You’ve got a great idea. It will make tons. But you have no cash. Not to worry. Figuring out how to start a business with no money is your new priority.
Entrepreneurs are magicians. They come up with solutions where there aren’t any. And starting a business without money will be a new trick to master.
I have operated businesses with my own money, borrowed money, and absolutely no money. Below are some tips on how I did it.
1. Define your business type
There are essentially two business models: those that sell products and those that sell services. And if you have limited resources, you should choose service. The main reason is most service businesses require more sweat equity than financial.
But product businesses can be created without a boatload of cash. With the popularity of drop shipping and website templates like Shopify, anyone can launch an online store. Drop shipping makes you the middleman.
Sign an agreement with a skincare line supplier, collect payment from a customer, and the supplier sends the products to your client. You own zilch.
With either business type you have to build a reputation, market your business, and respond to customer inquiries, order status request, and good or bad reviews.
2. Seek grants
Okay, so we know the business type we are launching. Let’s find some money.
If you have little to no cash to fund your side hustle, apply for a grant for your small business. Grants are a terrific option and don’t require repayment. Not always easy to get, but well worth the effort. Start researching government grant information here.
But be careful, just because grants are free doesn’t mean they are not restricted. Most have specific guidelines. First, your business will need to meet minimum requirements that will include having an EIN number, current incorporation status, and a business checking account to name a few.
Second, you’ll need to follow any distribution of funds guidelines. Apply immediately when you find a suitable match for your small business.
3. Get a loan
Small business loans are the most popular route to take with no money. They provide cash to get things started now. Don’t delay the launch of your new venture. Start purchasing equipment and or supplies. Hire a web designer. Lease your office. Hire staff.
In addition to getting the ball rolling without using your own money, business loans help build credit. Sure, being approved for your first loan may be tough but there are several lenders out there to choose from. Once you pay off loan #1, your credit should improve. So, when you need additional cash, you will pay less interest.
4. Barter with others
The fourth way to start a business from scratch without money is to barter. What is a bartering? The exchange of goods and or services. To minimize an outlay of cash, companies choose to exchange these goods or services between one another.
For example, I joined a barter exchange years ago to promote my janitorial service. The exchange acts as an agent between me and others with limited cash. We agree on a value for our service/product and barter. It’s as simple as it sounds.
Sound interesting? Join a barter exchange, search for products or services that you need, and complete the transaction. It’s a powerful business option to keep cash in your pocket.
5. Family & friends
Ask your family and friends for financial help. Ever heard of Nike? Of course, but did you know that founder Phil Knight got cash from his dad to finance early shoe samples?
Nike enjoys annual revenue of nearly $50 billion dollars. The athletic company is ubiquitous and celebrates branding deals with world-class athletes like Michael Jordan and Cristiano Ronaldo.
And Mr. Knight isn’t the only one. Mark Zuckerberg hit his dad for a sizable loan to start Facebook. Can you image? Think about life before social media and giants like Twitter, Instagram, and Facebook. Weird huh?
Michael Dell must have wondered how to start an online business with no money too. Because just like the others, Dell got money from his parents. Dell Technologies does $100 billion in annual sales today.
6. Low-cost businesses
Starting a business without money works best with a business with low overhead. Makes sense, right? Sure, you can start a local laundromat. But the build out for this business will cost several hundred thousand dollars.
Launch a low-cost business like consulting, blogging, how-to course, lawn care, maid service, or pet sitting. Not only that, but you can also generate returns quickly too.
I understand that these types of business may not be your dream choice. I get it. But why not get your feet wet as an entrepreneur step by step? Who says you cannot create business #2, #3, #4…