How to start a business with little or no money?
Many people ask whether starting a business with zero money is possible. Here are some ideas to answer this question. Most companies require some money to start. However, creating a business without money is possible by choosing an idea that uses your existing resources, such as skills, knowledge, experience and idle assets. You can also engage in a business activity that does not need resources upfront until you find money or the activity funds itself. Even with these, you may require negligible to little money. Below are business ventures that need little or no capital to start. The list includes ways to raise money to start a business without cash upfront and methods to minimize the costs of creating and operating a business. Here is the list:
Service-based and home-based activities
Activities like accounting, consulting, writing proposals, processing data for other businesses, performing research for someone else, etc., require little or no money. These activities may require a computer and internet connectivity, but you may already have a computer, and if not, you can request an institution, someone, or a friend to donate one to you. With cheap bundles, you have internet connectivity. There is a lot of internet-based freelance work. All you need to do is to surf the internet, tender your proposal and compete for work. You can find work on sites like Upwork People per hour or Alignable. It would help if you also had your CV on LinkedIn.
Participate in e-commerce
You can create an online (virtual) store from which you can sell products of your choice. See what happens on Wixecommerce or Amazon Market Place. For a virtual store, you need a computer or smartphone, a website, and the ability to accept payments using Paypal, Pesapal, Credit Card, or M-Pesa. For a website, you can adopt the many Do-It-Yourself (DIY) website platforms on the internet, like Pubsite.com, for a small fee per month or year. You can sell your product creations or choose any product from any manufacturer or creator and market the product using your website or social media accounts like Facebook, Twitter (X), TiTok, Instagram, etc. You create helpful content (information) on these platforms that attract people and, in the process, see and buy your products. With a virtual store, you do not touch the products except the ones you create. All you do is identify the creators, market their products on your digital platforms, take orders and pass them to your identified creators (manufacturers), who will make and ship the product to the customers. Such an arrangement is called Drop-shipping. You can work on commissions payable to you by manufacturers or sell products at retail prices to end-users, pay wholesale prices to manufacturers, and keep the difference.
Produce-on-demand
This business activity is similar to drop-shipping, as described above. You can make arrangements with a producer or drop-shipping agent like Amazon. The agent produces the product once they receive an order. Amazon, for example, has millions of book manuscripts written by various authors from where they create and deliver digital or print books upon demand. Check the internet for Kindle Direct Publishing (KDP). There are many print-on-demand services you can check.
Content creation
Be a content (information) creator on your website and social media (Facebook, Twitter, Instagram, and Titok). The content can be writeups, Audio like YouTube, Video, Podcast, or pictorial (Visual). You can create content for your platforms or others (freelancing). Once the content attracts traffic, advertisers can pay you money to attract an audience to which they can pitch ads. You can use Google AdSense or any other way of your choice. Browse the internet to learn how to monetize your platforms. Not easy, but possible.
Barter
A barter exchange is, for example, a transaction where you offer your services (skills, knowledge) in exchange for an asset or another service you need to start or run your business. Suppose you are a computer hardware or software expert. In that case, you can offer services to maintain an institution’s computers in return for a laptop that you can use to start your own business.
Equity financing
Equity financing is where you trade a portion of ownership of your business for cash and then use the money to start and operate a business. An individual can buy shares in your company if your business idea has the potential to generate profit.
Angel investor
Angel investors are individuals or associations willing to lend money to creative and promising ventures for a return and sometimes to help such innovative startups. Online sites such as Gust and AngelList and local associations can assist in connecting you with potential Angel investors in your line of business. Kenya Investment Network and Nairobi Business Angel Network are Kenyan examples of Angel Investor groups.
Venture investor
Venture capitalists are individuals or institutions willing to lend money to promising startups. They usually look for huge profits after developing and growing the startups and selling them for big money later.
Startup incubator
Business incubators assist budding business people in successfully starting and running small businesses. Many offer free resources such as starting up assets, business management training, networking openings, and marketing services, and in some cases, they also provide some money.
Government grant
Some governments and Donors offer small startup grants. Check these in your country and see if such gifts exist and if you qualify.
Advance financing
Some customers may be so interested in your product that they are willing to collaborate to produce and put it on the market. White-labelling agreements are common types of this arrangement. White labelling prearrangement is where a product manufacturer allows another business, like a retailer, to sell the manufacturer’s products under the retailer’s brand, name, or logo as if the retailer is the manufacturer of the products.
Win a grant
Participate and win a contest that provides some money.
Invoice factoring
You can raise funds by factoring in invoices, taking advance payments from customers, and using LPO financing.
Product pre-sales
This idea involves marketing your product to secure orders before producing it in full swing. Real estate developers often use this method, selling houses off-plan.
Suppliers’ credit
This arrangement involves buying inputs from suppliers on extended credit terms that can include up to 45 days.
Peer-to-peer (P2P) lending
Peer-to-peer (P2P) lending allows individuals to borrow money from other individuals in the group without the involvement of financial intermediaries like a bank. You have lender clubs in the USA, such as Prosper, Lending Club, Upstart, and Funding Circle. You can have a look and see how they work. P2Ps may be available in your country. You have Chamaas in Kenya.
Crowdfunding
Crowdfunding involves raising money using online campaigns from fans or early adopters of products and services you want to create. Kickstarter and Indiegogo are common sites for this type of thing. There are other crowdfunding sites in many countries, too. Check these out in your country.
Start with no cost or the least cost possible.
To create and sell a product with no or little cost, you need a minimum viable product (MVP). MVP is a product with core minimum functions to allow early-adopting customers to use and test the product enough to provide feedback. You use the feedback to improve the product before full-scale production and launching. With 3D printing and print-on-demand, finding someone to make a prototype cheaply for you is possible. Ways of testing the product include customer surveying, crowding funding campaigns where you offer the product for Testing, and website and social media channels. Relevant website metrics to measure performance include session duration, traffic source, number of visitors, average time on page, etc. Testing aims to confirm whether the product is viable before spending too much time and money on something that will not sell. If not feasible, you stop the process, cut costs and move to the next idea. If you fail, you should fail soon and cheaply, not after a long and costly affair.
Business Planning
Starting a business with little or no money requires business planning. You can start a business anyhow, but you enhance your chances of success if you follow the following steps:
- Think of a business idea or opportunity that answers the needs of known and tested customers. The concept can be a product or a service. Create a mental preview of the coming business’s attractions (a successful enterprise).
- Assess yourself to ensure a business fits you correctly.
- Give the business a legal format and identity by choosing a name and logo and registering the business as a sole proprietorship, partnership, limited liability company or corporation. The form you choose depends on what you want to do. A sole proprietorship is cheaper to register and suitable for a small business, but a manufacturing concern requires a limited liability company. If you need to patent the business concept, you must consider these aspects and branding features because patent registration requires these aspects.
- Do some strategic planning (strategic thinking) to plan and organize the new business. Everything you must do to start and operate a business, including the factors in number (3) above, requires strategic thinking.
- Using the information above, prepare and write a business plan (road map or game plan) and a budget. The business plan should capture what you need to do, by whom, when, and with the minimum resources necessary to start and run the business. The budget should show the minimum amount of money needed to commence and operate until the break-even point and the sources of the funds.
- Consider the need for elaborate or simple production facilities; operating facilities (facilities, systems, processes, policies, and procedures); marketing, sales, distribution, and customer service strategies; governance structures; policies and procedures; and financial management and recordkeeping tools.
- Hire the people you need and have a performance and motivation management scheme to manage their productivity.
- Obtain licenses, permits, and Taxation/levy identity numbers, and take insurance covers where necessary.
- Open shop and operate following your business plan (road map), evaluating progress and making changes along the way as necessary.