7 Ways to Start a Business With No Money

Shutterstock founder Jon Oringer, was an amateur photographer who worked a day job as a software engineer. He had a great business idea, but didn’t have tons of cash laying around to get started. So he used 30,000 of his own personal photos to start what would eventually become a $2 billion company.

Why am I telling you this story? Because even with a really great business idea, the road to starting your own business is paved with all sorts of obstacles, including financial ones. So it’s no surprise that one of the questions I hear most from aspiring business owners is how to start a business with no money.

Believe it or not, it’s entirely possible to launch a successful business with no money. In fact, many successful businesses were started on a shoestring budget, including my own. Today, I want to share some strategies that can help you achieve your business dreams without draining your personal savings account or racking up insurmountable credit card debt on a business credit card.

1. Pursue a Business Idea That Requires No Startup Capital

If you don’t have a pile of cash lying around, aim for a business that needs minimal upfront investment. Think service based businesses or an online business like freelance writing, graphic design, or social media marketing; something you can start with nothing more than an internet connection and some expertise.

Pros:

• Low Risk: With no upfront capital and little to no business expenses from the start, your financial risk is minimal.
• Flexibility: You can start part-time and scale as you go, fitting the business into your existing schedule so you don’t have to quit your day job until you have steady income coming in.
• Quick to Launch: There’s no need to wait for financing approvals; you can start your new business right away.

Cons:

• Time-Intensive: While being your own boss is great, you’ll likely be handling everything from operations to your marketing strategy on your own.
• Slow Growth: With no money upfront to invest in advertising or product development, growth might take time.
• Income Variability: Revenue is sometimes inconsistent in service based businesses, especially in the beginning.

2. Look for Small Business Grants

Grants are essentially financial gifts—money you don’t have to repay. They come from various sources: federal and state governments, private companies, and nonprofit organizations.

Begin your grant search by checking out government platforms like grants.gov, or check out the Small Business Administration (SBA) for free resources. Many state and local governments also offer grants to start a business, especially those that can benefit the community or generate jobs.

Pros:

• No Repayment Required: Since grants don’t need to be repaid, you receive the funding you need for startup costs without adding debt to your balance sheet.
• No Equity Sacrificed: Grants allow you to secure funding without giving up ownership in your business.
• Credibility Boost: Being awarded a grant signals to customers, potential investors, and even to yourself that your business idea has merit.

3. Consider Small Business Loans

Many small business owners get started by taking out a small business loan or a business line of credit. These can be particularly useful for businesses that need a little push to get the ball rolling. Yes, taking on debt is a serious decision, but with a detailed business plan and financial plan, you can put that loan to work effectively.

Pros:

• Immediate Capital: Small business loans give you quick access to funds that accelerate business operations.
• Builds Credit: Timely repayment can help build your business credit for future business expenses.
• Retain Ownership: Unlike investors, lenders don’t require equity in your small business.

Cons:

• Debt Obligation: You have to repay the loan with interest, which can put strain on your finances while you’re trying to get your new business off the ground.
• Approval Challenges: Not everyone will qualify, so you’ll need good personal credit history and a strong business plan, including promising cash flow projections.
• Collateral: Some loans require collateral, meaning the business owner may need to put their personal assets at risk.

4. Use Crowdfunding For Your Business Venture

Another excellent way to raise money is crowdfunding. Websites like Kickstarter let you pitch your business idea to potential customers and the general public. If people like what you’re offering and think you have a solid business plan, they’ll back you with their own money, often in exchange for a product or service later on.

Pros:

• Market Validation: Successfully crowdfunding your idea can validate market demand with your potential customers.
• Community Building: You can build a passionate customer base with your target market even before you launch.
• No Debt: Money raised is usually not required to be repaid.

Cons:

• Unpredictable: Success is not guaranteed, and you might not meet your funding goals.
• Time-Consuming: Managing a campaign can be a full-time job itself.
• Fees: Crowdfunding platforms usually take a percentage of the funds raised.

5. Use Angel Investors or Venture Capitalists

For those who aim to scale quickly or have a business idea that requires substantial capital, angel investors or venture capitalists can be your best allies. These are individuals or firms willing to invest in a startup in exchange for equity or convertible debt.

Pros:

• Large Funding: These options can offer significant capital for growth and scaling.
• Mentorship: Investors often bring industry expertise and valuable business advice.
• Network: Investors can introduce you to a network of other professionals and potential partners.

Cons:

• Equity Loss: You’ll need to give up a portion of ownership in your business.
• Loss of Control: Investors will likely want input into business decisions.
• Complexity: The investment process can be long and complex, requiring legal consultation.

6. Borrow From Friends or Family

Turning to friends and family for financial help is another avenue you can explore when you’re figuring out how to start a business with no money. It’s a route that offers the unique advantage of potentially low to no interest rates and a more flexible repayment schedule. You could say it’s like getting a small business loan but without the red tape and credit checks.

Pros

• Low to No Interest Rates: Often, friends and family are willing to offer loans with minimal or even zero interest rates. That can save you a ton of money in the long run.
• Flexible Repayment Terms: Traditional lenders are generally strict about their repayment schedules. With friends and family, you might find more leniency and understanding if you hit a rough patch.
• Quick Access to Funds: No need to go through lengthy approval processes. The money can usually be available much faster, letting you kickstart your venture without delay.

Cons

• Unclear Terms: The informality that makes these loans easy to secure can also be a downfall. Without clear terms and a written agreement, misunderstandings can easily occur.
• Limited Capital: You might find that the amount you can borrow is insufficient for your business needs, forcing you to seek additional funding sources.
• Lack of Business Expertise: Unlike venture capitalists or angel investors, your friends and family are unlikely to provide business advice or networking opportunities.

7. Pre-Sell Your Product to Fund Your Own Business

If you have a product that you know people will love, why not sell it before it even exists? Pre-selling helps you start a business by generating revenue before you incur the costs of production.

If you’re done your market research and know there’s a high-demand for your product, this can be a good way to start a business with no money. It works best for products or services that can be adequately described or visualized before they exist. Think small businesses that sell software, online courses, physical products, or event tickets.

Pros:

• Cash Flow: Money comes in before you start production.
• Reduced Risk: You’re producing a product you already know has demand.
• Customer Engagement: Early customers feel a sense of ownership and are likely to be loyal.

Cons:

• Reputation Risk: Failing to deliver can harm your reputation and potentially even leave you in legal trouble.
• Pressure: You’re committed to deliver the product on time and at high quality.
• Limited to Certain Businesses: Not all types of businesses can effectively pre-sell their products or services.

Embrace the Power of an Imperfect Start

Let’s face it, starting a business is messy. If you’re waiting for the perfect moment to launch your new business venture, you’re going to be waiting forever. So what if you don’t have all the startup capital you’d ideally want?

Your first business idea doesn’t have to be your final one. Many business owners start with a service business and add a product line down the road. Maybe you start smaller than you wanted, or perhaps your initial business model needs to adapt along the way. After all, Ralph Lauren started out selling ties before turning into the retail giant we know today.

So, embrace the bumps and detours. They might just lead you to unexpected opportunities or insights that you wouldn’t have discovered otherwise. Trust me, the climb might be tough, but the view from the top is worth it.

Take it from someone who’s scaled both mountains and business ventures: a start, even an imperfect one, is better than staying stagnant. So now that you know how to start a business with no money, get out there, take that first step to becoming a small business owner, and don’t look back. You’ve got this!