You have a great idea, and you want to translate it into opening a business. There is one big caveat, and you are short on cash. And for most aspiring entrepreneurs, getting hold of the much-needed capital is usually the biggest challenge.
So how to start your own business without any money?
Lack of funds should not deter you from pursuing your entrepreneurial dreams. With confidence in your idea and a clear vision of how you are going to execute it, you can do it. Once you have that covered, getting the funds to support your dream may not be as difficult as it seems.
Before budding entrepreneurs can start a new business, they usually need to secure the right amount of capital which covers everything from equipment financing to emergency funds. Most people think that a business can’t start without capital, but there are various ways for individuals to start a business with zero capital.
Take note of the following points when developing low-cost business ideas:
Maintain a day job
Keeping and nurturing a practical streak is essential for individuals who are exploring business options with a small amount of capital. The initial stages of starting a business will typically render zero profit, making it important for entrepreneurs to keep their day jobs at least for the time being.
Being practical is extremely important when you are toying with the idea of starting a business. You need a steady source of income before you can set up your business, so it’s advisable to hold onto your current job. By retaining your present job, you will be more secure when you need to take risks.
You will, of course, need to spend extra hours and work harder. But the transition from being an employee to a business owner will be far smoother as you won’t have additional expenses to worry about.
Having a day job while embarking on a new business ensures that business owners have a steady income stream while the business is still in its developmental stages. This also ensures that they are safeguarded against all possible risks. In the absence of a day job, risks are significantly lowered.
While this requires individuals to put in longer hours and make more sacrifices, keep in mind that this will make things easier once the transition from employee to business owner takes place.
Ask yourself what you can do and get for free
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 on Canva? Could you barter and trade your skills/products/resources with someone else instead 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.
Analyse the market
You have a brilliant idea that you know will definitely work, but what about your competition? Will it be difficult for a rival to copy your idea and repackage it in a better way? A potential investor will ask you this when you approach them for funding. It’s very important to understand the market you operate in and your competition.
Entrepreneurs don’t have to worry about small business costs, at least in this particular stage in their business. Conducting a thorough analysis of the market and its audience is important to map out the business’ competition and develop what makes their business unique.
What if the business idea is already present in the market and has a loyal following? How will the business shape up against competitors? Answering these kinds of questions not only helps the business idea improve and develop but also helps business owners prepare for investors who might ask the same questions in the future.
You should first look at the trends and identify challenges that your business may face. The next step is to understand how you are going to address those challenges to stay profitable.
Develop a killer business idea
Coming up with a great business idea is just the beginning of your journey as an entrepreneur. There are many more steps that you need to take before you can get started. Fleshing out your business idea is one of them, and it’s very critical to the success of your venture.
Business owners should keep in mind that their business is only as good as their business idea. Working on a business idea and consistently making improvements to it is important if entrepreneurs want to make their business work without the assurance of a capital source.
If the business itself is backed by a business idea that is unique, brilliant and profitable, the business will have no problem attracting investors and creating profit in the near future.
For a business idea to reach this stage, business owners must first determine the needs and preferences of their target market to determine whether or not their business is truly a standout in the industry they’re getting into.
Is your business idea really unique? What value will it generate? Is it something your target audience really wants? Or is it something you think they’d want? Getting answers to these questions is important to determine whether or not your idea works.
When you create a website, make the content shareable.
It’s great to reference some of the leaders in your space, but when you are developing your own brand, it’s important to create unique content on a single hub. A site that your readers and viewers can reference back to, for more of your incredible content.
Build a list
Email is the best form of currency online, and building an email list is one of the most important tools in building a business. As you develop your shareable site, begin building a list of emails of the people that visit your site. Then continue to provide them with value. This will translate into buyers for the future launch of your product or service.
Adding in an opt-in form on your website and having a place to store your emails are the first two steps to building your email list.
Assess Your Capital Needs
You require money to start your business, but how much do you really need? Without a clear idea, you run the risk of coming up with an unrealistic valuation of your business, which will put off investors and get your loan application rejected.
So before you start wondering how you should raise money, you should focus on evaluating your funding requirements. How much do you need to get started? How exactly are you going to use the funds?
Seek out potential investors
Business owners don’t have to worry about capital if they are able to attract a good set of investors willing to invest in the business and help it grow. But how can budding entrepreneurs secure investors? This can be done by presenting a business idea that is well-developed and profitable.
Entrepreneurs can seek out potential investors by participating in conferences, forums, bazaars and weekend markets relevant to their industry where investors are more likely to be present. They can also consider crowdfunding to secure investors.
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.
Explore Crowdfunding Platforms
Crowdfunding platforms such as Kickstarter have changed the way entrepreneurs are raising money to fund their new businesses. Whether you want to sell a new software tool or set up an organic noodle bar, you can get people to invest in your business.
Network with People
When you don’t have money to start your business, you must find the right people who can help. You may attend events and trade shows where you can find potential investors. You may also join various online forums on social networking sites where you can find useful tips and resources to bring your business to life.
Most venture capitalists and investors are quite active on social media, so if you can wow them with your idea, you may find a great way to get started on your business dream.
Run a Trial
Want to be sure if your business idea is indeed unique? Run a test and find out. A pilot will give you the confidence you need to take your idea to the next level and mitigate risk. You can start on a small scale by giving away some freebies to a few people in your target audience group to see how they respond.
A small trial can give you some new insights to grow your business and identify challenges that you might have overlooked.
Gather market feedback
If you are planning to get into a completely new business, it will help if you got a second opinion from someone who knows the market and the challenges involved.
A business idea that looks good on paper may not be that attractive when you actually get into it. An expert’s opinion may help you look at things from a different perspective and gain more knowledge that you may lack.
No matter how good a business idea might seem on paper and in theory, keep in mind that things might be different once the idea comes to life and gets applied to the industry itself. This makes market feedback important for fledgling businesses.
Gathering substantial market feedback helps business owners determine whether their business idea is feasible enough to be released in their chosen industries or if the idea needs more polishing and revision to make it more suitable to the preferences of the target audience.
Consider getting a business loan
If capital is really needed and business owners do not have enough finances to spare, getting a business loan might be a good idea to secure a startup capital minus the financial burden, at least for the time being.
Financial institutions such as banks and small business lenders can offer assistance to new businesses as long as an individual has a good credit history and is able to justify the need for a business loan.
However, business owners also need to keep in mind that repaying business loans take a long time and could become a burden to the business, especially if the business fails to make payments on or before the deadline.
Business loans also have accompanying interest rates which are paid along with the original business loan, affecting the business’ monthly outflow if finances are not well-taken care of.
Principles of Successful Entrepreneurs
Studies have shown that successful entrepreneurs use the means available to guide them to success. The means can be described in these principles:
When the best entrepreneurs set out to build a new business, they start with their available means. What cards do you have to play with? It does not matter if they are good or bad. You have what you have, and you take it from there.
The means you set out with are:
- Who you are - your personality. Are you introvert or extrovert, a nice guy or a pain in the ass? Does a perfectionist like Steve Jobs or a relaxed guy like Mogens Thomsen?
- What you know - your education, work experience, spare-time activities and knowledge from books and YouTube.
- Whom you know - family, schoolmates, former colleagues and the ones you have not met yet.
Affordable loss principle
It is often said that real entrepreneurs take big economic risks to win big - or lose big. Still, the most successful entrepreneurs limit risks by understanding what they can afford to lose at each step, instead of seeking large all-or-nothing opportunities.
Instead of borrowing money to produce ten products at a time they produce one product, start selling, earn money and then produce product number two.
Crazy Quilt principle
When a prosperous entrepreneur does not have the resources he needs, he seeks partners. He takes in partners early on in the venture as a way to fill gaps and reduce uncertainty. Partners can be family and friends and people he meets on the way or seek out for strategic purposes.
A successful entrepreneur knows that the future is uncertain, and in a split second everything can change. Instead of making plans for the worst-case scenario, embrace change and make the best of it.
Often, an unexpected incidence can be absorbed in your company and used as a stepping stone to innovate and make better products.
They use the term “Make Lemonade” when faced with a bad situation. By this, they mean, that you will have to find a good solution if you are suddenly faced with a sour lemon, which cannot be eaten. The solution may be to sprinkle the lemon with sugar, pour water and you get nice lemonade.
Most people want to control their own lives; it also applies to successful entrepreneurs. The other principles are used to increase control over one’s life as an entrepreneur.
When you work based on your own resources, you will corporate with people you have chosen to work with, not invest more than you can afford to lose and see obstacles as opportunities. Working like this, you have a better chance of controlling your own life.
At least you’d have a much better chance than if you had to manage resources controlled by external sources.
This principle can be described as if you were the pilot of your own plane (your business). You decide the course, and you steer clear of the immediate threats, around thunderstorms and ash clouds. You never fly higher than you should, and you always keep an eye out, should you need to, for possible landing space.
The most important thing is to enjoy the process and know that you don’t have to make it perfect. Start today. If not now, when?