by Is it even possible to start a business with no money?
It’s absolutely possible. But is it easy? NO.
It’s a myth that you have to have lots of money to start a business. But to clarify, we don’t want you to set unrealistically high expectations that you can build a highly successful business without a start-up capital from the get-go. Building a successful business requires materials, tools, manpower and a whole lot of systems that serve as the fuel to the life of the business. Heck, there are businesses out there that have spent thousands if not millions of pesos only to end up crashing and burning.
Ok… this sounds gloomy. But this is the reality! We only hear the success stories of entrepreneurs who make it big but we never hear about the 99% of the entrepreneurs who failed.
But there are TWO SECRETS that will determine your chances of becoming successful or becoming a failure. And contrary to what most people think, it’s not the starting amount of capital or the amount of funding.
The TWO SECRETS between those who fail vs those who succeed are: ATTITUDE and GROWTH MINDSET.
Attitude and Growth Mindset
If you wait until you have all the money in the world before you start a business, you’re already setting yourself up for failure. The LACK MENTALITY and DEFEATIST ATTITUDE are already holding you back. Of course when one is starting a business, you’re taking a risk. But if you don’t have no capital to begin with, you have nothing to lose! The only opportunity cost is time and when you’re creating a business from scratch, do expect to dedicate so much hours of your life into it.
Instead of focusing on what you lack, ask yourself about what YOU ALREADY HAVE.
- What are the skill sets that I have?
What are some of the skill sets I’ve gained from college? How can I apply my experience from working in a corporate job to my business idea. What am I good at? What essential skills do I know that might be useful for the business?
List down all your competencies and strengths and gauge which ones are useful for your business. These skills can vary from programming, to being able to cook a specialty dish, being able to speak 2 or 3 languages, knowing how to edit photos, or make logos, or creating websites. The possibilities are endless. Self-reflection is key.
- Who do I know?
There’s a cliche that when finding a job, it’s not about what you know but who you know. It’s very much applicable to starting up a business too. With the right connections, you’ll be able to tap into resources that you wouldn’t have known if you were working alone.
Perhaps, a friend of a friend knows a certain supplier that can give you a huge discount if you buy it directly from a manufacturer. Or perhaps, a friend of a relative who owns a business are looking for services that could help their company. Or you could even get some supplies for free if you’re lucky! Put yourself out there and don’t be afraid to ask.
It doesn’t hurt to ask for “donations” too. Give them freebies related to your business once it takes off later on.
Knowing your skill sets, competence and connections will help you develop grit and a confident attitude that could withstand the highs and lows of your entrepreneurial journey. But it just doesn’t stop there. Be prepared to learn new things along the way and be open-minded.
Always read. Adapt a growth mindset. Don’t get stuck as stagnancy is your worst enemy.
So how does one start a business with no capital?
1. Start Small
Knowing that you don’t have a capital is of course a disadvantage because you know that your competitors will be spending money for advertising, marketing, product development, etc. to get ahead of the game. Don’t fret though. You have competencies and skillsets that are unique to you and your business alone that no one else in the competition might offer.
Knowing that you are a one-man show, don’t bite off more than what you can chew. Start small. And I can’t stress this enough.
Doing small things masterfully is BETTER than doing big things haphazardly.
Take things step by step and from there, you can slowly grow your business.
2. Target a specific niche
If you create a business with no specific target market in mind, you are competing with authority websites and businesses that were only able to dominate the masses through decades of aggressive and expensive marketing campaigns and strategies. You don’t want to compete with the GIANTS. You don’t want a broad target market.
What you want to do is to narrow down your niche. For example, selling shoes is a very broad niche. Narrow it down to different categories like gender. Is it for men or women? Let’s say you chose to target women. Then narrow it down to age. Do you want to sell to kids, teens or adults? Narrowing down those categories, you will end up with a very specific niche, in this example, as “black school shoes for teenage girls”. This niche is very specific, but the market demand is huge since you’ll cater to students. You can estimate the potential by researching the population of teenage girls attending elementary school and high school in a particular city.
If you have no capital to manufacture, one way to be in the business is to become a RESELLER. Reselling is basically where you act as a middleman between the manufacturer of the product and the customer. Venturing in the reselling business is affordable and it carries less risk as there are no holding costs to inventory. You can also test which niches are the most profitable, and it is highly flexible in a sense that you can try out other niches too without spending a dime.
3. Make a Business Plan
Making a business plan is one of the most important things to do before jumping in head first. This is particularly true regardless of the amount of initial capital that you have. If you have no business plan, you won’t be able to strategize properly and your business functions will be all over the place.
Here’s a simple guideline on making a business plan even if you have no money to start a business:
- Map out a vision/mission statement
This is one of the most overlooked steps in business planning, yet the most important. Even if you’re just a small business, it’s important to ask yourself as an entrepreneur what your business stands for. What is your vision for the business for the first year? How about the succeeding 3 years? 5 years? What are the strategies you need to do in order to accomplish that vision?
Since you’re starting a business with no capital, one might have a misconception that you’re just a small time entrepreneur with little profit. While it’s true during the nascent stages of the business, the thing is, you won’t stay small forever. If you employ the GROWTH MENTALITY, you should be able to think of the future and expect to grow your business as it should. Why else would you start a business if you don’t expect it to grow? Mapping out a vision/mission statement will help you get there.
- What is the business about?
With just a couple of phrases or sentences you should be able to define what your product or service is about. If you can’t explain your business yourself then your customers wouldn’t be able to either. They just won’t get it.
What your business stands for should be clear cut. Your customers should be able to understand the value that you could provide for them. Failing to do so would make you lost in the sea of competition.
- Procurement
How do you obtain inventory (if you’re planning to venture into retail) or procure materials (if you’re in the service business) if you have no money to begin with?
This is the bottleneck point for most starting entrepreneurs. Procuring inventory is very costly and there’s a risk that the products just wont sell. While handling the risk of procuring inventory and materials is the reality in the world of business, there are alternative methods even if you don’t have any money. Here’s how:
a. Dropshipping– this is a form of reselling where you act as a middleman between the manufacturer and the customer. However, the difference between reselling and dropshipping is that the latter is an easier but more advanced system wherein you, as an entrepreneur, will only focus on the marketing aspect of the business. There’s absolutely no need to buy inventory as you’re only referring your customers to the manufacturer. All you have to do is give in the payment and shipping details of that customer to your manufacturer. You can set your profit margin to as high as you’d like. The manufacturer will take care of everything from product development to shipping to the customers.
b. Affiliate Marketing– this is a commission based strategy where you’ll have to promote the products to your customers and you’ll earn a commission from the affiliate links clicked by them. What is required, however is a website of a blog.
If you don’t have a capital to make your own website, you can start off by using free blogging platforms like Wix, WordPress.com, Hubpages, etc.
- Marketing Strategies
Since you’re working with no capital. You won’t have the funds to shell out for marketing campaigns like facebook ads or for softwares like premium SEO tools, etc.
Here are some of the most effective marketing strategies that are completely free:
a. Word-of-mouth campaigns– this traditional strategies are tried and tested even before the advent of the digital age. There’s no better way to start but by telling your family, friends, relatives, and community about your new business. It’s free and it works well because it creates a network effect that ripples into a larger community. This is very effective in creating brand awareness and establishing good rapport with new customers as people usually buy things from people they trust.
b. Social media campaigns– even if you can’t shell out money for facebook ads, you can still utilize the power of social media by joining fb groups, twitter fandoms or promoting via reddit. You can also make a twitter account to promote your products. Or make a facebook page and have your family and friends like them and promote them to their respective friends. These are completely free.
c. Cold email/call your customers – people think that doing sales pitches via cold emails and cold calls are a bit icky. But you’ll be surprised to know that it is still one of the most effective ways to generate a sale and it won’t cost you anything but your time!
Just don’t go ahead and bombard your customer with your products. You have to prepare an elevator pitch to introduce what your business is about or how your products are solving their problem. Don’t make it about you. Make it about your customer and how you’re solving a problem pain for them.
d. Send social influencers free gifts – sending a free product to a famous youtuber or a famous instagram model is one of the easiest ways to get your product to reach thousands, if not millions of customers! You should look for influencers with a high engagement rate and not just a high follower rate. Look at the number of likes per post, and the number of comments per post. If they have a high engagement rate, this means that their followers aren’t merely spectators, but they’re actively participating in the channel. This is also a great way to establish trust amongst your customers because an influencer, who they resonate with on a subconscious level, is promoting your product.
e. Make a blog and learn SEO– if you’re on a tight budget and can’t afford to shell out money to make a website, what you can do is use free CMS platforms that would allow you to make a blog! Examples are Wix.com, WordPress.com and Blogspot.com.
Every business needs digital presence. Write something about your product. Write articles related to your niche. And most importantly, learn the power of SEO or Search Engine Optimization.
Search Engine Optimization is basically just how your visitors are going to find you organically by searching on google. Since it’s organic, it’s free. While there is a plethora of premium tools out there that can help you with SEO, for starters, you don’t have to shell out money for keyword finders, you just have to learn how SEO works. An example of a keyword finder is Ubersuggest.
4. Execute efficiently
So you’ve made a business plan! Now it’s time to execute them.
It’s not just enough to make a killer business plan, however. Given the capital constraints, you should make sure that important resources like time, and most importantly, YOU, as the business owner are working as efficiently and effectively as possible. This is called project management in business.
You might be hustling with a day job, or a side gig, while working on your business idea. It’s super easy to lose focus, that’s why project management is very important.
Make a timeline for different milestones that you need to accomplish for your business. Set goals and success criteria. And make sure to track each progress for each timeline. Keep a spreadsheet on every task completed. And always make sure that you deliver on each deadline. If you stick to this routine, you’ll be able to properly manage your business and prioritise areas that need improvement.
5. Research on crowdfunding platforms or get a loan
In my opinion, you must have already accomplished the 4 steps above and created a business (no matter how small it is) before looking for fundings from a crowdfunding platform. This way, you’ll be able to easily gain the trust of your potential investors that despite the capital constraints, you were able to make things happen.
Not only do the investors looks at your business plans, but another criteria that they look for when investing in a business is the owner’s work ethic. Being able to prove to them that you can create a minimum viable business with a solid customer base is enough to gain their confidence to invest in you.
Some of the best crowdfunding platforms for small businesses are:
- Kickstarter
- Indiegogo
- Fundable
- Fundly
- LendingCLub
While these guides can help you kickstart your entrepreneurial journey even with no money, of course, it is still highly recommended to start off with savings so you’d have a safe net just in case. Here’s how: No Capital to Low Investment Passive Income Ideas.
