Starting a business requires a certain amount of planning, which includes determining how much capital you'll need. It's possible to start a business with little or no money, but doing so can test the limits of your creativity and commitment. It's helpful to know what options you have if that's your goal and you intend to grow it on a shoestring.
Key Takeaways
- Starting a business with no money is challenging, but not impossible.
- Exploring creative financing options and ways to bootstrap a business can help you raise the capital you need to get started.
- Borrowing may be a possibility but it's important to consider whether that's affordable, based on your estimated revenue projections.
Overcome the Challenges
An undeniable truth about starting a business is that money matters. A 2022 survey from Skynova, which aims to help small businesses get paid faster, asked startup founders to name their top reasons for failure. Forty-seven percent cited a lack of financing while 44% said that they simply ran out of cash.
Starting a business with no money or minimal capital can limit what you can do to grow and scale in the early stages. For example, when you have no money it can be more difficult to:
- Hire employees or support staff
- Purchase necessary inventory or supplies
- Advertise and market your business
How impactful a lack of money is can depend on the type of business you're hoping to start. If your budget is limited, then you might consider what kind of businesses you could start with zero investment.
Be sure to conduct market research before you even begin thinking about developing your idea. Determine who your competition is and how you plan to target your intended customer base. You may want to consider getting the opinions of potential customers through a focus group or via social media. You can also check with the Small Business Administration (SBA), which offers free educational resources to help you learn more about the basics of starting a business.
Develop a Low-Cost Business Idea
Some businesses cost more to start than others. For example, you may need $100,000 or more to open a restaurant while you may be able to get a food truck up and running for a fraction of that amount.
The best businesses to start when you have no money are ones with minimal upfront costs. They're the kinds of businesses you might be able to start from home with nothing more than a laptop and an internet connection.Here are some of the best low-cost business ideas you might consider.
- Content creation for online businesses
- Freelance writing or blogging
- Virtual assistant business
- Social media manager or consultant
- Online course creator or online tutor
- Online bookkeeper
- Dropshipping
- eBay reseller
- YouTube or TikTok creator
- Graphic designer
- Video editing
These are all businesses that you could run from home without having to spend a lot of money. There are also some businesses you can start offline that don't require startup cash.For example, you might start a dog-walking or pet-sitting business, become a tutor for local students, or teach art or music. These businesses allow you to leverage your skills to make money without spending any money.
Be sure to check local laws first if you're interested in starting a business that's subject to regulation, such as a home daycare or home bakery.
The Critical Role of Budgeting
When starting any business, it's important to have a budget to follow. Your budget serves as a financial guide to help you understand your costs when getting your business off the ground.
What your business budget looks like initially can depend on what kind of business you're starting. If you're pursuing a low-cost business plan, your startup costs may be much lower than someone who's starting a brick-and-mortar business.
In terms of how to make a small business budget prior to launching, it's important to add up all of the costs you expect to have. That might include:
- Purchasing inventory or supplies
- Renting or leasing a business space
- Buying equipment
- Paying for marketing or advertising
- Hiring staff
Your budget should be as detailed as possible so you have a realistic picture of what your spending might look like. You can then compare that to an estimate of what you expect your sales or revenue to be once your business launches.
Budgeting for a business isn't something you do once, either. It's important to review your budget monthly to see how cash flows in and out of the business. Keeping expenses to a minimum is one of the best ways to maximize cash flow while your business is still in the fledgling phase.
Creative Financing Options
There are a number of ways to finance a new business without having to spend any money yourself. Comparing different options can help you decide what might be right for you.Consider the following options:
- Small Business Grants: These grants provide money to support entrepreneurship, and unlike a loan, it doesn't need to be paid back. The SBA supports a number of grant programs, including ones for minority-owned, women-owned, and veteran-owned businesses.
- Crowdfunding: This option allows people to contribute money to campaigns in small amounts in order to help entrepreneurs launch their businesses. Some of the most popular platforms for seeking support include GoFundMe, Indiegogo, and Kickstarter.
- Microloans. If you're comfortable borrowing to fund your new business, you might consider a microloan. The SBA's microloan program allows you to borrow up to $50,000 to start a business and you can repay it over a period of up to six years.
- Credit Cards: Business credit cards can help you to pay for the things you need to start or run your business and they can be easier to qualify for than loans. Depending on which business credit card you choose, you might be able to earn cash back, points, or travel miles on your purchases.
- Peer-to-Peer (P2P) Lending: Peer-to-peer loans allow you to borrow money from the crowd. Investors contribute money to fund loans and borrowers pay them back over time, with interest. Loan rates and terms can depend on your overall creditworthiness.
Traditional small business loans might be harder to get if you're still in the beginning stages of starting a business. Lenders typically require you to have one to two years of operating history and a minimum level of revenue to qualify. Working on establishing business credit could help you to qualify for loans later once your business is up and running.
If you're using a crowdfunding platform to raise money for a new business, be sure to read the fine print to understand what you'll pay in fees and what happens if your campaign isn't fully funded.
Bootstrapping Techniques
Bootstrapping simply means using the resources you have at hand to fund your business. Choosing to bootstrap a business could help you avoid taking on debt, but whether it's realistic can depend on your financial situation.
Some of the ways to bootstrap a business include:
- Using funds in personal savings accounts or a certificate of deposit (CD)
- Borrowing against your 401(k)
- Taking an early withdrawal from an individual retirement account (IRA)
- Pulling equity out of your home
- Selling things you don't need for cash
- Putting together a fundraiser locally to ask for donations
- Asking friends and family for a loan
Each of these options has pros and cons. For instance, borrowing against your 401(k) or taking money from an IRA can shortchange your retirement savings since the funds you take out won't benefit from compounding interest. Not to mention, you could be subject to a 10% early withdrawal penalty on distributions.
Taking a home equity loan or line of credit carries its own risks. If the business fails, you'll still be responsible for paying back what you've borrowed. Should you default on a home equity loan or line of credit, your home could end up in foreclosure. The bottom line is that before you bootstrap, it's important to look at both the advantages and disadvantages of doing so.
Leverage Free Resources
Starting a business is no easy task and you may need some help along the way. You could hire a business coach but that requires money, so it's helpful to know where you can find small business resources for free.
Here are some of the places you can look to get free help when starting a business.
- SBA: As mentioned, the SBA offers a number of resources to help small business owners, including the SBA loan program as well as educational articles covering how to start a business.
- Small Business Development Centers: Small Business Development Centers are local organizations that assist small business owners with things like planning, accessing capital, and scaling for growth.
- SCORE: SCORE is a network of mentors who help small business owners find success. Entrepreneurs can connect with a SCORE mentor to get help with planning and starting a business, growing a business, or exiting a business when they're ready to move on.
- U.S. Department of Veteran Affairs: The VA offers support to veterans who are interested in starting small businesses. That includes access to educational resources and training for would-be business owners.
- National Women's Business Council: The National Women's Business Council is committed to helping women entrepreneurs succeed. Specifically, that centers on helping women in STEM get the capital they need to start their businesses.
You can also check for free resources locally. For instance, your local chamber of commerce might sponsor free workshops or seminars aimed at helping budding entrepreneurs. You can also look for local nonprofits that serve the small business community.
If you're starting a business with no money, there's one more free resource you can utilize. Social media can be an effective way to market your new business without spending a dime on advertising. It may take a little longer to build an audience if you're not actively spending on ads, but it's a zero-cost way to spread the word about your business.
The Federal Trade Commission (FTC) has specific rules for advertising and marketing that business owners must adhere to in order to avoid penalties.
Network and Collaborate
You might be starting a business on your own but if you want it to grow, it can be helpful to focus on building the right connections. That's where networking and collaborating come in.
Having a sizable network could benefit you in different ways. For example, you might have a connection who could introduce you to someone who's interested in investing in your business. Or you might be offered an opportunity to promote your business on someone's podcast or YouTube channel, which is a great way to get free exposure.
In terms of how you build your network, it can depend on what type of business you have. If you're starting a brick-and-mortar business, for instance, then you might want to look for connections locally first. That might include joining your local chamber of commerce or small business development council.
If you're starting an online business, then you could use online resources to connect. LinkedIn could be a good place to start your networking efforts. You can also branch out to other social media platforms to forge professional relationships with business owners or influencers in your niche.
Build a Robust Online Presence
With 62% of the world's population using the internet and 85% of Americans getting online every day, it makes sense to establish a virtual presence for your business. This can include setting up a website or blog, launching a YouTube channel, getting active on TikTok, or building a presence on Facebook, X, or Instagram.
One of the best things about using social media to market a new business is that it doesn't have to cost anything. While you could spend money on ads, it's free to create profiles on social media platforms. If you're interested in setting up a website or blog for your business, platforms like Wix allow you to do that for free.
If you want to build an online presence without spending money, you can certainly do so. It's also important, however, to think about which channels will offer the best return on investment for your time. Understanding where your potential customers gravitate when they're online can help you identify which social media channels are worth targeting.
Can I Start a Business With $0?
It's possible to start a business with $0 if you're choosing something that utilizes the skills and resources already available to you. For example, if you're interested in getting paid to write, you could start a freelance business from home and all you'd need to have is a laptop and internet connection.
What Is the Best Business to Start With No Money?
The best business to start with no money is the one that allows you to use your skills, knowledge, and resources in a way that produces maximum return and maximum enjoyment. If you love dogs, for example, then starting a dog-walking or pet-sitting business could be a good fit and it doesn't require a lot of money.
What Is the Easiest Business to Own?
The easiest business to own is one that generates passive income. Passive income is money that you earn without having to do a lot of ongoing work. For example, blogging can provide a passive income if you're making money from affiliate marketing or online ads. You could also make passive income by selling digital products that you only have to create once, such as printables, journals, or ebooks.
The Bottom Line
It's possible to start a business with no money if you have an organized plan and strategy. Knowing what you'll need to do to get your business started is the first step. Once your business is up and running, you can explore the best ways to grow it in order to achieve the level of success you desire. That might include applying for small business loans, which can help you to scale and expand.
