Starting up your own business can be a daunting task, especially if you have limited funds.
Having a concrete plan in your mind with regard to the expansion of your business can help you out in the long run.
Taking the first leap into entrepreneurship can be perhaps the most challenging step, but new research has shown that more 69% of American entrepreneurs start their business from home.
So, starting a business from your basement or garage is not something to shy away from. Besides cash, startups require a significant investment of your time.
The question remains, however, how do you start a business with no money? Here are some cost-effective ways to get your business going:
#1. Find your niche:
Traditionally, the first step to building your own business is to find out which niche your business idea is filling in.
Are you targeting your services to management professionals, or is your product meant to serve a younger audience?
Who are you competing against? Would your brand benefit more from thinking that is outside the box or by sticking to traditional norms?
Any potential investors will ask you these questions before deciding if your business deserves their funding.
It is, therefore, vital to hash out all of these details before you move on to the next step.
It may seem tough to find inspiration if you’re surrounded by examples of huge brands, but it is essential to understand their humble beginnings to get the bigger picture.
Jeff Bezos, the founder of Amazon, cashed in on the idea of internet-based business, and Amazon was originally meant to sell books!
By understanding the fluctuating needs of the market, Bezos then expanded his store to sell electronics, video games, furniture, and many other things, making Amazon the giant of the industry it is today:
Despite numerous hurdles at the start, Amazon managed to come out on top in an aggressively competitive industry.
#2. Explore your options
The internet is a veritable mine of free resources, and the first thing you should do is to jot down a list of all the things you want to offer in your business.
You can also note down the resources you require to make that happen.
For instance, do you need a custom-made website that is designed to sell your range of products? Or would it better suit your business if you sold your goods on a third-party website like Etsy?
Online resources like Canva can help design a wide array of social media content without any prior graphic designing experience:
If you would not prefer to make a website using cheap sources like SquareSpace, Wix, or WordPress, then you can just as easily make a Facebook page for your business.
Sure, online resources can be a little difficult to navigate initially, but if you reach a certain level of self-sufficiency, you can save up on a lot of initial costs that are required to market businesses.
You can also effectively market your businesses with the help of SMS marketing, which is an easy-to-use tool for small businesses.
#3. Keep your day job:
With any new business, it is vital to keep a level head.
You should not be so invested in your daydreams of running a successful business that you forget to make concrete plans to achieve that objective.
In order to build up your savings for the cold winter ahead, you should continue to work at your current job, which is providing you with a steady income.
Not immediately going “all in” may seem unwise, but it is important to build a stable base for your business before you decide to quit your day job.
While working at your current job, you can continue to perfect your business model, build a network of potential investors, and seek sources of funding for your business.
#4. Make sure you have funds to fall back on:
Businesses can take some time to become profitable. Depending on the initial startup costs, a business can take up to three years to start churning out a profit.
As a rule of thumb, your aim shouldn’t be to immediately start to pay yourself the same salary you were formerly receiving.
Instead, you should re-invest the majority of your earnings back into the business, maybe to upgrade your businesses’ technology.
Before initiating the business, you should build up your savings so that you can safely afford to pay for your basic requirements, such as rent and groceries, for a period of 6 months.
Dipping into your savings can seem imprudent, but it is, in fact, the fastest way to let your business’ profit flourish.
Being realistic about your profit projections can help you stay grounded in your expectations, and make it easier to work towards them.
By having some savings to fall back on, you can relieve some pressure off of your business and can focus more intently on the quality of your business.
#5. Search for investors at arm’s length:
Looking for capital when you lack funds for your business can be difficult, but there’s a number of options you can choose from:
Building a network of investors that starts with your family and friends can be the first path to angel investors.
Since you’ll be taking small loans from the network of people you know, be sure to maintain all records of such loans in writing so that they leave no room for error later on.
If you believe that your idea is very innovative and fulfills a gap in the market, you can try to crowdsource it.
Sites like Kickstarter and Patreon are becoming widely used by influencers and artists in order to gain some funding for their main project.
You can explore which site suits you and your business the best.
By circulating your funding links among your family and friends, you can become more widely known among their networks as well.
Wildly popular card games like Card Against Humanity began their humble journey with the help of a Kickstarter campaign, so don’t shy away from such sources of funding.
#6. Apply for a small business loan:
If you operate on a very tight budget and your other sources of funding are not panning out, then it may be better to apply for a small business loan.
Applying for loans of this nature may require you to fulfill some very specific business requirements, so you should carefully research potential options, and see which business umbrella you fall under.
You can also seek investment funds from traditional banks or even online loans that have less stringent requirements than banks.
Thorough research is crucial, and looking into the nitty-gritty details of the loans (interest rates, risk, etc.) can help you pick something that aligns with your business needs perfectly.
For instance, if you feel that lump sum loans will not suit your business model, then you can make use of a business line of credit. This can be useful for buying items on a need basis.
#7. Improvise. Adapt. Overcome:
It’s always a possibility that things may not go according to plan, no matter how well thought out your plan was.
By not becoming fixated on a singular objective or goal, you can become more adept at rolling with the punches.
Typically, well-established firms take longer to adapt than new businesses.
In this regard, flexibility is a huge competitive advantage.
New firms can, therefore, benefit from shifts of consumer preferences in the market, and utilize such changes to their advantage.
For instance, if you are running low on funds for a particular project, you can rearrange your current business model to cater to a new potential source of revenue.
Once this source of revenue starts bringing in the cash flow, you can then proceed to redirect these funds into the original project idea you had.
Business model innovation like that shown by major brands like Apple with their transformative work in iTunes leads them to carve out a niche in the market for the iPod.
By making music digitally accessible, they were able to tie their product, the iPod, with iTunes, making this combination a nearly $10 billion product.
For small businesses, an appropriate example could be that of construction machinery producers.
Besides selling a vast array of professional tools, they could also rent out much of their machinery.
This move would open up a wider consumer base for them and create new revenue streams for their business.
To ensure that you are succeeding in capturing a wider audience, you will need to take careful note of how your social media accounts are faring.
#8. Incubate your business:
If you think your business plan is well thought out with workable plans, then a business incubator may be perfect for you.
America’s National Business Incubation Association has more than 1400 members!
Incubators act as a sort of accelerator for your business. They help you find investors and funds that can help your self-starter grow at a quicker pace.
They can also help in providing you with services such as accountants or lawyers.
In short, incubators can help your small business flourish in a shorter time frame.
We’ve now discussed at length, potential strategies you can use to start a business when you have no money. But the question remains:
What kind of business can you start when you have no money?
Businesses that start with little capital have some shared characteristics. For different types of businesses, your approach and need for capital can vary, with some jobs such as graphic designing requiring very little initial investment.
Businesses fall under certain categories such as Service, Events, Performance, or Brokerage.
#1. Service-based Businesses:
This type of business depends on the skill-set of the person who is starting the business. The initial start-up cost of this business can be quite low, as all an individual needs are the tools of their trade, and they are good to go.
For instance, if an individual is offering their graphic designing skills, then all they need is a graphical drawing tablet and a computer. Similarly, all a plumber needs is a tool kit, and they are now armed to deal with any potential plumbing problems.
Such businesses can be run from home and can be a one-man operation at the start, requiring little to no office space or capital.
#2. Event-based businesses:
Event-based businesses are slightly more challenging when you have limited capital. The essential part of event-based businesses is their marketing, through which they can properly outline their services.
Events can range from conventions, expos, sports events, or even concerts. For event-based businesses, it is important to start small initially, and through networking and good marketing, you can strengthen your hold on the market.
An advantage of event-based businesses is that you can earn some money through selling tickets before the event. This can help you cover the major costs of the event, which means you’ll require a lower amount of capital to ensure the event’s success.
#3. Performance-based Businesses:
Such businesses rely on the talent and marketing capabilities of the individual. Comedians, motivational speakers, and musicians can all potentially create successful performance-based businesses with little initial capital.
Again, marketing that allows you to access a broader audience can help your business grow.
Collaborating with other people in the same line of work as you can also enhance the performance as a whole.
Some more specific examples of online businesses that you can start with no money are shown in the picture below:
People are always discovering new ways to make their lives easier. Shows like Shark Tank highlight the innate desire that people have to innovate and create.
However, lacking capital can be a major spoke in the wheel for any aspiring entrepreneur.
All of us have at least once in our lives heard someone say, “I have this great business idea, but I don’t have any money to make it happen.”
While before, traditional businesses practiced carving their own niche in the market, nowadays, your capital can come from who you know and how you market yourself.
Starting a business with no money can be daunting, no doubt, but taking the first step towards your goal, setting realistic and achievable progress points, and getting creative with your business ideas can help you go a long way.