How to Start a Small Business with No Money to Invest

How to Start a Small Business with No Money to Invest

1. Refine your idea

If you’re thinking about starting a business, you likely already have an idea of what you want to sell online, or at least the market you want to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing and figure out how you can do it better. If you think your business can deliver something other companies don’t (or deliver the same thing, only faster and cheaper), or you’ve got a solid idea and are ready to create a business plan. 

Define your “why.”

“In the words of Simon Sinek, ‘always start with why,'” Glenn Gutek, CEO of Awake Consulting and Coaching, told Business News Daily. “It is good to know why you are launching your business. In this process, it may be wise to differentiate between [whether] the business serves a personal why or a marketplace why. When your why is focused on meeting a need in the marketplace, the scope of your business will always be larger than a business that is designed to serve a personal need.” 

Consider franchising

Another option is to open a franchise of an established company. The concept, brand following and business model are already in place; all you need is a good location and the means to fund your operation.

Brainstorm your business name

Regardless of which option you choose, it’s vital to understand the reasoning behind your idea. Stephanie Desaulniers, owner of Business by Dezign and former director of operations and women’s business programs at Covation Center, cautions entrepreneurs against writing a business plan or brainstorming a business name before nailing down the idea’s value.

Clarify your target customers

Desaulniers said too often people jump into launching their business without spending time to think about who their customers will be and why would want to buy from them or hire them.

“You need to clarify why you want to work with these customers – do you have a passion for making people’s lives easier?” Desaulniers said. “Or enjoy creating art to bring color to their world? Identifying these answers helps clarify your mission. Third, you want to define how you will provide this value to your customers and how to communicate that value in a way that they are willing to pay.” 

TIP:TIP: To refine your business idea, identify your “why,” your target customers and your business name.

During the ideation phase, you need to iron out the major details. If the idea isn’t something you’re passionate about or if there’s not a market for your creation, it might be time to brainstorm other ideas.


Step 3: Develop your idea

With the feedback you’ve received, it’s time to refine your physical or online business idea, making it stronger. Perhaps you decide to look at a different area to open your electrician company or refine your revenue model to lower prices so that they are competitive with other equivalent electrician businesses.

Your research might have also shown that while the area of your business has a lot of professionals servicing the home market, there is a growing demand for subcontractors on large commercial jobs. This would force you to consider new ways to market yourself to this market. 

As you look to find funding for your operation, and as you talk to potential customers, you’ll need to develop a full pitch and shorter elevator pitch, enumerating the benefits of your business and how it will work, including how you will use social media and valuable channels for connection, such as LinkedIn, Facebook, and Twitter. Elevator pitches are quite important, so make sure to read some advice on how to best craft an elevator pitch.

Identifying your target market

A successful business needs to know who its ideal client is. Since you’ve just barely come up with the business idea, you’ll need to figure out who buys the product or services you are selling.

Facebook has got this down to a science, but their ads can be complex to use if you don’t know what you’re doing.

Wordstream published an infographic with all of Facebook’s targeting options. If you want to get your target market as precise as possible, spend some time learning about each of the options.

Step 7: Build The Smallest, Best Version Of Your Product

We live in a time of wild business valuations, venture capitalists galore, and stats that say 9 out of 10 business owners fail in their first year.

You shouldn’t need funding for your first business. Heck, even if it is your 14th business, you should probably still build a prototype or simplified version of your business before trying to get funding.

I started my IWearYourShirt business with a $150 Flip Video Camera and about $100 in plastic hangers. I bartered to get a website built. I took a photographer to a $30 lunch to get some professional photos taken. The term for this is “bootstrap.” You should do this to the best of your ability.

The one thing I wish I would have started earlier with my business was an email list

Social platforms change, the email algorithm doesn’t change. If you can offer value to someone and have the ability to send an email to their inbox consistently, you’ll build trust and strong relationships. This is the one marketing strategy I’d advise every single person reading this article to do.

One of the biggest mistakes you can make in business is making assumptions and holding on to them like they’re precious diamonds. Swallow your pride, listen to your customers, take feedback from your critics (if they have experience doing what you’re trying to do), and be open to making changes.

With all of that said, start with the smallest, simplest version of your business. You might have a feature list for an iPhone app that’s 20 items long. Cool. Keep that somewhere safe, but start with two or three of the items. Get people using your app. Get people paying for it. See what your customers are actually doing and saying.

No matter what you are trying to build, start small, and just get a version of what you’re building out into the world.

How to Start Almost Any Business With No Money

Almost any business can be financed if you can find the right investor or willing lender.

Friends and family are the most common financing source. Angel investors – wealthy professionals and investors who invest in startups – are another common source.

Other financing sources include crowdfunding, online lending, merchant cash advances, SBA loans, personal loans, government grants and many more.

How much money does it take to start a business?

According to Shopify, starting a business normally costs $18,000 for business owners with zero employees, while a business with up to 4 employees spends $60k during the first year. Shopify included 300 business owners in their study and found that they funded their business in the following ways:

  1. 198 used personal savings
  2. 90 reinvested revenue
  3. 69 got support from friends and family
  4. 63 got a personal loan

In other words, you’ll probably need some skin in the game because bootstrapping is the number one way of starting a business. Shopify goes on to explain the percentages a business should aim to spend on various aspects of the business. They suggest the following:

  • Operations: 10%–15% – Software for managing business. This can be fairly low. For instance, Quicken is $100/year and will make keeping track of accounting easier. Cloud based services normally have free trial periods to get started.
  • Product: 28%–36%: When selling goods divide the cost by.28 to get the price you should sell for. Use Printful to make this process easier.
  • Shipping: 8%–12%=should be covered by the customer unless they spend over a certain amount.
  • Online: 9%–10%=Cost of software directly attributable to selling product
  • Marketing: 7%–12% =You or outsourced
  • Team: 14%–30%=You starting off.

I have included some observations after Shopify suggested percentages.

The good news is that you’ll really only need about $1,500 per month to operate for a year.

Let’s look at some more commonly wondered things.

Choose a low-cost business model

If you don’t have ready access to cash, you’ll want to choose business model that doesn’t require much money to get started.

It usually costs far less to start a service business than a company that sells products since your income is generated by your skills and time rather than from physical items that you need to make, buy or store.

Low-cost service businesses include things like:

  • Tutoring and training
  • Consulting
  • Photography
  • Writing and editing
  • Translation
  • Graphic design
  • Digital marketing.

Types of new businesses to start with limited capital

The businesses that emerge when entrepreneurs have limited capital and adopt the alternative mindset for new venture creation typically have certain characteristics. They often fall into one or more of the following broad categories: Service, Events, Performance, Brokerage or Education.

  • Service businesses depend on the skill and time of the person starting the business. Such a person can make their skill available to others with relatively little upfront investment. To start a service business you merely need the tools of your trade.
  • A consultant may require a computer, a handyman some tools and a dressmaker a sewing machine. With these tools on hand you can use your contacts to start selling your service. Events-based businesses are a little more complex but can still be started with limited capital (see the March edition of Entrepreneur for a feature on events-based businesses). Events-based businesses include ventures that put on sports events, expos and concerts. The advantage of such businesses is that with effective marketing, you can sell the tickets before you incur the major costs, limiting the amount of capital required to keep the venture afloat.
  • Performance-based businesses depend on the ability of entrepreneurs to perform and to pull together other people who can enhance the performance.

Mark Lamberti, the entrepreneur who turned Makro into what it is today, says he learned some of his most important business lessons when he played in and managed a band in his young adult years.

Performance-based businesses depend on the creative skill of the entrepreneur coupled with an ability to market those skills to a broader audience.

Musicians, comedians, motivational speakers and singers all have the potential to create performance-based businesses.

Brokerage businesses are amongst the most popular kinds of ventures for people with little capital. They bring buyers and sellers together. You find brokers across multiple industries from real estate (e.g. estate agents), hospitality (e.g. website portals marketing B&Bs), recruitment (e.g. recruitment agents), and sports (e.g, sports agents bringing sportsmen and sponsors together), to speakers and performing artists (e.g. speaking agents marketing speakers to conference coordinators) and the list goes on.

The key to being effective in brokerage businesses is having contacts and fostering relationships and effective marketing on both sides of the equation – to buyers and sellers.

Many modern brokerage businesses – such as and– now leverage the web to create a broader reach between buyers and sellers.

But the essence of the business is still what it has always been, filling an information gap between buyers and sellers. People with lots of contacts in a particular industry and a flair for marketing and selling should consider a brokerage business as a low capital way to get into business.

Education is another area where people find opportunities with little or no capital. Anyone with skills and insights that others wish to learn, and a passion for helping others develop could move into education.

From an ex-teacher setting up a business that provides extra lessons to school-going children, or a sports fanatic setting up a coaching business, to a person with training in photography helping others take better pictures, there are multiple low capital opportunities in the education arena.

Although these five categories of businesses – service, events, performance, brokerage or education – may spark some ideas within you, low capital start-up opportunities are not limited to them.

With ongoing development in technology, there are many new opportunities emerging in the software and web services space (e.g. creating iPhone apps) and in the media space (e.g. with website and blogging tools there is no longer the need to spend R5 million to create the foundations of a media company).

The key is to start with what you currently have – the resources you can access, the skills you can leverage and the connections at your disposal – to help you figure out a low-cost path to a sustainable and profitable new business.

Ask your friends and family for extra funds

Remember, you’re not asking for charity. You’re not asking your friends and family to support your wacky business idea. No, you’ve got a dream of a business and your business plan is solid. You’ve crossed your t’s and dotted the i’s. That’s why you’re looking to those closest to you when making your pitch. Use your friends and family as multi-layered resources.

Practice your sales pitch with them. Ask for feedback. And, when you’re ready to launch your business, ask if they can help with a small loan to kickstart the business. Just be sure to get everything down in writing and when you’ll pay them back. You can even use a crowdfunding platform to encourage the people around you to encourage their networks to pitch in.

Tap Into Free Resources

While there are many high-cost business training options, there are even more low- and no-cost resources that can teach you almost everything you need to know.

Start with internet searches and a trip to your local library to search out free, quality business advice. You can get more customized business advice for free by working with a volunteer mentor from , a nonprofit partner of the Small Business Administration. Have your mentor help you choose a business model that can use digital platforms to grow and scale affordably.

You can use online platforms to avoid spending a lot on fancy trappings that you don’t need at first, such as using WordPress to make a free template website instead of paying a designer for a custom build of your own.

Find investment if its needed

Some types of business are simply impossible to start without any money. That may include businesses in the manufacturing, technology, construction, retail, or hospitality industries.

In this case, you might want to consider getting a loan or seeking out investment.

Bank loans

You might be able to get a business loan from a bank, although this may be hard if you have no collateral at all.

Government grants and loans

There is support from the government for certain industries and regions.

Bank of Mum and Dad

Family and friends may be willing to provide you a loan free of charge, or for a share of your company.


There are various crowdfunding websites – such as GoFundMe and Kickstarter – which allow people to either donate money or buy small shares in your idea if they like the sound of it.

Angel investment

This is often associated with technology startups. A wealthy backer invests in your business in return for shares.

Next Steps: Invest in the Business Once You Have Cash

Obviously, a lawn-mowing business would fare better in the long run if you had your own equipment. Use some of the money you initially earned from those first jobs to buy equipment. The same goes for any business. Borrow until you can buy. Then buy more when you need to expand.

Some small businesses will do better when you have additional training or expertise. Do some research into whether you need to take some online courses to gain expertise for the business. This investment may be painful at first, but often yields big returns because you become more marketable.

The key is to be patient and realistic with this process. Don’t spend more than you can reasonably expect to earn back through the business.

As PT Money grew, I started spending money on marketing, improved hosting, and freelancers to make this a better business. Truthfully, I probably waited too long to start reinvesting in this business.

Related: Make Sure It’s Legal: A Cautionary Tale on Starting Your Own Small Business

Don’t be like me. Take more chances early on and reinvest in your business. Especially if you’re still hanging on to that full-time job, but hope to transition out of it in a year or two.

Additionally, there are legal considerations for running a business. Some businesses need insurance, legal services, etc. As soon as you can afford it, get insurance to protect you and your customers.

Related: Do You Need Insurance For Your Internet Business?

5-Step Checklist to Improve Every Aspect of Your Online Business

We’ve been building and running online businesses since 2007, and in that time we’ve seen a clear pattern of five crucial things you have to pay attention to if you want to succeed. In this article, we’re going to go in-depth on these five important aspects of online business. There are certainly many more we […]

10. Grow your business

Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to be growing your business. It’s going to take time and effort, but you’ll get out of your business what you put into it. 

Collaborating with more established brands in your industry is a great way to achieve growth. Reach out to other companies and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization, and volunteer some of your time or products to get your name out there. 

While these tips will help launch your business and get you set to grow, there’s never a perfect plan. You want to make sure you prepare thoroughly for starting a business, but things will almost certainly go awry. To run a successful business, you must adapt to changing situations. 

Free download: Free download: We’ve created a sales plan template you can use to scale customer acquisition.

“Be prepared to adjust,” said Stephanie Murray, founder of Fiddlestix Party + Supply. “There’s a saying in the military that ‘no plan survives the first contact,’ meaning that you can have the best plan in the world, but as soon as it’s in action, things change, and you have to be ready and willing to adapt and problem-solve quickly. As an entrepreneur, your value lies in solving problems, whether that is your product or service solving problems for other people or you solving problems within your organization.” 

Selling Your Talents

If you have some talent or skill why not turn it into a business? If you’ve got some marketable skill you can probably charge high hourly rates and relatively quickly build a clientele. These businesses you can also start with no money.

  • Personal trainer
  • Freelance writing
  • Tutoring
  • Art lessons
  • Bartending service
  • Music lessons
  • Consulting
  • Selling crafts
  • Resume writing
  • Jewelry design
  • Chef for hire
  • Interior decorating
  • Knitting lessons
  • Photographer
  • Yoga classes

Live on Personal Savings

If you’re planning to quit your day job to work on your business venture full time, you’ll need a source of income. At first, you’ll want to reinvest most revenue back into its operations and growth.

“What it comes down to is you take your little bit of money, and you wear all the hats,” says business advisor Bob Hunter, operations director at Oxford Pierpont. “Any money that comes in, you put back into the business, thus multiplying the money that you’re getting every time.”

Eventually, the business revenue will grow to the point that it can support you, but it’s a good idea to build up some personal savings to live on until then. Just make sure to keep that money separate from your business accounts.

4. Create Your Business Plan

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions, and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. A well-rounded business plan should contain the following sections:

  • Executive summary. The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
  • Company description. The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
  • Market analysis. This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
  • Organization and structure. Write about the type of business organization you expect, what risk management strategies you propose, and who will staff the management team. What are their qualifications? Will your business be a single-member LLC, or a corporation?
  • Mission and goals. This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).
  • Products or services. This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your product costs, who will be responsible for creating the product, how you’ll source materials and how much they cost to make.
  • Background summary. This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
  • Marketing plan. The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.
  • Financial plan. The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

Find out about—and woo—potential angel investors

You’ve probably heard of angel investors, and with good reason. They come into play when it’s time to scale your business beyond you, yourself, and the handful of loved ones who’ve bought in. Angel investors are usually among the first people outside the company to invest in a business.

Unlike outside firms or other venture capitalists, angel investors put down their own personal funds. They can also make for the best kind of mentors, since many are former/current entrepreneurs themselves. (Find out more about how your can win over Angel investors, here.)


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