How To Start A Business With No Money (9 Proven Strategies)
Entrepreneurship is in our blood.
Around 2 out 3 people claim that they wish to be an entrepreneur, consider entrepreneurship a good career choice, or find the idea of being an entrepreneur attractive. But in reality, only around 14% of working-age adults actually take the leap and become entrepreneurs.
There are many reasons for this, but the biggest reason is always the same…
Money is pretty much always the problem, whether it’s about a stable income to pay the bills or seed money to fund that new business you’ve been thinking about.
The good news is that it’s 2017, and that means you don’t need money to start a business. There are numerous ways to get your own business off the ground without a dollar in your pocket, and today, we’re going to discuss 9 proven strategies for making that happen.
These strategies can be categorized into three distinct methods:
- Start A Service Business
- Pre-Sell Or Resell Products
- Pursue 3rd Party Funding
We’ll look at three proven strategies for each method and give you a crystal clear picture for how you can get started with your own business RIGHT NOW.
But before we begin, there’s a lot of misconceptions about what it means to “start a business with no money”.
Notice I Didn’t Say “Build” A Business With No Money
What we are going to show you today is how you can START a business right now without a cent to your name. We are going to show strategies that you can use to make $1,000+ in the next week, $10,000+ in the next month, or $1 million in the next year, so you can invest that money into building a legitimate, profitable business.
What we are NOT showing you today is how to build a business to 5 figures, 6 figures, 7 figures and beyond without spending any money. That’s pretty much impossible.
It’s amazing how many times I see people take exception to viable business strategies because they cost a few hundred dollars to get up and running. If you are the type of person who balks at spending money, you probably won’t make it very far in business.
Of course, you won’t make it very far if you are an overly extravagant spender either.
Our goal today is to make sure you are never limited in making the right decisions by a lack of capital. If you need $1,000 to launch your business, you can use these strategies to quickly earn that money to invest in your business. If you need $100,000, same deal.
Let’s get started.
Method #1: Start A Service Business
In my opinion, if you are starting out with no money, the best possible business you can start is a service business.
Many services can be performed at no monetary cost and only require minor overhead costs as they scale. The services business model is fairly straightforward and very accessible regardless of experience.
Depending on your existing knowledge or experience, you can target three different strategies when choosing your service business.
Strategy A: Sell An In-Demand Service
The single easiest way to launch a new business with no money is to sell an in-demand service. Another term for this is “freelancing”.
There are numerous in-demand skills that can be learned relatively quickly and then sold online:
- Web development
- Blog writing
- Link building
- Graphic design
- Social media management
- Video editing
The list goes on and on, and you can find people making multiple six figures in any one of these fields. You don’t need to have an existing skill set to get started, although your earning potential will certainly increase with experience and training. Many freelancers simply learn along the way, starting with low-paying clients and then increasing their rates as their skills improve.
A great example comes from writer Aaron Orendorff, who hit six figures after just one year as a freelancer. After Aaron’s life fell apart and he found himself unemployed, he launched a blog and began searching out writing contracts. He is now a regular contributor for high-profile sites like CopyBlogger, Business Insider, Fast Company, Unbounce, and Entrepreneur, and he earns more than $20k per month.
Watch the video below for in-depth look at Aaron’s success:
Strategy B: Sell Your Expertise
For individuals with a notable expertise or a notable knack for problem solving, simply offering that expertise to others can be enough to build a business.
Another term for this is “consulting”, and it offers a lot of the same benefits as freelancing but typically with higher earning potential.
The core of consulting is problem solving. You are being paid to help a business solve a problem, navigate a challenge, reach a milestone, or move forward in some way. Most successful consultants have spent some time in their target industry, and understand the niche enough to identify solutions for common problems.
Since consulting is usually performance-based, it provides a lot of leeway for inventive and unorthodox individuals to be successful without needing past experience or significant industry insight. As long as you get results, the “how” doesn’t necessarily matter.
Consulting is the path I personally took to launch my first successful business. After spending years as your classic “wantrapreneur”, wasting money on unimportant stuff and getting distracted by every new gimmick that popped up on my screen, I was able to focus on a core consulting business model that took me from $0 to $200,000+ in less than a year.
I’ve made my entire consulting course a complimentary resource for members of the Entrepreneur Alliance, which you can join here for just $1 for a limited time only.
Strategy C: White-Label Someone Else’s Services
One of the fallacies of business is that you need to be able to personally provide a service in order to make money from it. In many ways, the goal of launching a business is ultimately to make money without having to do much yourself.
You can do that from the very beginning by white-labeling someone else’s services under your own brand. You are essentially the salesman, but instead of working for someone else, with all the limitations, frustrations, and grievances that come with being an employee, you are working for yourself.
Many service providers today actually build their businesses through white labeling, typically as a supplement to more traditional sales channels.
For example, entrepreneur Chris Fawcett created Third Marble Marketing in 2009 as a company focused mainly on providing AdWords management and SEO solutions. In order to quickly expand their clientele, they offered their PPC services as a white label option for freelance marketers and agencies. If you wanted to build your own PPC agency from scratch, you could do it through a service like this without ever learning PPC yourself.
Method #2: Pre-Sell Or Resell Products
While I think starting a services business is the best possible starting point for new entrepreneurs, it’s certainly not the only option. Thanks to globalization, product-based businesses are no longer out of your reach, even if you don’t have any money to invest in a new venture.
Once again, I’ve broken this method down into 3 distinct strategies, each of which have the potential to be viable depending on your unique situation and goals.
Strategy A: Use Crowdfunding to Pre-Sell Your Product
Crowdfunding has completely changed the game for product-based business.
Traditional methods of raising funds have always been full of challenges, including stressful pre-qualification procedures, bureaucratic red tape, high interest rates, high collateral demands, and anxiety-inducing waiting times. With crowdfunding platforms like GoFundMe, IndieGoGo, Fundable, and Kickstarter, all you need to launch a product is a big group of people willing to pay for it.
The key to crowdfunding success is realizing that it’s effectively just pre-sales. It’s not fundraising. It’s not speculation. It’s not the lottery.
It’s a means for businesses to pre-sale a polished prototype to enthusiastic consumers.
One of the best examples of this in action comes from MVMT watches. Founders Jake and Kramer were 22-yr-old college dropouts from California with a bold ecommerce idea. They wanted to fill the market gap between cheap, throwaway watches and insanely expensive luxury watches. Accordingly, they created a few prototypes of simple, well-made watches at the $100 price-point and promoted them in a GoFundMe campaign. Within 50 days, the two business partners had raised $300,000 and MVMT watches was born.
Strategy B: Sell Pre-Orders To An Existing Audience
While crowdfunding is a viable strategy for launching a product-based business, it’s not the only one.
The crowdfunding route is appealing primarily for those who don’t have an audience of people they can connect with and sell to. If you can accrue or access an audience of people interested in your product, you don’t even need to use a crowdfunding platform.
The internet is full of audiences and communities. There are thousands of people who have spent years cultivating an audience interested in a specific topic. If you’ve managed to build your own audience, launching a product is as simple as pre-selling it to that audience.
If you don’t have your own audience, you might be able to get your product in front of someone else’ audience. The way this usually works is that you become friends or partners with the audience gatekeeper, who allows you to pre-sell.
The best part about this strategy is that you really don’t need much to get started.
An a great example comes from copywriter Jacob McMillen. After his blog posts built a small email list of around 400 subscribers, Jacob sold his audience pre-orders of his guide to freelance writing and earned a quick $1,000 before writing a single word of the guide.
Strategy C: Resell Someone Else’s Products
We’ve already spoken about white label services, and the same idea can be applied to products.
Without any money at all, it can be challenging to reach the prototype stage you typically need for presales. Even with supply hubs like Alibaba, finding the right suppliers and getting to prototype stage can set you back a few grand.
Through white labeling or affiliate sales, however, you can essentially run a product business without ever creating a product.
A great example of this comes from Brent Hale, who earned around $15.5m from 2012 to January 2017 through Amazon affiliate and FBA sales. Brent simply focused on the marketing side, using a combination of SEO, high quality pics, and review generation to flood traffic to his listings.
Method #3: Pursue 3rd Party Funding
Bringing in external capital can help you start your business in a huge way and reach your potential faster. However, it comes with a price. Most investors will want a direct say and even controlling interest in the affairs of your business/company at the seed stage.
If ceding some control to an investor is a smart move for your business, third party funding can bring you additional benefits such as experience, manpower, influence, expertise, and even a ready market.
3rd party funding to start a business may come from any of three distinct types of backers.
Strategy A: Pursue Friends & Family Funding
Most startups raise their initial funds from friends and family investors. According to Fundable, more than 38% of startup founders sourced investments from family and friends, raising over $60 billion. Compare this to $22b from venture capitalists, $20b from Angel investors, and $2.8b from customers and you quickly realize why family and friends are such important sources of funding.
Family and friends make up the largest investors in amount invested. They raise an aggregate of $23,000 and have easier, more flexible repayment terms. Though this is the easiest financing option to complete, it also has the potential to cause considerable damage to social relations and future funding opportunities.
Professional investors at the company growth stage usually want to gauge your credibility by the amount of investment received from family and friends at the seed stage. To safeguard relations and inspire confidence with your friends and family backers, you can keep the following in mind:
- Raise only what you need to achieve a pre-set milestone rather than asking for as much as possible. Only ask for what your family and friends can afford to lose.
- Offer a formal agreement, preferably a convertible note with specified duration and interest terms
- Make clear your own financial investment and level of commitment through thorough research and conducting due diligence.
- Tie all investment repayments to revenue growth rather than a fixed repayment schedule.
- Clearly communicate your business plan and all risks involved upfront.
Strategy B: Pursue Angel Investors
Angel investors are SEC-accredited investors who provide either one time capital investments or ongoing financial support to startups. While these high net-worth individuals typically invest less money compared to venture capital investors, they provide more favorable terms and other organizational advantages.
- No collateral requirements
- Quick investment decisions
- Access to specialized skills, management, and industry knowledge
- Access to mentoring and networks
- Flexible business agreements
- Infuses better discipline into your business and operations
Though most startups require between $1,000 and $50,000 investment capital, there have been multi-million beneficiaries. One of the biggest success stories is Meredith Perry who started uBeam with the support of angel investors. She successfully raised $10m in 2014 and uBeam now has a working prototype and may have wireless charging systems on shelves soon.
Strategy C: Pursue Venture Capital
It used to be that Venture Capitalists would never invest in a startup at the seed stage. They would wait till you got to the growth stage and showed real promise backed up by consistently impressive financial results.
However, the game has changed drastically and now venture capitalists are looking for fresh ideas that have high growth potential with expectations of high return on investment.
While an Angel investor is usually a high net worth individual, a venture capitalist is typically an investment firm made up of professional investors, board members, and a complete organizational structure.
Because so much time, effort, and expertise goes into setting up a venture capital deal, the money involved is usually much higher compared to angel investors. In fact, most venture capitalists will not enter a deal of less than $1 million.
Back in 2012, the now popular photo-messaging app, SnapChat, raised venture capital funding of $13.5 million in its series A round. The main backer was venture capitalist firm, Benchmark Capital.
It has never been easier to start a business with no money. If you have the entrepreneurial itch, don’t put things off any longer.
Just start. Just do it.
Pick one of the 9 methods we’ve discussed today and then start pursuing clients and customers.
And if you’d like a community of winners to help you along the way, click here to check out the Entrepreneur Alliance.