updated 29th December 2023
This article is dedicated to learnings from the book “How to Start a Business Without Money”. Seek out businesses that don’t need high upfront costs, which don’t need lots of money to run, and start making money from day one because customers pay in advance. This book is for students trying to find their way to fund college and create jobs for themselves, retired people who find their pension pot has shrunk while not looking, those jobs are at risk, and those who are at home trying to juggle bringing in money while raising children. Also for people who think that starting a business requires lots of money.
The key message is the very best thing about starting a business with no money is that if it fails, you will have lost nothing. You will have gained experience and self-knowledge. The only thing you will have lost is the fear that your life was passing you by, the fear you would never get around to following your dream.
How to think free
Start your new business from home, it is free, it is convenient, and requires minimal organization. You are already paying mortgage or rent, utilities so it makes sense to take advantage of that. If you don’t like the idea of working at home all day, then work away from home while using it as a base. Depending on the kind of venture you are starting up, that might mean the local cafe or the library with free wifi and an electric socket so you can plug your laptop in.
What can you do that someone else might be prepared to pay for? Services that other people will be prepared to pay good money for. If you possess a skill or knowledge that other people don’t, or would need to invest time and money in learning for themselves, that immediately puts you at an enormous advantage. If it is a skill you can teach others, it can become a business.
Use the resources you have at your fingertips, the chances are you already have access to them that you can use to start a business without realizing it. Have a car, and use it for local delivery services. Have a kitchen, you can start a catering business.
If you are starting a venture without any money, you will have to do most of the work yourself. You will have to plow everything you earn straight back into the business. This is the only way you will be able to build up enough cash reserves to invest in new equipment, and new premises and progress the venture from hand-to-mouth existence to one which you can invest in its future.
Start your business in your spare time and only give up your day job once it has become established enough to be able to pay you a wage. Now with technology, is the perfect low-risk solution to starting up without any money. If the business does not work out, you still have your job. If it does, the transition to being your boss will be a lot less stressful. If you do not have a full-time job to hold on to, then if possible get a part-time job that will provide you with some money to contribute towards the rent or the mortgage and household bills while you are starting your business.
Get the equipment you need to start your business by seeking out second-hand stuff that someone else no longer wants. If you are lucky you might get to kit your venture for free. There are free online advice and networking resources for anyone starting up a business and there are lots of free articles and videos. TED has a wealth of free talks and speeches from participants which will inspire and inform. Your library will have lots of copies of trade magazines in the industry you wish to enter and will provide you with invaluable free insight. Learn from YouTube the useful practical skills that apply to your business.
Once you have acquired a website address for your business, set up an email account for it with your company name as the bit at the end. It will make your venture look more professional. Sign up for social media to promote your business without spending money.
Can you make use of existing local infrastructure, transforming it from something that costs a fortune to something that costs next to nothing and in the process utilizes unused resources and regenerates and breathes life into another business?
Ideas that will make money fast
When starting a business without any money, you need to avoid upfront costs, you also need to choose a venture which will generate cash from day one. This means finding a product or service and a market that makes it easy for the customer to say yes, not no.
You cannot afford to sell a product or service that people can delay and put off buying indefinitely. You will go bust. Other better-funded businesses might be able to afford to wait. You can’t.
Choose a product or service people instantly understand. Neither do you have the time or money to start educating potential customers about why they need your product or service. Some people create amazing businesses by filling gaps people never knew they had in their lives. If you don’t have time or money on your side, what might work for a well-funded start-up will not work for you. You need to choose a product or service which people will instantly understand or get it.
Other than choosing a product people understand, you need to choose a route to market that your customers already feel comfortable using. It is always a good idea to combine two or even three routes to market in case one fails. Selling via retailers and your website. Via a push cart or a stall. That way you will find out which works best and you get to reach different groups of people. You have a fallback option if one route to market fails to work, you can reach your customers and they can buy things from you.
If you are starting without much money, choose something that is relatively low-cost per unit. Buying stock will cost less and in a tough economic climate people are reluctant to shell out for high-ticket items. Ideally, you want a product or service that people will be prepared to buy without having to think too much about whether they can afford it or not, and that they don’t have to consult anyone else about.
Fixed cost overheads are the ones you have to pay regardless of whether you are selling something. They are the big upfront costs of renting offices, paying business rates, paying staff, and storing stock. They are relentless and unbending and have to be paid whether you are selling five units or none at all. Fixed costs are bad for start-ups hoping to do without money. Replace fixed cost with variable cost and adopt a new model, pay as you go. Pay as you go means that all your costs whether buying in stock or hiring staff are linked to your sales.
Always ask customers to pay you upfront, whether they are individuals or other companies. Or ask half upfront, half later. That way you know your costs are covered for the work you are doing. If you are lucky, you can use this approach to fund your entire venture.
Avoid ventures which need to reach a critical mass before they can get going. Avoid online businesses that rely on advertising to make money. Avoid online businesses that aim to make money purely from linking to other sites. Business success is not about being complicated and clever, it is finding the gap in the market for a product or service people need and doing it faster, better, simpler, or more effectively.
How to spend nothing on premises
Where are you going to run your business? When you first start, it makes sense to base yourself at home but chances are you are also going to need somewhere to hold meetings, store things, or simply sell your product or service directly to customers. Meetings will be good to use hotel lobbies, it is a cheap place to hold meetings. They are classier than Starbucks and for nothing more than the price of a coffee you can hold a meeting in the plush surroundings. You must never forget that you are in a public area. Other people can see who you are meeting and they can hear your phone calls. If you are running a recruitment firm and need to interview a candidate, it may be good to hold it somewhere private. If you need a space where customers can come and buy your products, you can start with your home.
If your house is not enough, then get a friend to play host. Failing that, borrow any usable space and call it a pop-up shop. Pop-up shops are temporary shops that can be set up in any kind of space for a day, a few days, or a few weeks. Another great way of selling your products in a retail environment without having to open a shop yourself is to take space in a “concept” store, a communal retail space that sells a mix of brands, products, and services provided by a range of small local businesses. If you need more storage space, you can rent a self-storage space and run the operation from there. Self-storage units are great places to run a small business.