You’ve probably heard that old cliche: You’ve got to spend some money to create money. It’s obnoxious, however it does highlight a real problem that anyone aiming to start a business venture will probably encounter. Companies are investments, and investments imply an allocation of cash.
Or do they?
We put out our feelers and spoke with business owners who say they started their companies with no substantial outlay of money. How did they do it? What advice are they going to give other broke entrepreneurs? Read on to find out.
Tip #1: Don’t Quit Your entire day Job
At least not right away. You’ll probably need to rely on your present job to help keep the lights on while your new business venture finds its feet. According to Jason Littrell of Jason Littrell Ltd.:
I started my company over 10 years ago with absolutely no money. I didn’t have an LLC for 6 months. The misconception that you'll require money to start a business really bothers me, so I wrote a magazine about it. The truth is you can start a business while you already have a job. Within the COVID economy, it’s about taking a thorough inventory of your skills and building a business. The hardest part for most of us may be the sales and marketing part. Most people have a very troubled relationship with money, thus have a difficult time asking for it. You don’t even have to marry your niche, you can easily date it for some time to see if it’s working for you. Otherwise, simply change it.
Tip #2: The kind of Business Matters
Not all businesses are the same when it comes to initial costs. Considerations like the the equipment to run your business, any required physical space, and inventory to stock all factor into how easy or difficult it's to bootstrap a brand new company. Bear in mind the non-financial resources you may possess out of your current job or business; dealing with the time you have will reduce your costs. The following three stories help illustrate this, starting with Andrew Cao of Motoza:
My business partner and that i started Motoza, a digital marketing agency, in 2011. We had no funding and bootstrapped it from the beginning of it; we put in about $200 each to finance our new venture.
It was tough in the beginning. Luckily, we worked at home, did not need staff, and didn't need to purchase expensive physical equipment. We had some software already therefore the operational costs were at least.
We needed to dip into our savings for that first few months until we got a few contracts signed to help bring in revenue. The cashflow was still being insufficient to pay for full salaries, but at least we were making something after our newbie.
Next up, Ryan Snaadt of Snaadt Media Group:
I started my company in college with a $300 camera from Target — shooting small projects around campus. In less than 12 months, I made over $10,000. I then used the revenue to upgrade my gear, increase my production quality and price point — and grow my company.
The first couple of years were tough to overcome the ‘only a guy with a camera’ stigma. I quickly started offering integrated marketing with the videos. Essentially shoot, edit, produce, and run the ads for clients on social networking. This brought much more value to them and transcended the ‘guy having a camera’ stigma to achieve more premium level clientele.
For a business today, there are lots of ‘lean’ ways to start up. Many times something or consulting business can conduct their interactions over the internet and never require unnecessary overhead like office space, multiple employees, etc. In my world of marketing, it has never been so easy to use free platforms like podcasting, YouTube, social media, and others to grow your audience and discover more customers.
And from Julie Austin of Creative Innovation Group:
I’m an inventor and manufacturer of a product called swiggies, wrist water bottles for adults and kids. I literally began with $5.00 and a clay prototype. No investors, no savings, with no experience in operating a business, especially something as overwhelming as inventing and manufacturing something new.
How difficult maybe it was? Extremely! I worked 2 and three jobs for a long time to obtain patents, buy inventory, and obtain them back the ground.
How long did it take to become profitable? It took several years to exhibit a profit. But I don’t think every business are this difficult to begin with no money. It’s a really cash intensive startup.
Tip #3: Don’t Expect Immediate Windfalls
When you’re talking about starting a company without any money, you’re more likely taking a look at a slow ramp-up than instant gratification. Plan accordingly. While you can start raking in money immediately, your real payday might be months or even years away.
Neal Taparia of Solitaired shares some insights below:
It was very challenging to grow a business without financing. I lived off savings in the beginning, and paid myself just enough for bills for a long time. We became profitable 2.5 years in it, using the caveat I was paying myself minimally.
The biggest pro could it be requires you to be disciplined. You count every dollar in and each dollar out, and also you make certain things are spent to best grow the business. If you have a bad hire, you won’t hesitate to make the necessary changes. On the flip side, it takes time. You don’t have outside capital to accelerate your growth. You have to be patient and disciplined to achieve the long game in mind.
Joan Igawa of Atomic Bullfrog Studios has this to state:
I am a small company owner coupled with started my t-shirt design business about Three years ago. I did not use any type of money in advance to begin. I started on Merch by Amazon which requires no money to begin an account, plus all of the computers and design software I already had. The drawbacks for this was that it took a couple of months to start seeing any kind of profit, while toiling day and night creating, researching, and uploading designs. I needed to learn how to strategically use keywords so customers could find my designs, in addition to testing what was selling well, what was oversaturated, and what certain untapped niches had possibility to become very profitable.
Tip #4: It's really a Good Way To Launch Firms that Investors Would Overlook
Don’t have a network of investors at hand you dump trucks full of treasure to start your company? That’s not always bad. Investors are looking to win big on their investment, which means they can easily overlook niches that take time and love to develop, while ultimately establishing a healthy income. From Meaghan Thomas of Pinch Spice Market:
My partner started our organic spice company, Pinch Spice Market, this year with his former business partner. They started it with just their personal savings, and to this very day it has never adopted financing or received outside investment.
Personally financing the company was certainly the greater difficult road to take, but it wasn’t without its perks. These were in a position to have full control over the product, that was really important towards the founders. The organization proudly sources spices fair and direct trade from certified organic farmers and co-ops all over the world. It’s definitely not the least expensive way to acquire spices, but it is probably the most ethical way. (We think it is yields the highest quality spices too, as farmers don’t have to worry about living in poverty and can spend some time looking after their organic crops, but that’s a whole different story.)
The bottom line with investors was we didn’t want to take on anybody who would certainly take a look at spreadsheets and decide it had been cheaper to buy lower quality spices from a standard spice conglomerate like the majority of our competitors do.
Tip #5: Make the most of Free Platforms
The internet can be both a blessing and a curse for smaller businesses. On the one hand, it puts you in competition with individuals beyond your immediate geographic location. On the other, it offers you access to those other markets and frequently at little to no cost. Take advantage of platforms (for example Etsy, Amazon, etc.) to market and advertise your services and products without spending money upfront. Below is a quote from Ryan Scribner of Scribner Media LLC and Investing Simple:
I have actually started two businesses with $0 in launch money. The first is my YouTube channel, that we started in 2022. The second reason is my blog, that we co-founded with my company partner in 2022. As these are internet sites, it had been obviously a lot easier to bootstrap it and start with nothing. In 2022, my YouTube channel surpassed $500,000 in revenue and the blog is on the right track to complete around $150,000 in revenue in 2022. These businesses brings in a combined $1,000,000 by 2022. It was not difficult to start these firms without money. There was no inventory to buy, and I simply utilized what I already had around me. I eventually upgraded equipment, but I simply reinvested my earnings back to improvements. To get going with a channel, all you really need is really a camera along with a computer. For any blog, just the computer is going to do. It's totally free to post your videos online or share blog articles on the web.
Tip #6: Tap Unconventional Sources To Get Financing
You can function around lacking much cash, but there’s a high probability you’ll run into a minimum of a cost or two early on. From benevolent relatives to non-public loans, to crowdfunding platforms (for example Kickstarter), it’s possible to raise funds even if your accounts are empty. Just keep in mind that all of these unconventional sources come with their very own drawbacks. You can strain relationships, accrue debt you can’t pay, or add overwhelming complexity or responsibilities as to the otherwise would have been a simple strategic business plan.
Note this often goes against what conventional wisdom says is “the proper way to begin a business.” However, you probably wouldn’t do this if you weren’t a risk-taker, would you? Just take a look at what Frank Chioda of Trivr Eats has to say about this:
We’ve bootstrapped the organization to date: pouring our savings and resources into it and we’re very happy with it. Used to do something which I’m sure lots of people would advise against. At 29 years old, I emptied my 401(k). I pulled all $50,000 out and set everything in to the business. It’s been incredibly difficult and expensive, especially compared to a number of other startups that focus on OPM. Other People’s Money.
But I wouldn’t get it every other way. Savings, 401(k), it’s all just investments in different things and we decided that if we’re likely to gamble on someone, I’d rather it be upon us. We’ll discover in no time whether i was right or otherwise.
Tip #7: Be Prepared To Be considered a Jack-Of-All-Trades
While you may be able to outsource some work with favors or by providing sweat equity inside your business to individuals who assist you, chances are you’re going to have to wear a lot of different hats as your business gets off the floor. You might not be an expert in web design, for example, however, you still might have to design a functional one. You may not know much about finance, but you’re going to have to learn to balance your budget. This isn’t bad. While the salaried world has a tendency to reward specialization, entrepreneurs take advantage of a far more generalized set of skills. From Leigh Louey-Gung of Life Operating-system:
I started LifeOS without any money from my bedroom and it forced me to need to learn how to do everything. I learned building websites, how you can setup forums, crafting articles, how you can develop coaching programs, how you can do social media, and all things in between.
While it had been a struggle and took far more than it might have if I had money to hire skilled and experienced employees, the abilities I learned through that process have put me in great stead to build my later companies and also the experience with completing those tasks has provided me the ability to hire staff more effectively when i now know what to consider.
Small Business Spotlight: LaTersa Blakely Enterprises, LLC
In 2009, administrative assistant LaTersa Blakely of Peachtree City, GA, realizing that all but $20 of her salary was spending money on childcare, left her office job behind so that she could take care of her children full time. With the have to stay at home with her kids with no money to invest on a business venture, Blakely required to get creative.
“I started my initial business in 2009, called LaTersa Diaper Cakes and, to tell the truth, I really didn't know what I was doing,” says Blakely. “Because I still wanted to be able to bring about the monthly household bills, I began selling my diaper cakes on eBay, Etsy, and craft shows. Because I started my company from my kitchen table and just purchased supplies as my orders arrived, I had been able to make just a little money.”
Over time, Blakely sought additional causes of revenue for instances when the sales of her diaper cakes were low. She now supplements her sales with digital products, such as ebooks, consulting, and courses. Ten years later, her business is thriving.
Blakely offers a few strategies for people trying to bootstrap their businesses:
- Start With Digital Products: “It will only cost you time and effort upfront which will lead to re-occurring income with time. Some examples could be printables, eBooks, workbooks, and consultations.”
- Offer Coaching Programs: “For those who have knowledge that people are asking constantly, you are able to package might sell your understanding. If you're able to solve someone’s problem, individuals will pay out to create their pain disappear.”
- Host Virtual Workshops: “Collaborate and make relationships along with other entrepreneurs and also have Summits, classes, workshops all from the comfort of
your home.” - Get Creative: “When you're starting a company, you have to have more than a goal to earn money because when you first begin, your hard earned money will not come in consistently. You need a larger why than making money because if that’s your driving force, when you don’t see the money immediately, you'll quit. Begin small and come up. The greater creative you will get and keep your expenses low will help you build momentum while you’re building your company.”
Starting A company Without any Money: Have You Found Success?
Have you started your own business without any money? What obstacles and opportunities have you encounter? We’d love to hear about your experiences in the comments.
