As a mentor of many budding startups I often come across eager wannabe entrepreneurs who think that they need large sums of money in order to start a business. I see this also online, in many forum websites that I participate in, and I am always baffled at the lack of knowledge of other options. It is indeed possible to start a business with no money, as long as you have a great idea.
The problem with many businesses failing today is not the lack of money, but rather the lack of the necessary skill sets which are needed in any business. You might not have all the skills needed, such as administration, marketing, and sales. In this case, you would be wise to partner up with someone who fills the gap you leave behind. Having no money means you cannot hire them, but they are needed from the start, so offering them a partnership is a good alternative.
Crowdfund your business
If you are not familiar with crowdfunding, then you need to get to know about crowdfunding immediately. Crowdfunding is a modern and uniquely great way of validating your proposal and getting immediate funding for it. There are many crowdfunding success stories you could relate to. You can create a campaign page on one or more platforms, such as Kickstarter, Indigogo, or Zaar. Creating a campaign is usually free and you can offer those who fund you a reward which could simply be the product or a discount, a thank you note, etc.
In order to be successful in a crowdfunding campaign, you need to treat it as if it were part of your main business. You need to create engaging content, ideally include a video presentation and promote it, promote it, promote it! Without proper promotion, you cannot expect people who do not know you to fund you. There are many ways to promote your site with no money, but they do require your time.
If your crowdfunding campaign is a success, then you have proven two main concepts. One is that people like your product or service and are very interested in it. The pricing is also probably fair. Another is that you are definitely doing some of your marketing well. If, on the other hand, your campaign fails, then you might need to improve on your product or the way you promote it.
Create a demo of the product
This option is great if you are offering a product that you can build or source within a short time. Today there are many online marketplaces that allow you to promote your products for free. You would need to pay a commission on each sale, but you can easily include that in the final price. I would personally recommend sites like Etsy or iCraft over more dominant ones such as Amazon since it might cost you in the long run.
By having a demo of the product you can showcase it and use it for all your promotion. Depending on what you are offering you might not be able to create a demo with no money, but you might be able to produce a non functional item for use on display. Of course, you need to be sure that you can deliver to the customers, but if money is all you need you will get it each time buyers buy the product.
Start by offering a service
If offering a product requires more capital than you can afford, then you should consider offering a service first. Let’s take baby products as an example. Rather than starting off by creating a line of baby products, you could consider babysitting as a start. This will not only help you generate some income but also help you interact with your target market. As an entrepreneur, you should always enjoy the field you are working in, so in this example, we shall assume that you like babies.
There are many advantages to providing a service before launching your range of products. First, it requires almost no money to set up. You can use sites such as Craigslist or Fiverr, depending on the service, to be found by prospective customers. As you build your base of customers, you can use them to do reliable market research on the products you wish to launch when you have the necessary funds. In this way, you can get an idea of whether your products are wanted and how much you can charge for them.
Another great result of having started your business by offering a service is that you already have a client list. The people on this list can become the first customers of your future products. You would have hopefully built a good relationship with your customers, in this case, babysitting, and this would possibly lead them to start recommending your products to their friends. By offering a related service first you would be giving your product the highest chance of success, using no money.
Get investors on board
There are many types of investors and I will be writing more about this in future articles. Whilst equity investors put money in your business in exchange for percentage ownership, angel investors may sometimes ask for dividends. You need to be sure that you understand the consequences of getting investors on board. This is especially true when you need to agree on a proper company valuation.
Investors bring their money, but also their knowledge, connections, and demands. If you have a good enough product which investors are ready to buy into, then you might want to consider this option. The advantage of investors is that you can go from no money to having an operational business quickly. The downside is that an investor would normally expect to influence company decisions and might prioritise a return of investment over other priorities.
It is certainly not easy to start a business with no money, but as I’ve shown you it is possible. Bootstrapping and organic growth may not seem glamorous ways to grow your business. However, they can increase your chances of surviving an economic downturn. It is important to invest your time in learning. The more you learn the more you can do with no money.