Many people are wondering how to start a business with no money.
As you can imagine, this is NOT an easy thing to do.
However, there are many small business owners who did it.
They followed these 7 simple steps.
Here’s What We’re Covering:
- Step #1: Brainstorm Business Ideas
- Step #2: Write a Business Plan
- Step #3: Find Ways to Fund Your New Business
- Step #4: Prepare All the Legal Documents
- Step #5: Create All the Necessary Business Assets
- Step #6: Launch Your Business
- Step #7: Get Out of the Building & Start Selling
Step #1: Brainstorm Business Ideas
Working full time and running a small business is no small task.
Brainstorming and coming up with the type of business you want to move forward with is one of the most important steps.
The traditional way of starting a business is to find what the market needs and see what you can do to fill that gap.
You can provide consumers with a service or bring a new/improved product to the market.
We actually wrote an article that covers 20 trending products that actually sell, you can check it out here.
The golden spot is if you are able to find something where your passion and skills intersect with the marketplace. This should be your goal and always be kept in mind.
Start talking to your friends and family to bounce around ideas about what type of business interests you and fills a need for consumers.
First, you need to choose a type of business.
Choose a type of business
You will have to make several choices when starting a business but the first and most important decision you need to make is about the type of business you will start.
This decision will impact tax, liability, management, continuity, transferability of ownership interests and formality of operations. That’s why we suggest discussing it with an accountant and getting legal advice.
Here are the most common business entities and their differences:
This is the most common business type because it’s easy to form and gives complete managerial control to the owner. The only downside is the owner is solely responsible for all financial obligations.
You don’t have to shoulder all of the burdens in a partnership but you also have to give up some control because you will have 1 or more people to collaborate with. The main disadvantage of a partnership is the liability because each partner will be liable for the financial obligations of the business.
This is perhaps the most advantageous way to start a business because the corporation exists as a separate entity. The benefit of this type of business is the avoidance of personal liability. However, the downside is the upfront cost and extensive record-keeping that’s required.
Limited Liability Company (LLC)
A Limited Liability Company is a hybrid business type, taking the advantages of a corporation and partnership. The business owner gets to process the profits and losses without taxation while being protected from personal liability.
For these reasons, this business type is increasing in popularity.
Image Source: Business Licenses
Now that you’ve chosen a business type and registered your business, it’s time to write a business plan.
Suggested Reading: The 6 Types of Entrepreneurs: Which One Are You?
Step #2: Write a Business Plan
Even if you are the sole owner of your business, you will need a written business plan to make sure you stay on track towards your goals and to attract potential investors.
We’ll discuss this more and the importance in the next step.
Start with what you have at your disposal then research, research, research! Creating a solid business plan can be hard work but it is essential to the success of your business.
A solid business plan should include:
- Executive summary—a concise view of your business
- Company description—describe what you do, include a mission statement
- Market analysis—research on your industry, market and competitors
- Organization and management—your business and management structure
- Service or product—detail the products or services you offer
- Marketing and sales—break down your marketing and sales strategy
- Funding request—how much money you’ll need to launch your business and sustain it until you start making a consistent profit
- Financial projections—think of a budget on a larger scale
- Appendix—(optional) include résumés and permits
As you can see, business planning is extensive and contains several different parts but don’t worry, we are here to help!
There are several sites like Liveplan.com that provide business plan templates as well as guidance throughout the process.
Image Source: LivePlan
Determine the purpose of your plan early and tailor the way you write it for that purpose.
The great thing about the content you are writing for your business plan is that it can also be used in other areas.
Using Business Plan in About Page
For example, your plan will need a company profile. You can then use this content as the about page on your website and the descriptions on your social media accounts.
Similar to determining the purpose, you also need to understand who your audience is and what motivates them to complete the action you are wanting.
If an influencer is reading your business plan, they would look for very different things than an investor.
Lastly, be passionate! If people can feel the passion you have for your new business through the plan, they will want to be a part of it.
Describe your values, your dedication, your business goals and establish what separates you from companies already on the market.
Although the look of it feels outdated now, Apple’s original business plan might spur some inspiration.
Step #3: Find Ways to Fund Your New Business
Having the next big idea is great, but you can’t stop there. You’ll definitely need funding sources in order to take your business from just a thought to an actual office space.
The traditional way entrepreneurs fund their new business is by pulling together their own personal finances through savings, credit cards, or any home equity you have.
While this is a good foundation to launch your business, it’s not feasible to grow your company since your reserved money will keep decreasing until you make revenue.
Use the following funding opportunities as a starting point when figuring out how to start your own business with no money.
Venture Capitalists (VC) Companies
Venture capitalists typically focus their investment funds on specific industries (think software or digital media, etc) and start-up companies that have the potential to be successful.
They invest other people’s money (that they have held in a fund) and are more likely to go with startups that have the potential to make a lot of money in a short period of time.
These companies get bombarded with requests from startups wanting money. It’s important your sales pitch is crafted to make them see why you’ll be a benefit to them.
Venture capital firms who make an investment in a small business take an equity or ownership stake in the company.
Going this route however is a long process and can take weeks for venture capitalists to come to a conclusion. If you need money fast, this route is not the most ideal.
However, if you live in California we recommend looking into this option since 70% of all VC cash is invested here.
Baseline ventures, established in San Francisco, was the first seed investor of Instagram, and an early investor of Twitter.
Image Source: Baseline Ventures
A great place to search for and source investors and VC companies is Crunchbase:
Image Source: Crunchbase
Author’s Tip: There is a free trial for the pro version for 7 days. Make sure to take the most out of it.
Angel investors are high net worth individuals who invest early during a startups creation. Because they are using their own money, they’ll want convertible debt or equity in exchange.
Unlike venture capitalists who are investing other people’s money, angel investors are using their own funds as your startup capital.
They typically want between 20 and 50 percent stakes in the companies they invest with.
To find an angel investor, you can use an online tool like Investor Scout:
Image Source: Investor Scout
It may not have as many data as Crunchbase, but still it is a great way to source investors.
Make sure to check it out.
Crowdfunding platforms are an alternative way to gather business funds by collecting small amounts of money from many people.
You can crowdfund through mail-order subscriptions, benefit events, and more but the most popular way is through the internet.
There are sites like Kickstarter, that are designed specifically for crowdfunding. They allow you to set funding goals and then set a number of days to reach that goal.
Image Source: Kickstarter
Of course, you can also use your Facebook page, LinkedIn and other social media platforms to present your project to the world and source funds.
In fact, you will want to try more than one of these options to build up enough cash flow to support you through the first year and beyond.
It can be very intimidating to reach out to anyone for money but remember even Jeff Bezo’s had to write a letter to shareholders in 1997.
The only way to have others invest in your idea is to believe in what you are doing.
Believe in what you are doing and everything else will follow.
Keep Your Day Job
Starting a business while working for a company will be a lot of work.
If you want to know how to quit your job and still make money, check out the following guide:
But having that reliable and steady income will help you feel confident moving to a new chapter in your work life.
Whenever you find free time, slowly work towards getting your business launched.
Nights and weekends will be temporarily occupied with everything that needs to get done to start a successful business, but the hard work will pay off sooner than you think.
Apply For Loans or Grants
Small business (SB) owners typically seek other capital opportunities before loans or grants because of the stipulations they may come along with. Particularly, interest rates or repayment deadlines.
(SB) loans can be hard to qualify for, depending on your credit line, which also makes them less appealing.
Grants can be a better option, especially if you are a woman, minority or veteran applying.
The Small Business Administration is more likely to offer grants to small businesses with these types of owners but even if you don’t fall into one of these categories, it is worth looking into.
Image Source: The Small Business Administration
Author’s Note: Getting a loan is no joke, so before you take any decision, make sure you are aware of all the legal implications of taking such an action.
Now that you have the money to build your business, you have to prepare all the legal documents.
Let’s see what you need to pay attention to.
Step #4: Prepare All the Legal Documents
Having the right legal documents in place when you start your business is essential to your business’s success.
Once you’ve decided on the type of business you are going to move forward with, see step #1, it’s time to start registering your business name and getting your documents in order.
Each of the following is important in their own way. Take some time to decide what makes sense for you and your new company.
Registering Your Business Name and Trademark
To register your business name you’ll likely register a “Doing Business As” (DBA). This process lets the government know the name you are operating your business under.
This gives you the ability to create and use the name you want for branding purposes without there being any worry of someone else using the same name.
Maximize the benefits you receive from your investment and prevent others from capitalizing on it by also registering a trademark.
Registering your business name is essential if you want to create a strong brand.
Trademarking is something you may want to do later on.
If you do, it can take your business to the next level.
Check out our guide on how to register a trademark business name for further details on whether this is the right thing for you and your company.
This doesn’t apply if your business is just a one man operation. However, if you want to expand your company you will most likely need help from other employees.
Your employee contract sets the expectations and obligations of the company and employee. It also helps settle future disputes that could arise.
The contract will need to be reviewed by an experienced law attorney before a potential employee signs it to make sure your company is fully covered legally.
The document can be useful if you want to prevent employees from leaving your company too soon, going to work for a competitor, or disclosing confidential information.
When you are starting a new venture, you might not be thinking about the ways it will end when you retire or move on – or in the event of your passing.
However, having a buy-sell agreement makes sure that all your bases are covered when/if you leave the business and lays out exactly what to expect during the process.
The agreement can also provide an exit plan on what will happen with your business partners when they no longer want stakes with the company.
For example, the buy-sell agreement gives the remaining owners the authority to purchase the previous owner’s shares before they are open to the public.
This prevents another party from obtaining ownership to protect the company and your investment in it.
While this document is not necessary, it’s better to plan for the unexpected than to put it off for tough decisions to be made in the future.
Non Disclosure Agreement
A non-disclosure agreement creates a trusting relationship between you and your future employees.
You can use this to protect important information you want to share so you can be open and honest.
It’s a great thing to have if your business has a ground-breaking or innovative idea so it doesn’t get leaked to the public. When speaking with potential investors, a non-disclosure is helpful so they can’t steal your intellectual property for their own gain.
Like the previous buy-sell agreement, it’s better to cover your bases at the start of your business than to run into a problem years down the road and not know how to solve it.
Find a corporate lawyer like Walker Corporate Law Group to help you with all of these documents. They specialize in helping entrepreneurs.
Image Source: Walker Corporate Law Group
Let’s move on to the next step, where you have to create all the necessary business assets.
Step #5: Create All the Necessary Business Assets
Now comes the fun and creative part of starting a business.
Your business assets will be what sets you apart from other companies and give you your brand identity.
One of the first things you will need to market your company is a website, preferably on WordPress so you can customize it with different plugins to make it user-friendly.
Image Source: WordPress
Having a website gives you the opportunity to expand on how you can connect to your potential customers.
For example, blogging or a podcast help give personality to your company and you can dedicate certain pages of your website for these ventures.
Check out our article where we go more into detail about how to pick the perfect name for your startup, including registering your own domain name as your online presence.
Social Media Accounts
One of the first things you need to do is to create your social media accounts.
Now, you may not be using social media for personal reasons, but you have to use them for your business.
Image Source: Twitter
This is also the time to register your business on all mediums of social media (Facebook, LinkedIn, Instagram, Twitter, etc.) to make sure you are advertising on different platforms.
Your brand identity is formed and maintained through these social networks. It’s also where you can connect to your customers on a more personal level.
From social posts that express who you are to videos that explain what you stand for, your style of communication and the visual elements of your company brand— is expressed on these platforms.
Logo & Printed Material
Logos are another thing to think about that can be a part of your marketing materials to give your company brand identity.
Once you have a logo, you can use this for many different things – letterheads on official documents, business cards to hand out, or for promotional items.
Even if you have an exclusively online business, like selling merchandise on Etsy, having printed material to include in mail shipments or when promoting in person can be beneficial.
If you want to see how products will look with your logo, there are many sites such as Envato Elements that provide product templates you can easily place your branded images on.
Image Source: Envato Elements
Another asset that can help your business bring in some revenue is creating a pamphlet, book, or some other document that you can sell to bring in revenue.
You can link this to sell on Amazon and it’s something that you only have to work on once and hopefully continually receive revenue as a source of income.
Step #6: Launch Your Business
There is so much prep work that entrepreneurs must do before launching a business, it’s easy to think this day will never come but trust us it will!
The official launch of your business can be an exciting time but don’t let it sneak up on you.
Pick the date, time and venue of your launch party or event. From there decide what your event will need:
- Are you providing food?
- Does the venue have tables and chairs?
- Is there a sound system and a TV or a projector?
- Will your product be available to purchase at the event?
The venue, decor, activities, etc. should match the consumer preferences of your target audience. All of this is creating your brand’s image in their mind so it’s very important to maintain a common theme that reflects your business.
Invite The Right People
Next, get the word out to the right people. Think about using a variation of invitation types.
Direct mailers are good for your local community and social media is great for reaching a wider audience. There are many other options depending on your budget for this event.
Besides your own social media pages, look for event hosting sites such as Eventbrite. Sites like this allow you to upload all of the details for your event and even sell tickets.
Image Source: Eventbrite
Author’s Note: We don’t suggest selling tickets to your business launch but it is something to think about for future events.
Once you upload your event, users can search through relevant events using the tags you choose, the location of the event and other data.
This is a great way to reach people outside of your connections.
Can you fill a customer need right away with little to no expense?
Obviously, everyone loves getting things for free but if that is not possible try giving your potential consumers the knowledge of something they may not know they need—aka your product/service.
Don’t be afraid to give a speech.
This will help your audience put a face to your brand, creating a more personal connection and will also give you the opportunity to reach all of your guests at once.
A product or service demo could also be something that doesn’t cost you anything to give away.
If your product is a high-value item that you would not want to give away many of, have guests participate in a giveaway contest.
A give away contest is also a great and simple way to grow your email list by collecting your guest’s data and storing it in a CRM platform.
Before the launch date, think about investing in small business software that allows you to communicate with clients, get paid, monitor your social media accounts, etc.
Companies like Thryv allow you to have all of these features on any device.
Image Source: Thryv
Plus, a launch event is a great opportunity to invite:
- Potential employees
Because all of these people will give you a different insight into your product and can provide business opportunities later on.
Everything good so far?
Let’s move to the final step, where you need to get out of the building and start selling.
Step #7: Get Out of the Building & Start Selling
The success of your business is primarily dependent on your ability to sell your product or service.
There are many different ways to sell your product and while most of them are online, we also suggest trying to get out of your home or office and sell that way.
Look for community events or trade shows to showcase your product.
If you are selling a service, try offering it at a discount to the first few customers in exchange for their online feedback and word of mouth support. You will be surprised at how powerful word of mouth can be.
As we mentioned, there are several options to sell products and services online.
For digital services, we suggest Fiverr, an online marketplace for freelance services.
This can also be a great place to source employees for tasks you don’t feel comfortable completing on your own.
Image Source: Fiverr
There are countless options for selling products online. You can sell through your own website, Etsy, Amazon and many others.
For more information about selling on Amazon, read our ultimate (step-by-step) beginners guide.
Image Source: Amazon Services
Many young entrepreneurs focus too much on the idea they have, believing that their idea is enough to grow a business.
However, if you are not ready to sell what your product or service, your idea will never be enough, no matter how big or innovative it is.
Thus, refine your pitch and start communicating the value of your product in a way that is convincing for your potential customers.
Let’s close this with some final thoughts.
Wrapping This Up…
I hope this guide has helped you through every step in the business starting process, from choosing a business idea to selling your products and services.
I know it is a long process and it can be challenging at times but through this guide, you will be well on your way to creating the next trending business or product.
Every company has had their ups and downs in their life cycle. Don’t be afraid to take risks and dream big.
Good luck on your next grand adventure!
Additional sources you might be interested in: