OutlayMonthly Operating Costs
Other equipment$2,000Gas$500
Studio equipment$3,000Web hosting$15
Total capital outlay$9,000Total operating costs$515
Total + 1 month buffer$9,515Total needed to break even$515

You’ll have to invest in the equipment for taking photos as well as the studio equipment for editing them. As long as you are the photographer, monthly operating costs will be minimal unless you want to expand with more photographers or other staff.

5. Life coach (remote)

Life coaching is a booming business these days, with all sorts of prospective life coaches jumping into the fray. If you are good at speaking to people and understand the emotions we carry around every day, then this might be a good fit for you. If you always had an interest in psychology but didn’t want to get an advanced degree, life coaching can be a great gig that you can do from anywhere. Many life coaches work 100% remotely, meaning they can live anywhere with their clients based all around the world.

Capital OutlayMonthly Operating Costs
Social media$2,000Advertising$100
Curriculum materials$1,000
Total capital outlay$5,000Total operating costs$150
Total + 1-month buffer$5,150Total needed to break even$150

Life coaches have minimal operating costs, especially if they can operate out of their homes. The value is the life experience they bring to their clients. Due to the low overhead, life coaching can be a smart idea with a high potential for profits.

6. YouTube influencer

If you ask children what they want to be when they grow up, chances are they might say influencer. Yes, these people are super famous, particularly with younger generations, and can be rewarded handsomely for their photos and videos. The question is, however, what exactly do you influence, and why would people want to be influenced by you? If you already have a large social media following, then the road gets much easier for you. If you are not, then the best course of action is to concentrate on advertising.

Capital OutlayMonthly Operating Costs
Social media add-ons$1,000Advertising$100
Total capital outlay$3,000Total operating costs$150
Total + 1-month buffer$3,150Total needed to break even$150

This is a niche that costs very little to start but is also incredibly difficult to profit from. You need to gain a certain amount of followers who spend a certain amount of time watching your content. And you have to make sure your content does not become demonetized (lose advertisers).

Pro Tip

Many of the most popular YouTube stars and programs make money through means other than the YouTube platform. Sites such as Patreon allow people to donate money to their favorite content creators. If you want to start a YouTube business, you will want to make sure you are aware of all revenue streams and not just money derived from YouTube ads.

7. Online business consultant

If you already have business experience, you can get into the business coaching and consulting game. Be careful here, however, as many of these “online business coaching” sessions are really just pyramid schemes. You need to differentiate yourself by dressing the part and having real coaching materials. You can review such items as how to manage your inventory and how to be a responsible credit card user.

Capital OutlayMonthly Operating Costs
Consulting material$1,000Web hosting$15
Total capital outlay$1,500Total operating costs$65
Total + 1-month buffer$1,565Total needed to break even$65

Other expenses to consider

Your 20k will only go so far. Here are some of the other expenses you may have to consider when you decide which business to start:

  • business sales tax and self-employment taxes
  • accounting
  • legal consulting fees
  • marketing materials
  • permits or licenses
  • search engine optimization
  • forming legal structures such as LLCs
  • utilities
  • computers and other tech equipment


What should I do with 20k?

There are many ways to turn your 20k into more money. You can invest it in real estate or the stock market, or you could start a small business. If you go the business route, you’ll want to balance your potential profits with your operating costs.

Is 20k enough to start a business?

Yes, it’s more than enough money for many business ideas to come to fruition. You must make sure the overhead costs are low and that you have a buffer in case there are times you do not receive income. Then understand what your break-even point is for sales.

Which business is most profitable?

The businesses that are the most profitable are those with small startup and overhead costs and strong sales. It could be a popular food truck, an influencer account with a huge following, or a consulting business with a high hourly rate.

What is the cheapest, most profitable business to start?

There is no one-size-fits-all, cheapest, most profitable business to start. It’s really about your skills and what the market dictates. However, if you can start a remote, online-based business that runs out of your home, your startup costs should be pretty low.

What business can I start with no skills?

Think about the skills you use in your everyday life. Are you a good cook? Do you like to babysit? Do you know a second language? Do you love walking dogs? More than likely, you already have the skills to start some sort of business.

Key takeaways

  • There are a variety of businesses you can start with $20k, from a taco stand to a dropshipping enterprise.
  • Before starting a business, it’s important to decide if there is demand for it. And how much will it cost to operate?
  • It’s smart to model out a business with the initial outlay, operating costs, and sales to establish a break-even point. Then add a buffer to see how well it fits into your $20k or less plan.
View Article Sources
  1. YouTube Channel Salary – ZipRecruiter
  2. Drop-Shipping – Michigan.gov
  3. How to Start a Sole Proprietorship Company – SuperMoney
  4. How to Start a Franchise Business – SuperMoney
  5. How to Start an Online Consultation Business – SuperMoney