In these times of tight bank credit, aspiring entrepreneurs may wonder how to start a business with no money. If you have a great idea, but worry about your lack of capital, there are a number of ways to begin your start-up business with little or no costs to you. But you will need to plug into the key attributes for business success—creativity, resourcefulness, flexibility, and hard work—to turn your business dreams into a start-up reality on a shoestring budget. Here are a few free ideas to help you get your new venture off the ground.
- Be Committed to Do-It-Yourself Tactics. To start your business with no or little funding, you will need to think about all of the tasks that you can do without hiring others. Keeping your expenses low does not happen by accident, but through consistent and sometimes tedious efforts to handle matters on your own. If you can’t afford a CPA, then learn how to use open source budget programs. Want a website? Then go to one of a number of sites that allow you to use their templates and establish a basic web presence for free, like Google Sites, Yola and WordPress.
- Work from Your Home. The costs of renting an office or storage space may be a major obstacle to beginning your new business venture. Do as much of your work from your home, basement, garage, or storage shed as legally possible. Many start-ups, especially those requiring only a computer and Internet access, can easily be done from home where you are already paying rent or a mortgage. Check with local zoning laws, homeowners associations, and your lease terms to make sure your enterprise is permitted in your residential setting.
- Launch a Service Business. Evaluate your skill set and think about services you can offer to others. Many busy individuals and businesses would pay someone to handle their daily tasks. From dog walking and house cleaning to data entry and online research projects, your services have a value to others and involve little to no additional expenses to provide. Many types of service roles also avoid the costs and challenges associated with obtaining and storing product inventories.
- Create an Online Store Using Drop Shipments. If you have a passion for selling products, then think about developing an online store for free and collaborating with product suppliers who offer drop shipments. Many goods manufacturers and/or distributors would be willing to work with you on selling their products online and directly delivering your customers orders as drop shippers. Your buyers have paid for the items upfront and the drop shippers carry the costs of product inventory and delivery. It is a highly competitive business model with razor-thin profit margins. Yet with the right product niche and quality customer service, this approach allows you to open an online store for little or no money and without inventory and delivery expenses.
- Seek Microloans through P2P Lending Sites. Although you can seek loans from friends and family, you may want to consider casting a wider net through person-to-person (P2P) lending sites. A number of online sites have cropped up that allow individuals to seek microloans from other web surfers to fund their fledgling businesses, such as Prosper and Lending Club. On these social media sites, budding entrepreneurs can pitch their business proposals and credit needs to an online audience. Potential lenders browse site listings of each borrower’s business objectives and review interest rates for the proposed loan amounts. These P2P sites facilitate the funds transfer and loan payments. It is estimated that approximately $5 billion will be loaned through P2P lending sites in the coming years. Check the terms and conditions of any P2P lending to determine if it is right for your new venture.
- Launch a Campaign on Crowdfunding Sites. As an alternative to P2P lending, crowdfunding sites typically allow new businesses to establish financial campaigns for start-up projects. In general, these sites allow individuals to set monetary goals, generate interest through social media sites, and seek pledges in return for rewards, such as a share in any profits or a chance to receive a sample product, such as an e-book. In general, if the entrepreneur meets their funding goals, the crowdfunding site collects the pledges and takes a percentage of the funds before distributing them to the new business. The successful campaign then provides any agreed-upon rewards to its supporters. If the entrepreneur has been unable to meet their financial goals, then the pledged funds are usually returned to the supporters. This approach often encourages entrepreneurs to test the viability of their projects and to work at stimulating interest in their ideas on social media. Although crowdfunding sites, like Indiegogo, KickStarter, and Gambitious, tend to attract creative projects like films, music, books, and video games, many entrepreneurs and nonprofit organizations are using these crowdfunding models to help garner initial capital for their projects. Review your crowdfunding options to determine what might work best for you and your new enterprise.
- Develop Bartering Relationships with Other Businesses. For centuries, bartering was the only method of trade between individuals and businesses. Before the development of currency systems, bartering allowed parties to exchange products and services without money passing between the parties. In today’s budget-conscious times, your business can revisit this ancient tradition by offering to swap your products or services in return for others’ goods and services. For example, your web design business may offer to create a web site for a local attorney or CPA in exchange for their professional services for your business. A great deal of bartering may occur at the local level between business people, but businesses can also connect online through bartering services or online classified marketplaces, such as Craig’s List.
First Published: http://www.nolo.com/legal-encyclopedia/how-start-business-no-money.html
May 2013
