Editor’s note: This article was first published in November 2017. Its “See also” link to 31 business ideas for 2017 points to a list that is itself dated.
When it comes to starting a business, lack of money should not be an excuse. We have often seen entrepreneurs with plenty of money to start their business end up making worse decisions than those who, for lack of capital, had to use their creativity.
It is true that money makes the process of creating a business easier, but it is even truer that when we have just enough to get started, we avoid many common mistakes and lay very solid foundations for the company.
For example, an entrepreneur with money to spare at the start might rent an office and hire a secretary even before having the sales and profits needed to cover that expense.
When we have to be creative because resources are scarce, at first we will probably have to be both the salesperson and the receptionist, and we will add what we need only once we clearly see that we can afford that investment.
It goes without saying that not every business can be started without money, although some businesses really can be launched with practically no investment.
First of all, we need to be very clear about some of the concepts Tim Ferriss talked about when it comes to making a company profitable quickly. We have to be clear about whether we are going to create demand or satisfy demand, whether our idea is to compete only on price in a saturated market, or whether our product will be very exclusive.
Will our product be aimed at everyone or only at one segment? Answering all these questions in advance will give us the route to follow.
The usual advice is to write a business plan, but if we are not writing it to raise funding, the truth is that there is no better business plan than landing our first customer. Then a second customer, then five more. If we have no trouble winning our first 100 customers, our plan works, and it is a matter of repeating or improving that process to win more.
It may sound silly, but as we have said more than once, what we need is a travel plan, not a business plan: knowing that we want to get from point A to point B, we will change our plan as many times as necessary.
Here are some tips for starting a business without financial resources.
1. Start your business before you open it
You don’t know how long it will take you to make a profit, so try to start your business part-time while you work full-time (if you have that option). That way you will have funding. Start looking for some customers, provide them with some services or begin selling to them. Then, when you decide to open your business, you won’t be starting from zero.
Needless to say, if we are going to create an online business, we could take our time until the income from our business exceeds the salary from our job. Let’s say this reduces the risk of loss as much as possible.
2. Surround yourself with experienced people and widen your social circle
As the saying goes, success leaves clues. It is a matter of bringing into your circle people who have already done what you want to do. You can learn a lot from other business owners, and they can save you from a great many mistakes. Above all, they can give you excellent advice.
3. Study everything you can about the business you are going to start
Closely linked to the previous point: learn, study and read everything you can about business, the sector you want to enter, and so on. Prepare well and start out as an expert in the field. You will probably make many mistakes even if you enter the market well prepared, but the more experience you bring with you, the better.
Remember that, in most cases, a business succeeds or fails even before it opens. This way we also make sure customers don’t see a novice trying their luck in business, but a serious professional.
4. When you feel ready, take the leap, but not a big one
Think big, but start small. This principle should always come first when it comes to starting a business.
Start the business at home if you can. Before plunging into the costs of an office (rent, secretary, cleaning, electricity, water and so on), start your business at home. At first, finding customers happens out on the street, not in an office. To get started you will only need a space at home, a phone and an internet connection.
5. Your first salesperson: the internet
Hire your first 24-hour salesperson. Create a blog, website or web presence, although you should already have done this during step 1. That way some customers would already be reaching you through the internet. Try to make your site as professional as possible. Today, if you have no online presence, it is as if your business didn’t exist.
If your product can be sold online, start looking into reaching millions of users through the advertising that companies like Facebook offer today, which can put your product on the feeds of millions of people.
6. Your first sales staff
When you feel your tasks are piling up, that you are growing and can take on more, hire your first salespeople. Look for them on commission. Try to find sales professionals, people used to working on incentives, or salespeople who are already established in the market with products similar to yours. We are assuming we are at the start of the business, keeping financial risk to a minimum. Clearly, later on the right thing to do is hire salespeople exclusively for your company and offer them good terms.
7. Analyze your situation
How is your business doing? Have you grown in these months? Is my customer base increasing every week? Can I take on more? Do I want to take on more? If the answer to all these questions is yes, the time has come to take the next step.
If your profits can now cover the rent of an office, go ahead. But don’t make the mistake of neglecting your customers to decorate your office. Your business is now your job. So handle all those tasks related to the premises part-time.
See also: How much a business needs to grow to be profitable
8. Expand your network
You now have your own customers, those who come in through the internet and those your salespeople bring in. Widen your field of action or the number of salespeople, and increase your sales in one of the ways we have already discussed.
If you have reached this point, it is because you have, in a way, been successful. But this is where you either establish yourself as a successful business owner or go bankrupt. The decisions you make from now on are decisive and key to how your business works. Once you reach a considerable sales volume, not just anything will do. You need people on the payroll, your legal situation clearly defined, and so on. Now is when you really need to invest.
See also: 18 businesses you can start quickly with no investment
Featured image: davidgiesberg, CC BY 2.0, via Flickr.
