You don’t always need a lot of capital to get a business up and running. In fact, sometimes you can get started with little to no funding. (Yes!) Starting a business with no money might initially seem like a far-fetched idea, but it’s not impossible.
It’s true that to start and scale any business, you’re going to need more than just extra cash flow. You’ll likely need partners, investors, and a solid plan for how you’re going to use your new business funds to grow. But, when you’re just starting out, you start out small. Even better: you can start out as small as you like.
If your plan is to open up a storefront where you sell your hand-crafted wares, you can always start by selling them to friends and family. You can build up a reputation and get initial feedback. Then, you can sell them on a third-party website online. After that, you can move on to hosting your own site and store. You get the idea.
If you’re worried about how you can start a business with zero funds, here are a few ideas on where you can start.
Ask yourself what you can do and get for free
Starting a business with limited capital requires a shift in mindset. Traditionally we are conditioned to begin the process of looking for new business opportunities by asking: “Is there a gap in the market and how can I fill that gap?” A gap could be an unfilled customer need or a new invention yet to be brought to market.
Next, we establish a goal to create a venture that will fill that gap. We consider the resources necessary to make our goal a reality and go out in search of those resources. We write a business plan and present it to potential financiers with the promise of a return on investment.
If the financiers like us and like our idea, they provide us with the capital to start the business. If not, we are stuck.
It’s easy to come up with a list of obstacles standing in the way of you and launching your business. It’s often harder to come up with a list of opportunities that are right in front of you. If the thought of starting a business with no money scares you, stop and reflect on what you can do without right now.
What’s essential to your business? Do you need the slick, custom-designed website when you’ve only perfected three items for your new store? Could you do with creating a Facebook page to promote your business locally, instead? Or, would it make more sense for you to post your products for sale on a site like Etsy? Would it make more sense for you to design your own marketing materials in Canva? Could you barter and trade your skills/products/resources with someone else in lieu of payment?
To say there are a lot of free resources on the web is an understatement. Make a list of what you need for your business and then research free alternatives on the web. It might take time, and perhaps even require you to pick up some extra digital skills, but you’ll save funds when you need them most.
Build up to six months’ worth of savings for expenses
Admittedly, tapping into your savings account isn’t the ideal situation. Yet, it’s a pretty common practice among entrepreneurs. When designing your business plan, be frank with yourself about how much you’re spending and how much revenue you’ll likely bring in. Then, be realistic about how long it will take before you see a profit. Usually, it takes at least six months before you start seeing any cash flowing in. Make it a goal to save at least six months’ worth of living expenses so you can devote yourself to your new business.
Ask your friends and family for extra funds
Remember, you’re not asking for charity. You’re not asking your friends and family to support your wacky business idea. No, you’ve got a dream of a business and your business plan is solid. You’ve crossed your t’s and dotted the i’s. That’s why you’re looking to those closest to you when making your pitch. Use your friends and family as multi-layered resources.
Practice your sales pitch with them. Ask for feedback. And, when you’re ready to launch your business, ask if they can help with a small loan to kickstart the business. Just be sure to get everything down in writing and when you’ll pay them back. You can even use a crowdfunding platform to encourage the people around you to encourage their networks to pitch in.
Apply for a small business loan when you need extra cash
If you’re looking for more capital and have been operating on a shoestring budget, consider applying for a small business loan. Banks and online lenders offer different kinds of small business loans to customers looking for extra cash flow or investment funds. You can usually get more favorable terms with a traditional bank. Online lenders, however, are typically more lenient in their requirements. Just watch out for those high interest rates.
If you’re not looking for a lump sum loan amount, consider a business line of credit. In short, they’re like credit cards for your business. They’re good options for purchasing items on an as-needed basis. (You can read about them and other small business loan options, here.)
Look to small business grants and local funding opportunities
Truthfully, grants for small businesses aren’t always the easiest to find or get. But, once you’ve got your business up and running (no matter how small), you can begin searching in earnest for free cash. Always remember that grants will usually have specific application requirements. So long as you meet those, you’re in the running for a pot of cash that’s all yours for the taking. Start your search in government databases and always be sure to ask your local small business administration chapters for help.
Find out about potential investors
You’ve probably heard of angel investors, and with good reason. They come into play when it’s time to scale your business beyond you, yourself, and the handful of loved ones who’ve bought in. Angel investors are usually among the first people outside the company to invest in a business.
Unlike outside firms or other venture capitalists, angel investors put down their own personal funds. They can also make for the best kind of mentors since many are former/current entrepreneurs themselves.
