It’s 2021, and starting a business when you don’t have any money is genuinely possible.
Going from idea to startup is incredibly cheap and convenient today, and you can build something of value and reach a large group of potential customers easily.
But before you think the entrepreneurial path is a bed of roses, let me make one thing clear: It isn’t.
Launching a business with no money isn’t the same as starting without resources. In fact, the better resources you have, the less money you’ll need to become an entrepreneur.
Precisely why you must learn the best ways to leverage your resources—intelligence, imagination, experience, social circle, time, and determination—to grow your business.
The Easy Parts of Starting a Business With No Money
The best thing about starting a business with no money is that it isn’t a fantasy!
You’ll find thousands of companies offering freemiums and basic services for all kinds of things, ranging from business formation to website building to business templates. Having access to all these advanced tools and software is another thing we should be thankful for.
Let’s take a business formation service, for example. These companies do every aspect of registering and launching a business, such as offering legal advice, filing paperwork, and maintaining documents. You can rest easy knowing experts are handling your job—at a feasible rate.
You may not have money right away, but that doesn’t mean you have to stay that way.
There are tons of investors, crowdfunding platforms, and banks that can provide you with the necessary funding. Of course, you’ll need a profitable business idea and prove yourself to them, but the fact that there’s this possibility is definitely good news.
The internet is filled with rags-to-riches stories of business owners who started from nothing. With plenty of (practical) inspiration and strategies readily available, you won’t have to blaze a trail to make a mark—doing thorough research and having the dedication to see it through is often more than enough.
The Difficult Parts of Starting a Business With No Money
Starting a business is a challenge, and attempting to do it without money only makes it even more challenging. You’ll find yourself repeatedly brainstorming ways to overcome obstacles and keep moving forward.
However, the most challenging part of this ordeal is generating bankable business ideas.
Your business idea has to be better and/or cheaper than what is already out there and more innovative. At the same time, there should be a demand for it in the current landscape. Understandably, coming up with a brilliant idea that fits those criteria isn’t easy.
Also, while you can raise funds from different sources for your business, you have to be better than or different in some way from your rivals. Just like you, there are thousands of other entrepreneurs wanting to secure funds for their ventures, so to say the competition is tough is putting it lightly.
Lastly, the other issue with starting a business is uncertainty.
No one can predict the market. You may have a fantastic idea, a solid business plan, investors, and the drive to make your business a success, but things may still go south.
However, ups and downs are a part of business, so even if you fall, just remember to stand back up and keep moving.
Step 1: Generate and Refine Your Business Idea
Coming up with a business idea is easy—it’s coming up with a viable business idea that’s hard.
You have to think of great business ideas and then research them thoroughly to determine whether they can turn into a successful and profitable business. Knowing what your current business rivals are doing and figuring out how to do it better is another task.
Clearly Define the ‘Why’
Knowing why you’re launching your business helps outline your personal and business goals.
It’s crucial to differentiate between whether your business idea serves a personal ‘why’ or a marketplace ‘why.’ For instance, when your business is focused on meeting a need in the market, the business scope will always be more extensive than one focused on meeting a personal need.
Vet Your Business Idea
Put all your business ideas on paper and brainstorm ways to monetize them.
Think about which product or services you can create and how you will earn from them. Next, consider where you can sell your product or service with little or no upfront money.
Research Your Target Market
Conduct a thorough analysis of your ideal target market to map out your competition and understand customer pain points.
Is your business idea already present in the market? Does it have a loyal following? Can your business compete with them? What resources—in and around you—can you use for your business? How, specifically, is your idea different from the ones that already exist?
Figure out answers to all kinds of questions to improve your idea. In addition to idea development, it’ll also prepare you for investors who will ask the same questions in the future.
You should have a clear idea of your potential customer base, including demographic data and behavioral patterns.
The main purpose here is to ascertain whether your business model will work considering the current market landscape. If not, you should consider other ideas.
Be honest when looking for answers to these questions and researching the market. You may think you have an amazing idea, but don’t get so stuck on one idea that you refuse to see if it is just not feasible, has too much competition, or isn’t practical.
Step 2: Test the Business Waters
You have a list of thoroughly researched business ideas. Now, it’s time to validate them.
Know how well the premise of your proposed business idea works in the real world is crucial. This will save you from chasing ventures with no future and help explore different routes to marketing your idea.
Set Performance Parameters
You can’t gauge the success or failure of an idea without working out how to measure performance. Here’s a list of a few parameters you can consider:
- How many products can you send? Or how many clients can you book
- How much revenue do you estimate you’ll earn?
- How much customer interest can you generate?
- What kind of press awareness is possible?
Answer the above questions and then use them as standards when testing your ideas.
Implement a Testing Method
While you’ll find diverse methods to test your business idea, you should only deploy the fastest, most robust, and the cheapest alternative.
Below are some of the most popular testing methods that are affordable and effective. Regardless of the method you choose, this will help you better understand whether your business would be a success.
Email Marketing
Email marketing is one of the most popular and quickest ways to carry out testing. Here’s what you need to do:
- Set up a quick one-page website (called a landing page)
- List your service/product
- Add your contact email
- Source the emails of ideal potential customers and contact them regarding your business
After setting up the first contact, communicate with prospects to gauge their interest. If they seem uninterested, try to find the reason why.
Pitch Over the Phone
I believe LinkedIn is one of the best things that’s happened to the business world. You can use it to network, pitch your services/products, and establish authority.
Here, you can use the platform to find your ideal clients, track down their phone numbers, and call/pitch them to gather feedback and, preferably, as many pre-orders as you can.
Set Up a Physical Booth
You can test your business, especially if it’s product-based, by setting up a market stall and pitching to potential clients. You’ll need to build initial versions of your product and book a slot at your local market or festival.
This will help you gauge customer feedback and gain valuable insights to hone your idea’s premise to success if it fails. Let’s not forget how Innocent Smoothies initially tested their products at a festival before later being acquired by Coke for hundreds of millions.
Step 3: Create a Business Plan
So you’ve finally zeroed on a marketable business idea. Great!
Next, you have to flesh out your idea and work out the nuances, such as your business purpose, end goals, finances, and so on—all of which can be answered in a well-written business plan.
There are many business plan services out there that are affordable and reliable. One we like is LivePlan. LivePlan offers two tiers, the Standard plan at $15 per month for help with professional business plans, sample plan templates, financial forecasting, and more. The Premium plan is $30 per month and is for businesses that need more than just a plan, they also want financial tools, KPIs, dashboards, integration with QuickBooks and Xero, and more. Both plans come with a 60-day money-back guarantee.
Outline the Main Elements
Put simply, a business plan is a series of intentions that explains what you’re trying to achieve and how. It lets you present your business idea in a structured way for yourself and external parties like investors and partners.
A business plan has a few critical elements, including:
- Executive summary
- Business model and product/service
- Market research
- Marketing and sales
- Finances and projections
- Company information/Team information
- Business plan summary
You must go into detail for every element to make your business plan as straightforward as possible.
For instance, under ‘Market Research,’ you can conduct surveys, research SEO and public data, and/or hold focus groups—basically, anything that helps you understand customer needs, preferences, and behavior, and the industry and competitors.
Although it may not look like it, creating a business plan isn’t that intimidating—provided you know how to proceed. You can check out my How to Write a Business Plan post for detailed guidance to create one for your startup.
Consider Viable Exit Strategies
Have you thought about why flight attendants show you the emergency exits? Or why when you go to the movies, they always point out the exits?
That’s because having an exit strategy can help you leave without complications. You won’t feel ambushed.
You can use a business plan to figure out where your company is going, how you’ll overcome potential difficulties, and what you’ll need to sustain it. And good business plans also include exit strategies and plans. Every aspect of your company is mapped out in a business plan.
Step 4: Register Your Business
Before registering your company, you have to determine your legal business structure. The kind of entity you select will affect everything from the extent of your personal liability to how you file your taxes.
You can choose from diverse types of legal business structures when setting up a business. Read on as I detail them further:
Sole Proprietorship
As a sole proprietorship, you’ll have full ownership of your business and will be responsible for all your debts and obligations. Remember, taking this route will directly affect your personal credit.
Partnership
A business partnership involves more than one business owner, with each being personally liable for the business’s debts and obligations. Opt for this business structure only if you have someone with complementary skills to your own and who shares your vision.
Moreover, partnerships can be of different types, ranging from a general partnership to a limited liability partnership. Select one that meets your requirements best.
Corporation
As a corporation, you won’t be personally liable for your company‘s liability. Your business will be a separate entity from you and other owners, where it can own property, assume liability, enter contacts, pay taxes, and get sued.
You can choose between being an S Corp, C Corp, or B Corp, each having different guidelines.
LLC (Limited Liability Company)
An LLC is the most common structure for small businesses. It’s a hybrid that offers the legal protections of a corporation while providing the tax benefits of a partnership.
Deciding which entity is best for your current needs and future business goals is completely up to you. Once that’s sorted, you can use reliable business formation services to register and launch your business, where the third party will take care of all the paperwork, fees, and requirements.
Again, you’ll find many software services offering free business setup like Inc Authority, excluding the state fees.
Step 5: Raise Capital and Set Up Your Finances
Starting any business will always involve some money.
Since you don’t have significant funding, you’ll need to focus on minimizing costs and devising effective ways to raise sufficient capital. Exactly why you need to know how much money you need to break even, consider your funding options, and finally, create a bank account.
Do a Break-Even Analysis
Performing a break-even analysis will tell you how much money you need, which, in turn, will help you plan your finances better.
You can use it to know when your business will become profitable, your product/service costs, and your competitors’ pricing strategies. More importantly, you can figure out ways to reduce your fixed costs and variable costs, as well as tactics to improve sales to become profitable.
Here’s the formula:
Break-Even Point = Fixed Costs / (Average Price – Variable Costs)
A break-even analysis also informs you about the minimum performance your business must achieve to avoid incurring a loss. Furthermore, you know exactly where your products come from, so you can decide your production accordingly.
Secure Capital Funding
You can utilize other sources to raise capital for your business. Keep in mind that acquiring funding depends on several factors, including the amount you need, your creditworthiness, and availability.
Investors
If your business requires significant upfront funding, working with investors may be your best bet.
This can be an excellent source to raise tens or hundreds of thousands—and even millions—of dollars. However, bringing in investors may result in them demanding a more hands-on role in running your business and you sharing equity.
Business Loans
Although difficult to secure, getting a commercial loan from a bank is a great way to get adequate financial assistance. If you’re unable to get a bank loan—for whatever reason—you can apply for one through the U.S. Small Business Administration or SBA.
Business Grants
Business grants and business loans are mostly similar, except you don’t have to pay back grants. Which is why business grants are so competitive and have strict specifications you must meet to be considered.
Look for options unique to your situation to increase your chances of securing a business grant. For example, there are some business grants specifically for women entrepreneurs or minority-owned businesses.
Crowdfunding
Crowdfunding involves launching an equity crowdfunding campaign to raise smaller amounts of money from multiple sources.
You’d be surprised how helpful this option has been for numerous companies in recent years. What’s more, several reliable crowdfunding platforms are designed for different business types, which further improves your chances of raising capital.
Open a Business Bank Account
When choosing a bank for your business, consider the following questions:
- What factors are important to you?
- Are you willing to build a close relationship with the bank if they are willing to help you?
- Are you okay with being just another bank account, which is likely how big banks will view you?
You have to know your needs and narrow down your focus to understanding what you should be looking for in a business bank. Schedule meetings with different banks and ask all questions you have to find the right fit.
Be sure to consider your accounting and tax filing requirements to ensure compliance and stay on the right side of the law.
Step 6: Create an Online Presence for Your Business
It’s now finally time to create a public-facing identity for your business!
Here, you’ll have to create your brand, set up a website, and make a business email address to set you up for success, despite costing little to no money depending on your choices.
Develop a Professional Brand
You need a professional brand to stand out from your competitors, and no, this won’t have you breaking the bank.
First, you need a logo and a slogan for your company. You can hire designers and copywriters from freelance platforms like Fiverr and Upwork for as little as $15. Second, you need to create a color scheme to use across all your promotional and company assets down the line.
Third, although optional, you can consider creating a smaller symbol or avatar if you don’t want to use your full logo every time.
Create a Business Website
You must have a website—no matter how basic—to earn money from your business idea. Customers expect it, and so do your lenders and investors. Make sure to add the following details to your website:
- Your company details, like your address, phone number, name, and logo
- A brief business description—what it is and what it does
- Your product/service details
- Contact information
Building a website is surprisingly easy, thanks to website builders like Wix, Shopify, and Weebly. You can use anyone of these free tools to have one set up and running in less than an hour! No joke.
That said, you do have to purchase a domain and website hosting. This isn’t a big deal since both are incredibly cheap.
That’s it! That is everything you need to start your business with the absolute minimum amount of money. Once you sort all this out, you can focus on creating effective sales and marketing strategies to score customers and build a team to grow your business.
Trust the process and stay dedicated. Good things will come!
Source: quicksprout
How to Start a Business With No Money