Starting a business when money is tight is not easy, but it is done every day in New Zealand. The good news is that many trade and service businesses can get off the ground with very little capital - if you are smart about where you spend and where you save.
This guide is general information for NZ businesses, not financial advice - check business.govt.nz or a licensed adviser for your situation.
Start as a sole trader (free and simple)
The cheapest legal business structure in NZ is a sole trader. There is no registration fee - you simply use your existing IRD number and start trading. If you want a New Zealand Business Number (NZBN), that is also free to get at nzbn.govt.nz.
You do not need to register a company to run a legitimate business. Sole trader status gives you a valid structure, lets you open a business bank account, and keeps your paperwork simple. When your income grows and the risk profile changes, you can look at forming a company later - but at the start, keep it lean.
Read more in our guide on becoming a sole trader and the broader how to start a business in NZ guide.
Pick a service business with low startup costs
Not all businesses need a van full of gear. Some of the lowest-barrier service businesses include:
- Lawn mowing and section maintenance
- Cleaning (residential or commercial)
- Handyman and minor repair work
- Mobile car detailing
- Painting (exterior or interior)
- Garden and landscaping services
- Computer or IT support
- Bookkeeping or admin services
These businesses share a key trait: your main asset is your labour and your skills. The gear list is short, and much of it can be sourced cheaply to begin with.
Use free and low-cost tools
You do not need to spend money on software to run a professional-looking business from day one. There are solid free options for the essentials:
- Invoicing - Use our free invoice generator to send professional invoices immediately
- GST - Once your turnover hits $60,000, you must register for GST. Use the free GST calculator to stay on top of what you owe
- Pricing - Know what to charge before you quote. The charge-out rate calculator helps you work out a rate that covers your costs and pays you properly
- Business advice - The government's business.govt.nz site is free and covers everything from registering your business to employment law
- Accounting - Wave is a free cloud accounting platform. Xero has a low-cost starter tier. Start free and upgrade when you can afford to
Get your first customers before you spend
This is the single most important rule when starting with no money: do not spend on marketing or gear until you have paying customers lined up.
Here is a low-cost way to get your first few jobs:
- Tell everyone you know - friends, family, neighbours, former workmates
- Post in local Facebook groups and community pages
- Create a free Google Business Profile so you show up in local search
- Ask your first customers to leave a Google review
- List on Neighbourly or local community boards
- Offer a small discount for referrals in the early weeks
Word of mouth is still the most powerful marketing tool for trade and service businesses in NZ. One happy customer who tells their neighbours is worth more than a paid ad.
Borrow or hire gear instead of buying
In the early stages, hiring gear for specific jobs is almost always cheaper than buying. Check hire rates before you commit to purchasing anything. If you only need a piece of equipment for one or two jobs per month, hiring makes financial sense until you are turning enough work to justify the capital outlay.
Other options worth considering:
- Buy secondhand - Trade Me is full of good secondhand tools and equipment at a fraction of new prices
- Borrow - Ask friends or contacts in the trade if you can borrow gear for a specific job
- Sub-contract - If a job needs a tool or skill you do not have, sub-contract that part out and manage the job overall
Do not take on debt to buy gear until you have consistent paid work to cover the repayments.
Price right from day one
Underpricing is one of the most common mistakes new business owners make - and it can sink a business faster than almost anything else. Set your rates to cover:
- Your actual time on the job
- Travel and fuel
- ACC levies (all self-employed people in NZ pay ACC levies - factor this in from the start)
- Materials and consumables
- Tools and equipment wear
- Tax (set aside at least 20-25% of your revenue as a starting point)
- Your own time for admin, quoting, and invoicing (this is real time that deserves real pay)
Use the charge-out rate calculator to stress-test your numbers before you start quoting.
Manage cashflow tightly
Getting paid is not the same as having money in your account. Cashflow is the lifeblood of a small business, and it is the thing that trips up most new operators.
A few habits that help from the start:
- Invoice the same day the job is done, not at the end of the week
- Set payment terms of 7 days, not 30, for residential customers
- Ask for a deposit on larger jobs before you start work
- Chase overdue invoices quickly - the longer you wait, the harder it gets
- Build even a small cash reserve if you can, to cover slow weeks or unexpected costs
Our guide on managing cashflow as a tradie goes deeper on this topic and covers practical systems you can put in place early.
The one cost you should not skip: insurance
When you are bootstrapping, every dollar counts. It is tempting to skip insurance and put that money toward gear or marketing. Do not.
A single incident - damaging a client's property, breaking a window, causing a water leak that floods a room - can create a liability claim that wipes out a new business overnight. For most service businesses, public liability insurance is not expensive. The annual cost is modest compared to a single uninsured claim, which can run to thousands of dollars you would have to pay out of your own pocket.
Read about the risks of running a business uninsured and what to look for when shopping for small business insurance. If you are in a customer-facing trade or service role, public liability insurance is usually the first policy to put in place.
Get a few quotes, pick a policy that fits your work type, and treat it as a non-negotiable cost of being in business.
Frequently asked questions
Do I need to register my business to start trading in NZ?
No formal registration is required to operate as a sole trader in NZ. You use your existing IRD number to start trading. You can also get a free NZBN, which gives your business a more professional identity without any cost.
When do I need to register for GST?
You must register for GST once your annual turnover reaches $60,000. Below that threshold registration is optional, but some businesses register early to claim GST back on purchases. Use the free GST calculator to keep track of where your turnover sits.
What about ACC levies?
All self-employed people in NZ must pay ACC levies. The levy amount is based on your earnings and your industry type, and ACC will invoice you after you file your tax return. Make sure you set money aside for this so it does not catch you short - and factor it into your pricing from day one.
Can I run a business from home to save on costs?
Yes, and many new trade and service businesses start exactly this way. You can use a home address as your business address, though it is worth checking any relevant council rules for your zone. Some costs of using your home for business may be tax-deductible - talk to a tax adviser or check with Inland Revenue.
Where can I get free help starting my business in NZ?
The best starting point is business.govt.nz, run by the Ministry of Business, Innovation and Employment. It covers registration, tax, employment law, and more at no cost. Your local Chamber of Commerce and Citizens Advice Bureau can also point you toward regional business advisers and support services in your area.