How to Start a Business With No Money

Starting a business can be both exciting and scary. You have important decisions to make and it  might feel like you aren’t ready for the challenges to come, especially if you’re low on savings.

But a lack of startup capital doesn’t necessarily mean you can’t start a business! In fact, there are plenty of ways to start a business with no money stashed away. With the right strategy, you can start first, then reinvest your earnings into your new business.

From choosing the right business idea and writing a business plan to creating a brand and sourcing funding, we’ll walk you through everything you need to know about starting a business even if you’re low on dough.

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How to decide whether to start a business

The first step to starting a business is clearly defining your reason. Considering how to start a business without money becomes easier when you know why you’re doing it. Perhaps your business idea is a lifelong passion in an area of your expertise, or you noticed a gap you can fill to provide value to your potential customers or clients.

There are many great reasons to start a business—you are your own boss, you can achieve financial independence, and you can follow and fulfill your passions. But even with a business idea in mind, consider these questions before you jump in:

• What need will your business fulfill and/or pain points will it address for the market it will serve?
• How is your business idea different from others in the market, and how will you stand out?
• What are your unique qualifications for starting this business?
• What type of business structure will you run? (Sole proprietorship, LLC, partnership, corporation)
• Where will there be opportunities for your business to grow?
• What resources will you need to start your business?
• Will your business be able to adapt to changes in the market?

At the end of the day, thorough research will be your best friend when it comes to starting a business. If you have a crystal-clear picture of why you want to run a business before you start, you’ll be much more likely to succeed. And if you want to start a business with no money, it’s even more important to prepare well in advance. 

5 steps to start a successful business

Before you dive head first into business ownership, there are a few important boxes to check first to make sure you’re prepared. 

1. Research, research, research

When you’re low on financial resources, it’s crucial to understand everything about the industry you’re going into so you can identify where your business will fit in and how you will stand out among your competitors.That way, when it’s time to launch your small business, you can work smarter, not harder!

Remember to take into account market trends, the digital landscape, and your local community preferences. Consult economic reports, study the success of your competitors, and consider how to allocate your resources more efficiently.

2. Find your people

As a business owner, you have to ask yourself who your target audience is. Are you serving consumers or other business owners? What kinds of customers will need your product or service? Are you focusing on a specific age, location, or income demographic?

Free tools like Google Analytics and Google Trends can reveal useful information about potential customers and clients. Take advantage of reports from the Bureau of Labour Statistics or think tanks like the Pew Research Centre to better understand the landscape in your industry and region. And if you’re ready to get more personal, Surveymonkey or other free feedback tools are a great way to seek more specific information.   

Understanding the people you will serve and their needs, wants, and overall purchasing behavior will help you polish your offerings and get your marketing and sales messaging to the right audience. Your customers will be the backbone of your business success, so prioritizing getting to know them will benefit you enormously. 

3. Make a financial plan

Even though you’re starting with little to no startup capital, it’s still a good idea to map out your finances. Knowing what you have will help you identify what you need. 

New business owners can get creative when looking for resources. Tap into your community and ask friends and family members if they are willing to help you build a foundation. Take the time to network and connect in your industry—you may just find the opportunity to pitch your dream to an investor with shared interests. 

And regardless of your community support, apply for small business loans and lines of credit through a bank, credit union, or the small business administration (SBA), which exist for people in your exact position.

4. Expect the unexpected

Becoming a business owner means understanding the possible risks and being able to adapt whenever challenges appear. Do you have family or other dependents who may rely on your income? Do you have a security net if your business takes longer to get off the ground than expected? 

Before you even start putting together a business plan, identify your risks and ask yourself if you’re prepared to respond to the unexpected.

5. Choose an inexpensive business idea

If you’re starting on your own, it’s important to keep your financial limits in mind when starting a new business. You may have a clear vision for how you will scale up, but consider beginning with a business model that takes few resources.  For example:

• Service-based businesses like freelance writing, house cleaning, dog walking, or photography
• Sell handcrafted goods through an online store
• Sell digital products like ebooks or online courses
• Try affiliate marketing and sponsored content through social media

These types of businesses don’t break the bank to start, but they can develop dedicated clientele and customer bases. In particular, think about how to start an online business with no money. Without the costs of a brick-and-mortar space, you can save big and focus your resources elsewhere.

Get creative and you might surprise yourself with how much you can do without a starting fund!

How to create a business plan

Once you have your business idea, you’ll need to draft up a business plan. Business plans are not one-size-fits-all, but they typically include these sections:

• mission statement
• business description
• list of products and services
• market analysis
• financial plan
• areas of opportunity

Not only does your business plan provide you with a clear foundation, you can present it to investors and partners as evidence of your potential.

Choose a business structure

After writing up a business plan, the next course of action would be to choose a business structure for your organization. That could be a sole proprietorship, limited liability company (LLC), partnership, or corporation.

• Sole proprietorship: A sole proprietor is an individual who owns an unincorporated business on their own.
• Limited liability company (LLC): This business structure has different regulations on a state-by-state basis, but members could include individuals, corporations, and other LLCs. A single-member LLC only has one owner.
• Partnerships: A partnership includes two or more people that contribute property, labor, or money to a business and share in the profits and losses.
• Corporations: A corporation is considered a separate tax paying entity apart from you as an owner and can take special deductions on tax returns.
• S Corporations: An S Corp functions like a corporation apart from the fact that the flow-through of income and losses is sent through to shareholders to help you avoid double taxation on corporate income.

When working from a limited budget, research the associated fees and financial obligations involved in each structure to find the best fit for your business. 

Register your business with your state

A corporation or LLC business structure will require registration with the state in which you will be conducting business—even if you have customers/clients outside of that area. Each state has different regulations, so check out your location’s Secretary of State website for all the details. You will need to register your legal business name, and you can do a search in the database to determine if the name you want is available.

Consider a trade name

Having a trade name for your business is not a requirement. However, it allows your business to be legally referred to without the “LLC” or “Inc.” title without worries of misidentifying your business. 

A trade name is typically referred to as DBA or “doing business as”. Keep in mind that trade names are not necessarily exclusively yours. If another company registered their DBA as the same name, depending on your state’s legislation you may not be able to use it. Be sure to check your state’s specifications for trade names.

Use free small business tools to get started

How to start a business without money may seem daunting, but you don’t have to do it alone. There are sophisticated but easy-to-use small business tools that can help you manage business functions all in one platform. 

At Homebase, we have a free-to-use app for small businesses that allows you to manage technology integrations, HR and compliance, hiring and onboarding, and scheduling and payroll in the palm of your hand.

As your small business takes off, use Homebase to skyrocket your success at no cost. It’s really that simple!

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