While it may not be considered optimal, starting a business with no money is certainly possible. But to make it work, you’ll need to take a number of things into consideration, from funding opportunities to making the most of what you have to begin with — even if it’s just a great business idea.
Not convinced? Then take a look at this seven-step plan for how to start a small business without money:
- Take stock of your current situation. If you already have a job, keep at it. It’s much easier to start a business when you have a steady income, reliable benefits and don’t need to spend valuable time job-hunting or looking for your next paying gig. If you haven’t already done so, evaluate your current financial situation and make a plan to save towards future business-related expenses. Any amount, no matter how small, may help you get your new venture off the ground.
- Come up with a rock-solid low-cost business idea. If you don’t already have one, dedicate your free time to investigating what the best business to start with little-to-no money might be. If it’s a low risk venture, even better. You should also familiarize yourself with industry trends, research your target audience, do a competitor analysis, determine the value of the products and services you plan to offer and figure out how to address potential challenges. You may find that your first idea (and second, and third) just wouldn’t succeed without a significant amount of funding. That’s okay; move on to the next low-cost business idea until you find one that will work.
- Use your research to create a business plan. According to the National Federation of Independent Businesses, there are seven essential parts to a business plan: an executive summary, a company description, an explanation of your products and services, a market analysis, a sales and marketing strategy and plan for implementation, an outline of your business’s organizational structure and a financial plan with projections. Having this information on-hand will help you raise money to launch your business. Here are some tips we’ve put together to help you create a business plan.
- Pilot your business and evaluate your feedback. Before you start asking people for money, it’s a good idea to do a trial run. Not only will it help you learn whether your idea works, but it will also give you valuable information to improve upon it. In exchange for trying your products and services for free, ask a few prospective customers to provide you with detailed feedback. If their reviews are positive, you can use them in your marketing as testimonials.
- Try raising money through crowdfunding. While it does take some effort to create a crowdfunding campaign, you’ve already done the hard part by writing a business plan. Translate that vital information into a compelling message that inspires people to donate and help you reach your funding goal.
- Seek out potential investors. This may seem intimidating, but networking — both in person and online — may lead to a meeting with a venture capitalist firm or individual angel investor. At the very least, you’ll learn more about your idea’s potential and will get some valuable advice from experienced business owners.
- Consider applying for a small business loan. It’s worth checking out funding options for first-time business owners at the federal, state and local level. In addition, you can also contact your bank about getting a small business loan and look into small business lending marketplaces.