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  • Sylvia Singleton, CPA

It is Possible to Start a Business with No Money

Updated: Apr 20, 2023

Is it possible to start a business with little or no money? The answer is yes, you can. Starting a business with minimal financial capital can seem daunting or even impossible. Still, there is a strategy for launching a new business venture with little or no money to invest. Five key elements should be included in your plan to launch your new business under these circumstances.

The Five Key Elements:

Write a Business Plan

Writing a business plan is the first step to launching a new business with no or minimal money. A business plan is a roadmap for your business. It should include your company's mission, target market, competitive analysis, financial projections, and strategies for growth. A business plan is vital for every business, yet often, entrepreneurs do not write one. Why is it vital? Writing a business plan founded on quality research about the product/service and the market data of the industry will be critical to your business in two key ways. First, the information you gather will prove crucial in assessing whether your business product/service concept can capture market share. Keep in mind that many businesses are targeting the same customers you are, so customers have many options. Your research will help you identify potential issues you need to investigate to determine whether your product/service will be marketable such as the demographics of the customers who would purchase your product/service and what they would be willing to pay. Your research will also help you learn about quality standards, industry regulations, and forecasts for the industry's future. After completing your research, you may need to reconsider offering a select product/service. You may also discover that you need to find a way to better distinguish your product/service from the many companies targeting the same customers with a similar product/service. Remember that for your business to be successful, your product/service must meet the targeted customers' needs and be unique in some way that makes them want to buy from your business instead of another.

So, how is this relevant to starting a business with little or no money? If you do not have a well-written and researched business plan, you are severely limiting your options for securing financing and the potential for your business to be successful. For example, banks and other types of organizations that provide funding will require you to provide a business plan when your business is a start-up. To learn more about writing a business plan, visit the U.S. Small Business Administration’s (SBA) webpage on writing a business plan. The SBA is a governmental agency dedicated to issues of interest to small businesses. The SBA’s page includes information on each element regarding what should be included in a business plan and provides a downloadable sample business plan for your review. Here is the link to the SBA page,

Identify Grant and Lending Opportunities

Conduct research to identify grants, loans, and other financial assistance from your local government, lending institutions, private organizations, and online resources.

There are many avenues for securing grants for small businesses. Grants will provide funds for your business that you do not have to pay back. There are grant programs at the federal, State, and local levels of government. The grants may be offered to businesses that meet specific societal needs, provide services in select specialty areas, or for companies owned by members of particular groups such as women-owned or underrepresented minorities and others. Federal-level grants can be searched by visiting States, cities, and towns may offer grants and other resources, such as coaching, to support small business initiatives, so you should research your state and locality to see what programs are offered. Keep in mind that governmental agencies may require you to register your business and meet specific criteria before you can apply for a grant, so you should give yourself sufficient time to get everything done to meet the grant’s application deadline.

There are also many grants available that private and nonprofit organizations offer. The organization may advertise these grant programs through various media channels. Also, different online platforms collect data on grant programs offered by organizations. However, be aware that some platforms charge a nominal fee or require membership to access their lists. So, before you invest, see if the platform offers some guarantee, concession, or refund if you are dissatisfied with the results. You can self-discover some of these opportunities by simply conducting a Google search with the phrase ‘small business grants’ or by visiting the websites of companies directly. Remember that many businesses will compete for the grants you are interested in, so take the time to complete a thoughtful and well-written application. Aspects of your business plan will prove very useful when completing grant applications.

It can be challenging for a start-up to secure a loan from traditional lending institutions such as banks, but it is possible. Here is where a quality business plan will prove essential since lending institutions require a business plan as part of the application process. For start-ups seeking to secure lending opportunities, a starting point would be to visit the SBA’s Lender Match webpage at The Lender Match webpage provides information in your demographic location and throughout the United States on lending institutions (i.e., banks and other lending institutions) participating in the SBA’s small business lending guarantee program. The lending guarantee program helps small businesses, including start-ups, secure loans. Specifically, the program encourages lenders to approve loans for small businesses by offering a guarantee to pay a percentage of the loan should the business default. The guarantee can be a significant percentage of the loan. Hence, it minimizes the lending institutions' default risk, making loans available to businesses that may not qualify under more restrictive qualification standards. Why are lending institutions so concerned? Because new businesses fail at an alarming rate in the first few years of operations, thus, lenders assume considerable risk without the SBA guarantee.

Other credit-related sources include vendor credit accounts that can be used to secure inventory and other product needs, or traditional credit cards, which can be used to initially cover start-up expenses and fund operations. Additionally, if you own a home with positive equity, you could apply for a home equity loan or line of credit to fund your new business. This might be a more advantageous option because the interest rate on the equity loan or line will most likely be significantly lower than the rates offered by traditional credit cards; however, keep in mind that your home secures an equity loan or line of credit, so defaulting on the loan could put your home at risk.

An additional lending source could be family and friends, but this option can be risky. Suppose you ask a family member or friend to give you a loan to launch your business. In that case, you need to ensure the person understands that the loan is not an opportunity to have a say in your business’s management unless you have decided their input would be beneficial. There are two ways to handle this type of funding. First, you can create a written loan document with the terms you have both agreed upon; this would result in you making payments in accordance with the agreement. Second, you can give the person an invested interest in the business, so the person will share in the earnings when the company becomes profitable. If you choose this option, you should carefully consider how your relationship with the person will be impacted if your business fails.

Leverage Your Non-Financial Resources and Readily Available Free Resources

Identify the resources you already own that can be used in your business. For example, you can dedicate a room in your home to your business, a personal computer, a personal vehicle, and other assets you own that can be used to launch your business. You may be surprised by what you will find in the storage areas of your home that you forgot about but can serve a purpose in your business. The benefit of using the resources you already own is that you can use any other funding you secure to meet different needs, and it comes with tax-related benefits. If what you have cannot be used for business, it may be time for a yard sale, or you can post the items for sale on Craigslist or use various apps available for consumer-to-consumer sales, such as Facebook Marketplace. You might be surprised by how much cash your unwanted items can generate to help launch your business. Even if you generate less money than you would have liked, even fifty dollars can help. Think about it, the fifty dollars can buy you enough business cards to hand out at networking events which could lead to your first sale. Or the fifty dollars can be used to pay a creator on Fiverr to build a fantastic logo and other business branding digital products that will help your business get noticed.

But don’t stop there. I am sure you have friends and family who have items they have not used for years that they would be willing to donate to your new business venture. Think about it this way, every dollar you do not spend furnishing an office or purchasing office equipment, and other items, is a dollar that can be invested in generating income from selling your product/service. Additionally, use your human capital to help launch and grow your business. For example, you can use your existing contacts, friends, and family network to help get the word out about your business. And market your business using tools like social media, websites, and blogging platforms available at no cost.

Start Small and Grow Strategically

Don't try to increase your product/service offerings too quickly or implement new business initiatives without clearly understanding the success or lack thereof of the strategies you have already deployed. Start small and build your business slowly. Don't be tempted to take on too much debt or hire too many employees immediately. Focus on one product or service and expand as you prove your concept. Pacing your growth will allow you to stretch your financial resources over an extended period. As your product/service lines produce profits, you will have additional capital to invest in diversifying your portfolio or improving your current line to retain existing customers and attract new ones.

Use Barter and Trade Options

Bartering is when you can trade your service/product for the service/product of another business or person in an equal exchange where no money changes hands. Bartering is a great way to get what you need for your business without spending money or taking on debt. Start by reaching out to businesses in your area with which your businesses could benefit from exchanging products or services. These business owners might be more receptive to an arrangement since you are a member of their business community, especially if your business does not represent a threat to them as a potential competitor.

In closing, there are many avenues to securing funding for your business. Each type of funding will come with different nuances, such as the submission of extensive application packages, sharing personal financial information, meeting select qualification criteria, and even may require the submission of reports detailing how the funds were spent at a later date. You should weigh your options, commit to the process, and use the funds to help your business achieve the goals you established in your business plan, so you maximize the return on the funds invested and set your business on a growth path.

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