Have you ever asked a successful entrepreneur “how much money do you need to start a business?” Trust us; it’s a great question. Many people have the same thought when they find something they are passionate about enough to create a business model for. Where a lot of people miss the mark, though, is knowing the right steps to get the ball rolling on their business.
Starting a business with no money may sound like an intimidating journey to set yourself on. Other than the logistics of it, an endeavor like this sometimes seems so paramount if you are not starting off on the right foot. In the US, approximately 48.8% of the population are small business owners, but they are not all successful.
Although it may seem like businesses that have started from the ground and worked their way up to the skies are a romanticized perspective of business ownership, it is entirely possible to do this for yourself. But it is important to note the effort, hard work, and dedication required to achieve a feat as great as this one.
If you want to venture into becoming a part of that percentage, it’s crucial to follow a path that will lead your business to success. Here is a comprehensive guide on how to start a business with no money.
1.It Begins With an Idea
Before grabbing the calculator, it is important to establish exactly what you want your prospective business to look like. Something that a lot of small business owners choose to ignore is the importance of the idea being the key component for motivation. If you are not all in on your idea, your business will not amount to what you had in mind.
A million-dollar idea can be just that if approached correctly. There are formulas and tips and tricks that are advertised to catch your attention, but the logistics of an idea is just as important as the vision. Is it doable for you? Can you spend most of your time dedicated to making it come to life? Do you have the necessary tools to pursue the idea to the fullest? Learning how to come up with the next million-dollar idea can catapult your business, but you have to consider all the details of it.
2.Planning to Start a Business With No Money
The next step is planning. Any successful business stems from a successful business plan that can highlight all present and future goals. Buying a business with no money is completely different from creating a business model from scratch. Planning is an essential step in an adventure such as this one.
Whether you consider yourself a top tier planner or not very good with miniscule details, a business plan acts as the starting point of what is to come. You should include a concise, specific description of your business. You do not need to drone on about what you intend to do, all the resources at your disposal, or why you want to begin a business. If you dedicate a paragraph or even just a line to describing what your product or service is, that will suffice.
After that, planning for a simple budget can get you started on the financial front of things. You need to calculate how much money you must put towards your business and any and all resources that you can also contribute to the vision. Resources include knowledge, experience, contacts, time, potential clients, potential partners, etc. This will give you a structured idea of exactly what you need to invest in versus what you have covered already.
Lastly, you can formulate immediate actions that need to be taken based on the budget you have established. Doing this will give you a starting point so that you can gauge the trajectory of your business.
3.Low-Cost Business Model
Because you are in a position where you do not have much cash flow for your business starting out, it is important to choose a business model that does not demand too much money to get started. You will have to determine if you want to start a service business versus selling a product. Usually, service businesses cost far less to start compared to companies that sell products.
With a service business, you must determine the time and cost of using your skills to provide the service that you choose to hone in on. With a product-based business, you should establish how much goes into making, buying, and storing the physical item that will be the center of your business. Finding out how much money you need to start a business is highly dependent on the kind of business you intend to go into.
The lowest cost service businesses include photography, writing and editing, graphic design, digital marketing, tutoring, training, consultation, and more. These are realms that focus on the abilities of the one providing the service rather than the authenticity and quality of a physical product.
4.Calculate Business Costs
Business costs include everything that is necessary to make your business operate in the way you want it to. This can range from how you want the exterior of your restaurant to look to what kind of napkins you will be using on each table.
In calculating business costs, you will be better able to give yourself a saving target so that you do not lose control of your finances, which can be detrimental when starting any business. Startup costs are necessary but can be sizable if you are starting a business with no money.
A few startup costs include marketing and branding, registration fees, costs, assets, and professional services. Marketing and branding focus on whether you need to spend money promoting your business, which most businesses must do to spread the word about themselves. Registration fees depend on if you are registering as a sole trader or registering a limited company.
Assets, costs, and professional services all involve equipment and inventory, fixed or regular costs that are involved in running your business, and services that you may have to outsource to keep it running. These things can include office supplies, raw materials, office space, subscriptions, bookkeeping, patents, and more.
In creating a list of your business’s needs, you can visualize the expenses compared to how much you predict you will be making with the launch of your business. The key to this step is being as realistic as possible. It is recommended that you overestimate when starting a business with no money rather than underestimate.
5.Minimize Outgoings
Going along with the low-cost business model may be difficult for a lot of small business owners, so it is important to minimize exactly where you are spending and allocating your budget. If you are starting your business from home, you will already be minimizing your outgoings considering how much money it is to rent an office or warehouse.
When searching for necessary services for your business, try navigating to the cheaper options. There are plenty of opportunities on the internet, and there will typically always be a cheaper alternative that offers the exact same service. For example, if you need to build a website, you can start with a free service like WordPress and then market your business through free social media like Facebook or Instagram.
There are also websites and companies that provide you with people who can do a service for you for a lower cost than if you were to look elsewhere. This includes freelance websites like Upwork, Fiverr, and People Per Hour.
By prioritizing cheaper options, your expenses are not going to seem as colossal as they potentially could be if you were not motivated to save as much money as possible in starting your business.
6.Silent Partners
Sometimes circumstances do not allow for little to no capital being invested in the beginning of your business. This is when you can entail a silent partner. If you need capital upfront and do not qualify for financing or do not want to go down that path, a silent partner is the best option for you.
A silent partner is a person who invests in your business to have an ownership stake in the company. This person does not necessarily need to be part of the business operations, but his or her contribution to the start of your business gives that person more leverage than most. It is like having a business partner that stands silently in the corner while you stand at the forefront of your company. Hence, the name ‘silent partner’.
An advantage to having a silent partner is the lack of loans that you will face. Because of this, you may have a better chance at succeeding as a business. A disadvantage is that you will be sharing ownership of your company with a silent partner, therefore, you will be sharing the profits even though the silent partner is doing substantially less than you for the business.
This drawback has the potential to create problems when it comes to operations. Although you will be leading the charge in day-to-day operations, your silent partner will always have a loud say in how the business is running. This is why it is important to weigh your options and determine how much money you need to start a business so you can decide if a silent partner is necessary.
With silent partners, you will also reach the point where your business becomes profitable, and the partner will be paid for all the hard work that you are doing.
7.Find Financing Prospects
There are multiple routes that you can take to ensure financing for your business; it just depends on the path you want to take. In finding the financial means to begin your business, take all the factors from the previous steps and give them a good, hard look over. This will determine the route you must take in starting your business.
If you want to know how to raise funds for a business, this is the place for you. There are several options and pros and cons to each. You can either ask for funds or you can work to get them. An example of asking for funds is going to your friends and family who you know can support an endeavor like this. A pro is that you can receive the money from someone you trust and know is well-intentioned, but a con is that doing business with someone close to you can ruin your interpersonal relationship because of money issues.
You can also resort to crowdfunding. There are a multitude of crowdfunding platforms like GoFundMe, Indiegogo, Patreon, etc., that can provide you with the money you need for your business. For crowdfunding, you must determine which platform would be most appropriate for your business and exactly how much you can realistically make from it. It is helpful to know the pros and cons of crowdfunding for your business.
Government support is another option for those who start businesses with no money. There are many startup financing opportunities from the state and federal government, but in doing this, you must closely adhere to the rules and regulations that the money comes along with.
An angel investment is another option that future business owners turn to. It is when high-risk investors invest a bit of capital into companies or projects that they feel are promising. If you have ever watched an episode of Shark Tank, you have seen angel investment at play. After doing some research to decide what would be the best path for you to take, you can find networks of angel investors on the internet.
8.Adapt, Adapt, Adapt
As you run into new problems and situations that you did not expect in starting a business, adapting is a critical part of growth. You can begin your project with a clear picture in mind of what you want everything to look like at each step of the way, but problems arise in any endeavor, and you must take this into account. If you are unable to adapt, your company will not be able to adapt in an ever changing economy.
It is best to remember the importance of making mistakes and being able to learn from them. Adjust and keep moving in times of turbulence, something that many business owners can relate to. With this mentality, you can focus on the bigger picture and continue to work towards that.
Starting a business can feel like an overwhelming process if you are not given the right steps, precautions, and tips to help along the way. Hopefully, this guide provided you with a bit more insight on the excitement and thrill involved in starting a business with no money. If you can achieve something like this, being a business owner will not be as intimidating as you may think.