While it may be very difficult, starting a business with no money is absolutely doable. Technology nowadays has opened up a vast number of opportunities to connect with people, groups or organizations that can fund your business without you putting up any money. However, the point to keep in mind is that starting any business requires money. So, you may figure out a way to start your business with you putting no money up, but someone else undoubtedly will. Thus, one of the biggest parts of starting a business with no money is coming up with an innovative idea and tapping as vast of a network of people as you can. Read on for a full guide for how to start a business with no money.
How to Start a Business With No Money
Whenever a person is starting a business, including with no money, there are some fundamental steps to take. Here are some basic steps every entrepreneur who wants to start a business should take:
- Decide on what kind of business to start
- Choose a name for your business
- Write your business plan
- Register your website domain and create an online presence
- Choose a business location
- Choose your business entity type
- Apply for an EIN
- Open business bank accounts
- Get necessary licenses and permits
For more on starting a business in general, check out this complete guide to starting a business. It covers all the mentioned steps in more detail as well as information on how to find forms, permits and paperwork you might need. Once you have these preliminaries done, it’s really mainly about acquiring funding for your business. It is possible to start a business with no money, but, in the end, everything costs money, so money needs to come from somewhere even if it’s not your money.
When it comes to starting a business with no money, here are some solid strategies you can pursue.
1. Start with Evaluating What You Have to Offer
At the beginning of when you’re trying to start a new business, a good place to start is by evaluating what value you bring to the table. Since you’re trying to start a business with no money, you’ll need to make up in some way for not being able to contribute startup capital. This usually requires unique value, products and services you can bring to the marketplace and customers. Some areas you should evaluate in terms of include:
- Skills: What can you do? What skills do you possess, both hard and soft skills? Are any of your skills unique or rare?
- Experience: What have you done or worked on in the past that adds value? What past experience is relevant to certain types of businesses? Why does your past experience make sense for the business you want to start?
- Knowledge: What do you know? What of your knowledge-base is valuable and relevant to the business you want to start? Do you have unique or rare insight or knowledge of a certain industry or business type?
- Resources: What do you own? What do you have access to? Do you have physical assets that could be used to get financing? Do you have physical assets that could be used by your business?
You should really put the time into answering these questions. Be thorough with your self-evaluation as this ultimately forms part of the foundation of starting your business. Physically write down responses to these questions, rather than just thinking about them mentally. Having written answers will help you when it comes to writing a business plan as well as for pitching your business idea to other people like potential investors. In general, you should draw out the most unique and valuable attributes you bring to the table in order to separate you and your business idea from all the others out there.
2. Take a Look at Your Network
Knowing people, especially knowing the right people, can go a long way if you’re trying to start a business with no money. Therefore, you need to combine your skills, experience and knowledge with getting the most out of the network of people you know. You may have an available pool of interested investors just lying in wait for the right idea to come along. Take account of the relationships you have with others, including family, friends, coworkers and any other personal and professional connections. You can map out your network of connections and determine which connections could allow you to do the most given your skills, knowledge, experience and business idea.
By exploring who you know, you can pitch your business idea, feel out the response, ask for feedback and re-pitch. What’s more, you may not find an investor among your direct circle, but your contact could have a contact of their own to connect you with. Secondary and tertiary connections like this are invaluable when trying to start a business with no money. Nowadays, all this networking has been made much easier by platforms such as LinkedIn.
Another advantage to multiple levels of networking is that one connection by vouching for your business concept while another connection puts up the money. For example, if an industry expert thinks your business pitch is a great idea, then family members or friends might be willing now to invest in your company with you putting up nothing.
3. Start Your Business by Crowdfunding
Crowdfunding platforms such as Kickstarter, Fundable, GoFundMe and countless more, have transformed the way entrepreneurs can raise money to fund their new businesses and business ideas. You could be trying to raise money to sell a new software tool you developed or establishing an innovative food truck company, you can connect with tons of potential investors to fund your business through crowdfunding.
Crowdfunding involves turning to a crowd of people — almost always online — and asking them to provide financial support to fund the business you want to start. This is what occurs with crowdfunding platforms like Kickstarter, Crowdfunder, Indiegogo and others. You’ll draw up a detailed description of your business idea, how you plan to make money with it, what you plan to do with the funds raised and overall business goals. Your method of crowdfunding can also depend on whether your business offers products versus services, since some platforms are better for one versus the other. For example, Patreon is a subscription-based crowdfunding platform for writers, artists and publishers, versus Indiegogo, which emphasizes unique or innovative ideas.
With most crowdfunding platforms, you don’t need to put money up, though there are some in which you can provide your own capital and investors the rest. With the most popular crowdfunding platforms, like Kickstarter, you can set the funding goal, get the word out and, if you hit your goal, get the funds you need to start your business.
4. Obtain Funding Through Small Business Grants
Every year, and sometimes more often, various government agencies and private organizations offer grant programs that are open to small businesses. One of the most notable federal government programs is the Small Business Innovation Research (SBIR) program, which is a very competitive program that promotes domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that demonstrates the potential for commercialization. The SBIR conducts a competitive awards-based program, which enables small businesses to explore their technological potential while providing the incentive to profit from its commercialization. It’s a win-win program as small businesses benefit by getting the funding they need to make innovative products while the government benefits from having its specific research and developments met.
5. Seek Out Angel Investors
Angel investors are high-net worth individuals who look to look to grow their wealth by investing in new business ideas. These kinds of investors are interested in business ideas that have real viability and a chance at succeeding in the marketplace. The good thing about angel investors is that they’re more open to risk than traditional lenders because they understand that truly innovative businesses can be unconventional and risky, but also can have spectacular payoff.
If you have a brilliant business idea and pitch it to the right angel investors, it is possible to start a business with no money this way. It’s important to note, however, that funding from angel investors isn’t a grant or gift. Angel investors expect to see a return on their investment through eventual profits. Thus, though you can avoid a loan with angel investors, they will need to be paid out of your company’s profits.
Finding and locking down angel investors is no easy task. But thanks to the internet, there are online websites and platforms specifically catering to connecting entrepreneurs with angel investors. Beyond this, you can always use a professional social platform like LinkedIn to find angel investors and reach out to them.
6. Use Credit Cards for Funding
An increasingly popular option of business funding is by using personal credit cards, business credit cards or a combination of both. One of the advantages of unsecured credit cards — which is the majority of them, as opposed to secured — is that they don’t require money down. Your application and approval is based chiefly on your credit score and self-reported information like your household income. Therefore, if you don’t have any cash readily available, but a good credit score, say, 680 or higher, you can likely get approved for various personal and business credit cards. And, by combining more than one credit card, you can also add together their credit limits, which translates to more funding for starting your business.
7. Check Out Incubators and Accelerators
Incubators and accelerators are programs both focused on helping promising startup businesses get off the ground and running. If you think you have a great idea and viable business plan, you might want to consider looking into business incubators. Generally, startup incubators are nonprofit organizations that are commonly associated with universities and business schools and offer a collaborative program for startup companies. Some popular incubators include Y Combinator, Techstars and 500 Startups.
Accelerators are similar but have some notable differences. Incubators typically operate on an open-ended timeline, focus more on the long-term prospects of the startup and less on immediate growth. Accelerators, on the other hand, work on a set timeframe, usually around three to four months. Both incubators and accelerators provide assistance through networks and mentorship. However, incubators usually don’t provide capital directly to the startup, instead providing assets like office space, supplies and equipment to operate your business. Accelerators usually do provide capital, but these programs also typically focus on businesses that are already up and running yet need more assistance to really experience lift off. Both types of programs tend to be very competitive, so you’ll really need to have an innovative business idea that’s thoroughly worked out.
8. Start a Business That Requires Little Upfront Capital
Another way of going about starting a business with no money is to target types of business that are affordable to get off the ground and operate. So, this route might not cost zero dollars to pursue, but you can identify kinds of businesses that need very little in terms of upfront capital.
In general, these types of businesses are likely to be service-oriented, rather than producing a product for the market. This is because you can provide a service and then collect compensation, which acts as funds to put back into your business without having much overhead. With a product-based business, you’re likely to need substantial upfront capital in order just to produce prototypes, let alone produce inventory for the consumer market.
A consulting company is a prime example of a business that can be started for very little to no money. The principal prerequisites for starting a consulting business are your skills, experience and your network of contacts. If you’ve worked in the same field for many years, have learned the ins-and outs of a particular industry and have made a lot of contacts, then a consulting business could be a great candidate for starting a business with no money or very little upfront. Either way, if you’re looking for a business to start with no money, focus on service-based businesses as these will require significantly less capital than a product-based business. Of course, you may need a computer and software, but if you’re already experienced in the field you want to consult in, you may already have access to such things.
The Bottom Line
Figuring out how to start a business with no money really comes down to creativity, persistence, flexibility and a lot of homework, whether in the sense of research, networking or planning. The key factors are maximizing the connections you have and exploring various forms of raising funds. Loans from the Small Business Administration (SBA) and traditional business loans from banks nearly always require some minimum of capital from you, not to mention revenue generation and time in business requirements, which makes these avenues fairly unhelpful if you want to start a new business for free. However, through your personal and professional connections, combined with several investigating different funding options, you can make starting a business with no money a reality.
More From Seek
- 15 Entrepreneurs Share Their Biggest Fears
- The 20 Best Businesses to Start
- How to Start a Business in California
Business Loan Resources
Photo credit: Monkey Business Images/Shutterstock.com