So you want to know how to start a business with no money? Join the club.
Next to a great idea, having the funds to put that idea into action is often just as important when starting a business. But while you can generate ideas given enough time and thought, money doesn’t come as easily.
Business ideas are time-sensitive — if not put into effect at the right moment, they may not be such great ideas later on. And getting funding isn’t always a given. So how do you get these ideas going and start a business with no money?
This post will help answer that question by offering ways to tap into your network and resources to get your business off the ground.
Don’t Quit Your Day Job
It may be tempting to throw caution out the window and fully devote yourself to your new business. Don’t. This is the time you need money, and keeping a steady source of income will help during your transition from employee to entrepreneur.
Although this means working longer and harder — essentially doing two jobs at the same time — having something that pays the bills allows you to be more thorough and take greater risks in your new venture.
Think of it as a lesson in practicality — a good business owner knows it’s all about the bottom line, and being mindful of yours is the first step.
Know Your Numbers
You know you need money. But do you know how much? Do you know exactly how the money will be spent? Without firm answers to these questions, you may not be ready to go into business just yet. Take some time to think about how you would actually start the business, what steps you would take, what resources you would need, and where you could source those things at a reasonable price. Run through every detail and figure out your real startup cost before searching for where to get it.
At Your Service
While you’re thinking of your business, can you come up with a way to start it as a service? Products usually require raw materials, third-party manufacturers, and significant minimums — all things that cost money up front. Services, on the other hand, don’t require much money to perform. What they need is time and effort, two resources well within your reach.
Furthermore, a service business can generate revenue and cash flow rather quickly, sometimes even at the start of the job (given the right contract terms). If possible, consider starting out by offering your services, saving some money, and then pivoting to products at a later date.
Start From What You Have
As a business, you need to take inventory of your own personal resources. List down your skills, your knowledge, your network, or anything of value that you have access to. No one else will see this, so feel free to write down whatever comes to mind.
Maybe you can set up your own free Wordpress website, Facebook page, or social media account, ask your cousin to help create your logo, or invite a few friends over for a casual market study. All these things can add to the business, and therefore reduce your starting capital.
Put in the Sweat Equity
There are two types of owners — those who put in money and those who put in their time and effort. (Yes, it’s possible to be both). Those in the latter category are usually referred to as managing partners and they contribute what’s called “sweat equity.” Managing partners are those who are hands-on, oftentimes without the other partners, as that is their contribution and share in the company.
Rather than a financial investment, you are investing your effort and hard work in building the business. So, while you don’t get paid for your work, you do get a share of ownership in the company.
Don’t Be Afraid to Experiment
The beauty of a new business is that it has nothing to lose. There’s no line of customers outside your store or 10 million online followers noting every little move you make. Take advantage of this time and space to try new ideas, test out services, and yes, make mistakes.
To a startup owner, adaptability and flexibility are your strengths. You can move more easily and quickly compared to a large firm that is stuck in its ways and has numerous employees to consider. Maintaining this alternative mindset will help you weather through the steep starting climb, and perhaps even reveal new routes to get you in business.
The Friends and Family Plan
This may not have been something you considered. But remember, you’re not asking for charity or seeking money for unfounded personal reasons — you’re asking as an entrepreneur with a solid business plan and drive to succeed. Of course, be selective with which friend or family member you choose. Don’t go to your penny-pinching uncle or your friend who’s supporting three kids with another on the way.
Look to those closest to you who are perhaps running their own business, can offer sound financial advice, and a small business loan. Take them out to lunch and formally present them with your idea. Bring a business plan, financial projections, and any market studies you have. Treat this like you would any other investment meeting, and they’ll be more likely to see the value of your efforts.
Get Creative With Your Sources of Capital
Startup capital doesn’t just come from your own bank account or an outside investor. These days, a lot of people are willing to put their support (and money) behind a good idea and there are a number of options for funding.
The most traditional, of course, is a bank credit line. Most commercial banks offer credit cards or lines specifically for businesses, allowing them to borrow up to a certain limit and pay interest only on the amount borrowed.
Almost the complete opposite of securing a credit line is crowdfunding. Crowdfunding platforms like Kickstarter and Indiegogo allow the public to invest in your business.
Keep in mind that these platforms have become quite competitive, and you still have to create a compelling crowdfunding campaign and pitch that will draw people’s interest. But if you manage to get a few dollars per donor, this can eventually add up to be the amount you need to start your business.
If you’re really serious about your idea and have a working business plan, you can also consider applying for a business incubator. Incubators function almost like a business school, providing personal mentorship, hands-on guidance, office space, and yes, funding.
While many popular incubators are partial to tech-focused ventures, such as Techstars or Y Combinator, a number of others have since opened for other forms of business.
Mergelane, for example, caters to female founders, while Make in LA is specifically for hardware startups. A good place to find incubators that are best for your business is on InBIA (International Business Innovation Association).
Keep the End in Mind
At the beginning of a business — and oftentimes through the first year — it’s usually the owner doing all the work. This is a great way to cut costs and get operations off the ground.
However, bear in mind that this can’t last forever. In cases where the owner is the business, it can be hard to envision any future growth. The business is limited by one individual’s time and effort.
So while you may have been able to push through the initial startup phase, it can be hard to scale and secure any additional investment. To prevent this from happening, make sure to create a log and system for what you do, and an easy way for someone else to replicate it. If only you can perform the essential functions of the business, then your small business really can’t grow any further.
At the end of the day, a business is an “enterprising entity engaged in commercial, industrial, or professional activities.” This doesn’t require a business card, an office, or domain name. You can just start offering your services on the many free listing sites available online (e.g., Craigslist, Fiverr, Upwork). Focus all your efforts on getting your first client, doing a great job, getting your next client, and so on. Once you’ve generated a little cash and experience in the business, then you can start to officially build your business.
The Bottom Line
Yes, starting a successful business does require certain resources. But these resources don’t need to be monetary. If you’re willing to put in the time, effort, and a little bit of creativity, you can already take the first steps toward building a solid foundation and customer base before making the big move into a full-time business. And that’s how to start a business with no money.