You’ve decided you’d like to start a business and you’ve got a great idea. There’s just one thing standing between you and your entrepreneurial dream: money… or more accurately, a lack of it. You may have heard stories about successful entrepreneurs who started great businesses with no money, but is this really possible today? Yes, but you’ll need to plan well. Here’s how to start a business with no money.
Can you start a business with no money?
Yes and no.
We say ‘no’ because to grow your business and make a profit, you need to invest money into overheads… there’s simply no way around this.
If you’re selling a product, then you’ll need to pay for raw materials to make the product, and you’ll need to pay for storage and shipping etc. If you’re selling a service, you may not need to pay for physical materials, but you’ll often need to invest some money in spreading the word about your services, whether that’s buying a domain name for a website or paying for marketing materials like leaflets or Facebook ads.
To grow your business and make a profit, you need to invest money into overheads… there’s simply no way around this.
On the other hand, we say ‘yes’ you can start a business with no money because it’s possible to minimise all of the costs associated with starting a business and start your company with very little money. You’ve just got to be a little strategic. And once you’ve done that, there are several ways to cover the rest of the costs even if you have no money right now.
So, how exactly can you do this?
Bootstrapping – the best way to start a business with no money
If you’re not familiar with bootstrapping, it simply means starting your business with little to no outside support. It’s what many entrepreneurs and new business owners mean when they say they built their company ‘from the ground up’. To do this, you’ll generally need to rely on whatever money you have in your personal bank account and then reinvest the cash that comes in from your first sales.
If you’re not frugal by nature, it may sound impossible to start a business with a measly amount of money, but it’s very doable.
Start by making a list of all the things you think you’ll need to start your business. On that list may be office space, staff, advertising, a website, raw materials (if you’re selling a product), etc.
Now, consider how you can get these things as cheaply as possible.
Here are a few ideas.
If you choose the bootstrapping route, you’ll generally need to rely on whatever money you have in your personal bank account and then reinvest the cash that comes in from your first sales.
A physical office space can cost upwards of £20,000 per year. And even cheaper co-working spaces can carry a membership fee of at least two thousand pounds. Few brand new businesses need an office on a daily basis, so consider eliminating this cost in entirety by doing without an office until your business is in profit. Instead, buy a virtual office address to use for official mail. This can cost as little as £20 for the year and some PO Box addresses are completely free.
If you need a special space to work in, consider moving into (and working out of) your parent’s home. You won’t just benefit from free office space, you’ll also save on rent – and you can use the rent money you save to fund your business. But holding client meetings in your parent’s house doesn’t scream ‘I’m a serious business owner’, so take advantage of a fancy nearby coffee shop and hold your client meetings there. You’ll only need to pay £2 for a cup of coffee.
It’s common to get attached to the idea that you need staff to help you get your business off the ground. After all, you don’t know everything about everything, do you? However, every member of staff costing at least £18,000 per year, a quick and simple way to save money is to do everything yourself until your business is bringing in money.
Take advantage of automation and planning tools that can do some of the repetitive everyday tasks that can sap your time. These include meeting scheduling software like Calendly, social media management suites like Hootsuite, and marketing and sales automators like ActiveCampaign. Best of all, most of these tools have free basic plans, allowing you to use them without spending a penny.
Take advantage of automation and planning tools that can do some of the repetitive everyday tasks that can sap your time.
You need to get the word out there to get customers… right? That’s true, but don’t get sucked into spending tens of thousands of pounds on PR or advertising. We’ll let you into a little secret. When we first started The Ambition Plan, we naively plunged our savings into PR and got zero return on that investment… that’s right, we got zero clients, no long-lasting boost in web traffic and zero ticket sales for our events. But once we started using the free methods we’re about to share with you, things took off.
Don’t make the same mistake we made! There’s power in slowly spreading the word about your business and the best ways to do this include:
- growing an organic social media audience
- speaking at events for free
- approaching your ideal client and offering to hold workshops/taster sessions
- appearing on relevant podcasts
- asking your network to share your company’s details with their network
These are just a few ideas, but we hope they give you a good idea about how to approach bootstrapping. Whenever you find yourself thinking you have to spend money on something, pause and ask if there’s another way to get the same result for free. The free alternative will usually take time and effort, but the knowledge and contacts you will gain from doing things this way will prove useful down the line – trust us!
How to get funding for your business idea
Another effective way of starting a business with no money is to get someone else to put in the money. And unlike 20 years ago when your only option would have been to get a loan from the bank or a family member, the options today are much better.
Here are a few to consider.
Crowdfund your business
Crowdfunding is becoming a popular way for businesses to raise the money they need to get started. So, what does it involve? You’ll list your business idea on a crowdfunding platform, such as Kickstarter or GoFundMe, explain how much money you need and what you need it for, and then activate your campaign to allow people to donate.
It sounds simple enough, but there are a few things to bear in mind.
- You’ll need to decide how you’ll reward people for donating. Will you give away equity in your business or will you give every donor a specific reward, such as a free product?
- You’ll need to work hard to promote your campaign. People are not sitting at home waiting to give away their money to your business, so you’ll need to spread the word and make a compelling argument to convince people to invest in your business.
You’ll need to decide how you’ll reward people for donating. Will you give away equity in your business or will you give every donor a specific reward, such as a free product?
Find an investor
An investor will give you money for your business in exchange for equity – a stake in your business – and sometimes practical advice and support. There are many ways to attract the attention of an investor, from applying to pitch days (events at which you can deliver a cold pitch to investors) to joining a business accelerator or incubator, a type of programme designed to help entrepreneurs start or develop their business ideas. Very often, these incubators take a percentage of your business in exchange for monetary investment and hands-on support.
Don’t overlook funding competitions and initiatives. Many run throughout the year and target specific types of businesses or entrepreneurs. For example, SheEO invests in female-led businesses and Backstage Capital is a venture capital fund for underrepresented founders, such as women and ethnic minorities.
It takes time and effort to secure funding, but if you’ve got an idea that needs a sizable investment to grow, it’s the best way of realising your business ambitions.
Raise enough money to start your business
If you don’t like the idea of giving away big chunks of your business before you’ve even started or you’re not interested in asking others for money, you can always raise the money yourself.
There are several ways to do this:
- offer your services in something you can do alongside your current job, such as consulting
- downsize your lifestyle and put the money saved each month into a ‘startup fund’ for your business. Here’s a step-by-step guide to saving enough money to start a business in just 6 months
- ask for a payrise in your current job and save the extra monthly income in an account for your business
- start a low-cost side hustle
These are just a few of many ways you can start a business with no money. Which strategy appeals to you the most? Let us know in the comments below.
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