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Starting a business from scratch isn't necessarily easy but it can be done. We've broken down the steps and provided a number of lucrative ideas too.
Although money plays a vital role in starting and running a business, it’s unnecessary to have a lot of money. We can find plenty of examples of businesses that began with no money and attracted capital later when they had to grow to the next level.

When it comes to starting a business, the most important thing you need is a working economic model that can generate profits consistently. The more profit a business can make, the more capital it will attract, and the easier it would be to operate the business.

Here’s our guide to starting a business with no money in the bank.

The Prerequisites of Starting a Business with No Money

Starting a business involves taking a lot of risks. Even if you’re not putting your money into the business, you’ll be dedicating a lot of time and effort to make it a success. You may also need to call in favors from your network of friends, family, and social acquaintances.

New entrepreneurs have a tendency not to take the business seriously if they have invested no money into it. This half-heartedness towards the business is one of the primary reasons most new businesses fail.

Whether you invest money into your business or not, you’ll be investing time. Time is a precious resource, and you should make a careful analysis of the overall business requirements and plan.

Assess the Non-Monetary Requirements

Money is just a means to achieve operational business goals. When you don’t put money into the business directly, you can make up for the shortcoming by directly putting in your own effort to run the business.

For example, you need money to pay the salary costs of employees such as the delivery person, accountant, or sales agent. You can take up these responsibilities yourself and manage your own books of accounts or deliver goods yourself to save money.

You must carefully plan the time and effort you’ll dedicate to the business. The less money you put into the business, the more you must accomplish on your own. Consider how running the business might affect your job. You will also have to examine what impact the business will have on your social and personal life.

Setting up the business is the most labor-intensive and challenging part. Many entrepreneurs get overwhelmed with the work that they have to do because they haven’t planned their time and throw in the towel at this initial stage. Try to avoid falling into that category by planning your schedule ahead and know your limitations.

Keep Your Job

While it’s possible to run a business without money, you can’t run your life without a source of income. Companies require time to stabilize, build a reputation, and attract customers.

No new business starts with a steady flow of income coming in from day one, no matter how brilliant the idea is. It will take at least six months to a year before you see profits, as most of your earnings will be reinvested into the business to keep it going.

Since you’ll need income to provide for yourself and your family, it’s highly advised that you hold on to your job while your business is in the initial stage of formation.

Follow Your Passion

This may sound cliché, but only pursue a business venture into an activity you enjoy. There is a practical reason for this.

When trying to set up a business without money, you must work long hours to manage both your job and the new venture. This can be a burden, and most new entrepreneurs get stressed out, especially if they are trying to set up a business they aren’t really into.

So to avoid the stress of working long working hours, only pursue a business in an activity you enjoy.

Here are a few examples:

Suppose you’re into cars and enjoy detailing your own vehicle or upgrading it with new parts. An automobile detailing shop or auto mechanic store would be an ideal business for you.

Enjoy making handicrafts or painting? Why not start a business selling art pieces and unique artworks?

Interested in tinkering with computers and software programming? Start an electronics hardware store or IT repair shop.

As long as you start a business in an activity you enjoy, you can keep your stress level down even if you have to work 14 – 16 hours a day.

Setting Up a Business Without Money

Setting up the business is the most challenging part of starting a business without money. You will need to carry out a variety of these activities, depending on the business.

Keep Office or Store Set Up Costs Down

Many businesses require a physical location for the store or central office. It gives customers and suppliers a place to get in touch with the business and buy or sell products or services. It also allows you to store inventory and gives your employees a place to gather and organize business activities.

Whether you’re opening a new restaurant, retail store, barbershop, fitness center, or a business consultancy service, you may need a central location for your business.

You don’t necessarily have to rent or buy a commercial space for your office, though. You can also run your business from home and save rent. This is great if you’re working on a low budget.

Get Free or Discounted Licenses

Some businesses and professions require special licensing that is mandatory before you can open shop. For example, professionals in the healthcare or legal services industries must be appropriately qualified.

People already working in these professions may be able to use their existing license to register a new business without spending any money on new license acquisition.

Set Up a Free Digital Presence

Businesses these days heavily rely on the internet to promote their brand, products, and services. This is happening because it’s easier to find customers and attract them to your business using online promotional media.

A website is a must. It gives a place for customers to contact your business, browse through your products or services, and book orders. It also tells visitors how long your business has been in operation and your record of service. Social media pages can also be used for the same effect.

The formation and running of digital assets can cost anywhere from zero to millions of dollars. If you’re good at social media and web designing, you can create a website yourself and promote it through your social circle, spending no money.

Use Free Marketing and Promotion Opportunities

Marketing is a necessary and essential activity for new business ventures. Your potential customers will not buy from you if they aren’t even aware of your existence. This is why new businesses set aside a substantial amount of money for promoting their products and services through a variety of marketing channels.

If you’re starting a business with no money, you’ll need to carry out most of your marketing on your own. There are three channels you can use, the importance of each being dependent on the business you’re starting.

  1. Local neighborhoods or communities are targeted through flyers, store banners, brochures, etc.
  2. The larger town or city is targeted through newspaper ads, radio and TV commercials.
  3. Digital marketing can be tailored to target a local or broader audience.

Promotion flyers and banners have costs related to designing, printing, and distribution. You can carry out one or more of these activities yourself to save money.

Newspapers and media ads require more investment. If you’re running a business with no money, you’ll need to postpone this promotion until your business is stabilized and earning a steady income.

Digital marketing can be carried out for free, or at least a low cost. It is useful if you’re good at using social media, SEO, or Google Ads, but it requires the most work. It should be the preferred marketing method if you’re planning to run the business without money.

Lease Equipment Instead of Purchasing

Some businesses require specific equipment to generate revenue. For example, if you’re running an online delivery service, then you’ll need to have some vehicle that riders can use to deliver products to customers. If you’re making cakes or cooked meals from home for delivery, then you’ll need kitchen equipment such as ovens and cooking utensils, etc.

You can get a small loan to purchase equipment necessary for running the business. You can also lease equipment from retailers and pay the costs from the proceeds of your sales.

Get Products on Credit Terms

For product-based businesses, owners generally have to invest a sum of money to purchase inventory they can sell off to potential buyers. This has been traditionally the case where manufacturers and wholesalers deliver products only after they have received the deposit.

Things have changed in the fast-paced economy. If you’re an excellent negotiator and can sell, you can book an order on credit and pay your supplier later on a 30 or 60-day credit term. This allows new entrepreneurs to start and run a business with no money.

Note, however, that product selling businesses have an additional risk factor for new entrepreneurs. If you’re not good at selling or if unforeseen factors occur in the market that limit your sales, you may end up with unsold inventory with the supplier pressing you for their payment.

It is advised that you should be conservative in your estimates about how much you can sell and only order a limited quantity of products.

Develop a Strong Support Network

Everyone knows that having a big social network is very important for running a business successfully. It can also come in handy when looking to start a business with little or no money.

A big network can help you get good bargains in the market and reduce set up costs. You can also use your network to get customer referrals or spread the word about your business.

Your acquaintances can also loan you money short-term or put in a good word for you if you take a loan out for the business. Just return the borrowed money on time or return the favor to maintain your business credibility.

Secure a Small Business Loan

If your business venture requires some investment and you don’t have the money for it, you can get a loan to meet immediate expenses. The loan can be acquired from different sources.

The first people to approach for the loan are your close friends and immediate family members. These people know you best and can assess your ability to make the business a success.

After immediate friends, you can approach extended family members or your social circle to meet the financial needs of the business. These people might be less sympathetic to your needs and can also become impatient for getting their loan back.

If you’re unsuccessful with your attempt or don’t want to borrow from your close friends and social circle, you can also apply for a loan for your business. You will need to formally apply for the loan, along with a business plan and an outline of how the funds will be utilized.

Once approved, the funds will be transferred to your bank account. Do note that banks charge interest on business loans determined by the risk, loan duration, and amount of money you borrow.

Peer-to-peer (P2P) lending is another option to look into. It’s often quicker to obtain a loan this way since banks are not involved. It’s a transaction between investors and borrowers. Our two favorite P2P lending platforms are Lending Club and Prosper.

Related: Prosper vs. LendingClub

If you own a property, you can also get a mortgage or home equity line on it to meet your financial needs. Mortgage loans have a low-interest rate as they are backed by collateral, i.e., your house. However, they are risky for you. If your business does not work out, you can lose your home, so be very careful if you go this route.

Read more: Best Small Business Loans

Business Ideas That Do Not Require Any Money

Many people have started and run successful businesses investing no money into it, or at least without putting their own money into the business. Here are some popular business models that require little money and you can quickly start the business with just $500.

Online Store – You need only to design a website using free design tools and get free hosting. Dozens of online sites offer both services. Showcase your products on your website and give customers a way to order directly. You can also use social media for advertising your products to clients. You can run the store from home and sell everything from food & beverages to clothes, fashion accessories, electronics and lifestyle products.

Teaching and Consulting Business – If you have expert level knowledge in a field, you can offer to tutor in exchange for money. Many people will pay for education or advice on subjects ranging from business and homecare to social relationships. You can start and run your business at less than $100. All you need is some marketing and a network of referrals.

Ride-Sharing – If you have a car, you can use it through ride-sharing platforms like Uber and Lyft and turn your vehicle into a business.

Home Improvement – You can offer a variety of services to homeowners ranging from home cleaning, plumbing, and gardening to luggage transport for moving homes. You will need to invest in the equipment such as a vehicle and tools. You will also need to acquire licenses for businesses like HVAC repair or electrician service. These businesses can be started for less than $500.

Freelancing – Freelancing is becoming very popular and highly in demand. You can offer your talents in accounting, writing, web designing and drawing and charge reasonable rates for it. There is some competition in freelancing, but if you’re talented, you can easily make a name for yourself.

Related: How to Earn Extra Income and Have More Fun With a Side Hustle

Bottom Line

Many people dream about starting a business for months and years but never take the first step towards it because they feel they don’t have the money for it. This is a bad approach.

You should never start a business by investing a lot of money into it, even if you have the funds. New businesses, especially those with untested ideas, are risky. What will you do if the business idea fails and you lose all the money you have invested in it?

Always start a new business with as little money as possible to assess if there is a market for it first. It is not only possible to start a business with no money, but it’s also recommended by experts, to protect your investments.

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Article comments

1 comment
Steveark says:

I started my post early retirement career the day after I retired with no money. It isn’t that I didn’t have money, I was well past the need to earn another dollar but I wanted to work some for enjoyment. I signed up a dozen clients to pay me a flat fee regardless of the amount of work and also provide me with an expense account that covered the extremely powerful computer set up I needed as well as my cellphone and plan, color laser printer and office supplies. I had zero of my money involved in the set up and my home office was in one of the many unused rooms in our house that used to have three teens living in it, who are grown now. I can work for additional clients and sometimes do that on an hourly basis but since I already have all the gadgets I need for consulting there are no out of pocket expenses for me to pay. Obviously this kind of set up only works if you are selling your knowledge and experience, if you are producing tangible products like clothing or furniture you’ll have to have supplies and inventory that you can’t easily bill to others until after they’ve bought the product. But I agree with everything you said, start with as little spending as possible, many businesses do fail and at first you likely do not even know exactly what you’ll need to buy to grow in the future. Going into debt early in the life of a new venture is just asking for trouble. I think of the yard and garden services around here, whenever I see someone trailering some lawnmowers and weed eaters behind a $60,000 pickup I just shake my head in wonder. I think they should be driving the cheapest old wreck of a truck they could find used because nobody cares about how fancy their truck is and they are going drive the wheels off of it anyway!