The rookie, winner of the feeder GP2 series in 2014 and son of ex-racer Jonathan Palmer, was the Lotus reserve last year and took part in regular practise sessions at grands prix.
Speaking to reporters at the team's official launch, Palmer did not try to put a gloss on the situation.
"It's not going to be an easy year rebuilding from what was Lotus. It's impossible to say right now where we are going to be on the grid," he said.
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"I've got a back-to-back (view) with how Lotus were last year. It was very tough. They were struggling to make all the races at the end of the year, trying to get money in from anywhere they could."
Lotus had their cars impounded by bailiffs after the Belgian Grand Prix and were locked out of the paddock hospitality in Japan due to unpaid bills.
At the season's Abu Dhabi finale, the cars were not allowed into the paddock until payments were forthcoming. Little money was spent on development of the 2015 car, with knock-on consequences for 2016.
Renault finally bought the team in December.
Palmer said 2015 had been 'on the limit': "There were a lot of times where we turned up and couldn't get in the garage, we didn't have the kit, we had no idea what was going to happen.
"In fairness, we managed to get through all the races which was an achievement considering the money that was being spent or owed at that time. They had to do what they had to do...it ended up being quite messy."
Since then, Venezuelan Pastor Maldonado -- whose sponsorship from state oil company PDVSA provided a lifeline but has now ended -- has departed and been replaced by Denmark's Kevin Magnussen.
Palmer said he felt sorry for Maldonado but pleased for the Dane and his own response would be to make the most of every opportunity in a fickle sport.
"Everyone's watching you...you have to be a ruthless person and look out for yourself a lot. If you don't you are going to get spat out," he said.
"I fully realise that I've got to make the most of it this year. Treat every year as if it could be your last. I can't leave anything on the table. I've got to hit the ground running in Melbourne."
The season starts in Australia on March 20.
(Reporting by Alan Baldwin, editing by Toby Davis)
