How to Start a Business With No Money by Roberta Codemo

How to Start a Business With No Money

Even if you don't have a trust fund, with a little creativity and a lot of hard work you can start your own business.

by Roberta Codemo
updated October 22, 2020 · 5 min read

How often do you have a great idea for a business startup, but you don't have the capital? It's possible to start a small business with little or no money. All it takes is a little hard work, ingenuity, and resourcefulness. Below are a few tips for how to start a business with no money.

Offer Services You Know Well

Build your startup based on your field of expertise. For example, put your engineering skills to use and become a consultant, or make use of creative writing talents to start a freelance writing business. Service-oriented businesses can be the best businesses to start with little money.

Often requiring little more than a computer and an Internet connection, service businesses allow savvy entrepreneurs to later use these revenues to fund product-oriented businesses if they're so inclined. Product-based businesses often require a larger upfront capital outlay than initial service-focused startups have.

Minimize Startup Expenses

When starting a business with no money, keep your expenses as low as possible. This can be as simple as working from home, to delaying major purchases, to bartering for what you need or using free resources such as free VoIP.

There are a lot of upfront expenses associated with starting a small business, such as legal fees or licensing fees. Keep in mind you may also incur business formation fees if, for example, you're incorporating your business.

Avoid Debt As Much as Possible

As tempting as it may be, try to resist the urge to put everything on your credit card, incurring a large amount of debt in the process. While it may be tempting to purchase new computers, office furniture, and office supplies outright, use your company's revenues to finance your expenditures.

Do your homework to find often-times lower-priced online sources for business cards and other branding materials, and build your website on a free web-hosting site. Being frugal in the beginning can mean the difference later between a successful business and a failed business.

Get Creative About Funding Sources

Entrepreneurs without a proven track record need to think outside the box when looking for funding to cover business startup costs. While friends and family may be there to lend a hand when money is tight, consider looking for alternative sources, including:

  • Angel investors. Angel investors are high net worth individuals who invest their monies to help grow a startup in exchange for an equity stake in the company.
  • Bank loans. If your credit is in good standing, consider talking to your bank and taking out a loan or establishing a line of credit. Some financial institutions even work with startups in their early stages. Just don't take on more debt than your business can handle.
  • Business incubators and accelerators. Business incubators provide support in a variety of ways, including mentoring and office space or shared administrative services. Business accelerators operate on a more compressed time frame, with an expectation of rapid development and return on investment; if you're prepared to hit the ground running, this can be a great alternative funding source.
  • Crowdfunding sites. Crowdfunding sites like Kickstarter and Indiegogo are popular with tech startups. Entrepreneurs set monetary goals and seek pledges in exchange for various rewards. If the funding goal is met, the site collects a percentage of the funds before distributing the remainder to the startup; otherwise, pledges are usually released back to the contributors.
  • Micro loans. Person-to-person lending sites like Prosper and Lending Club let entrepreneurs seek micro loans to fund their startups. Entrepreneurs pitch their business proposals and credit needs to potential online lenders. The sites handle the fund transfers and loan payments.
  • Small Business Administration. The Small Business Administration offers government-backed lending programs for small businesses that are administered through local financial institutions.
  • Venture capital. Venture capitalists are similar to angel investors, whereas angel investors tend to be individuals. Venture capital firms work with businesses that need significantly larger scale financing.

Get Paid Upfront

Under a customer-funded business model such as a pay-in-advance or subscription-based business, you first collect monies from the customer before providing the goods or services. In effect, the customer is financing the business.

This can be a great way for entrepreneurs to start a business with little to no upfront capital investment. Many online startup businesses use this method. However, not every business can operate this way. For example, a brick-and-mortar business may be too capital-intensive.

Start an Online Business

An online business typically requires very little capital investment, so, if your financial resources are limited, you may want to start an online business. This outlet is great for creative enterprises. For example, if you want to start an online wedding invitation business, you can upload your own custom designs to a service provider's website and then advertise your wares on the Internet. You don't need to purchase the card stock and hold it in inventory. When people purchase the wedding invitations, you'll receive a percentage of the sales.

While it may seem daunting to start a business with no money, if you truly have a passion for what you're building, you'll find a way to make it work. Be confident that people want what you have to offer and don't let the temporary lack of funds deter you. All it takes is a little ingenuity to get your business off the ground.

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About the Author

Roberta Codemo

Roberta Codemo is a former paralegal. Her areas of specialty include probate and estate law. … Read more