How to start a business without money?
Let us start out by being completely real with you. Building a new business is hard and building a business without money is even harder.
But it’s definitely possible. In fact, when we started our first business, the only money one of our founders had was a $250 deposit into a business checking account.
And to be honest, he said he never even planned to use that money. It was just a deposit he had to make to ensure the account would get opened without incurring fees.
But fast forward to today, and that company went on to make over $10M dollars throughout the last decade, and is listed as an Inc 5000’s fastest-growing company in 2020.
So in this post, we want to share what we learned on how to start a business without money.
This is so you know exactly what you could do if you were in the same position as we were.
Now the tips we are going to share with you today build off of one another, so make sure you read this entire post so you completely understand what to do.
Let’s dive straight into the first step on how to start a business without money.
10 Steps on How to Start a Business Without Money
Step 1: Start a Service Company
So if you don’t have any money, we are going to recommend the first business you start is a service business.
And that is because you can start a service business with very little capital when compared against product or tech companies.
Now if you do want to raise money, get investors or a loan, and overall get in debt to start your business, then that’s a whole different story. That’s for another post.
However, if you are a new entrepreneur, like you’ve never started a business before, and you don’t have a huge business social network…
…we highly highly recommend that you do start with a service business anyway because there is much lower risk, and you have the luxury of making mistakes.
And this is what you definitely will if it’s your first business.
Step 2: Pick the Right Service Business for You
There are a lot of different types of service businesses you can start.
You could be a personal trainer, a makeup artist, pet sitter, handyman, graphic designer, tutor, YouTuber, lawn care specialist, auto mechanic, etc.
And because there are so many options, what we see a lot of people default to is picking the service business that will make them the most money.
And that is exactly what you do not want to do.
Choose something that you are passionate about as opposed to picking something that you think will make money.
And yes, we know this is difficult because money is so important when you don’t have a lot.
But believe us, when you actually care about what you are doing, the money will be much easier to make.
For example, if you run the numbers on how much money you can make as a technology consulting company, and how much you can make as a dog care company…
…you would easily choose to start a technology consulting business because they generally make more money per client.
However, we have a client who is passionate about dogs and runs million-dollar dog care companies.
On the other hand, we also have clients who run information technology companies and barely make 6 figures.
So choose something that you’re passionate about, something that you would enjoy learning about, reading on weekends about, watching YouTube videos about, etc.
Step 3: Develop a Valuable Skill
So maybe you decided to start a service business (or maybe not) but either way this step applies to you.
That’s because whether you have a service, product, or tech, you have to be able to set yourself apart from the competition.
And the best way to do this, if you want to start a business without money, is to be the most knowledgeable about your industry and have the most technical skill around it.
And it’s because when you have undeniable skills and talent, people will develop more trust in you and your company.
For example, if we go back to the dog care company, that is something that would seem like anyone can do, right? Like walking a dog, entertaining them, and grooming them can seem so simple.
But when you can show your expertise around, for instance, this dog has this kind of fur, so they need these grooming products.
Or, this breed of dog is sensitive to these types of food so they need to eat this.
You would be immediately separating yourself from someone who is just like “yeah, I can wash your dog.”
And then eventually, establishing yourself as someone who can take care of someone’s dog in the best possible way.
And guess what, it’s okay if you don’t have a valuable skill now.
You can take your time and develop skills while still following the next few steps in this post.
Step 4: Choose Your Business Entity
So in some states, like Georgia for example, you can establish a sole proprietorship without filing any legal documents with the Georgia Secretary of State.
This means, if you don’t have any money for your business (or just want to be very conservative), then you can start a sole proprietorship or general partnership completely for free.
And then, start working on your business right away.
The main thing you are going to want to obtain is to get an EIN which stands for Employer Identification Number. This is like a social security number but for your business.
You’re going to need an EIN number to set up a business bank account, pay employees, etc.
Now typically, we see people rushing to start an LLC because they want limited liability protection for their personal assets.
But only when we ask “what personal assets are you trying to protect?” do people start to realize they have very few assets to protect.
So sometimes starting an LLC is not a good idea but then again sometimes it can be.
Read this post next to learn about the disadvantages of LLC and find out if this is the best entity for you.
Step 5: Trade Your Time
When you want to start a business without money, time is your most valuable asset.
You can trade your time in 3 ways. You can trade time for experience, money, and growth.
Let’s briefly talk about how you can do it.
- Trading your time for experience
So when we started our first company, we did marketing and we had no clients.
And every time we pitched someone a marketing program, they wanted to see some of our past work and results. But we never had anything to show them.
So we continued to work on our pitch by working on what we would say and the overall design of our slides, but we still came up short.
Until finally, we decided to offer our services for free.
And at that time, we feel like saying, “Hey, we didn’t start this company not to make money.”
We started thinking that they are probably using us, they will take what they can get and leave us hanging.
But, the exact opposite happened.
We generated so many results that our first client started paying us to continue the marketing program.
And we had real results to show other potential clients, which helped us land more clients as well.
Now we have to admit, we were incredibly lucky.
But we stand firm on the idea of if you don’t have past results, or clients then start out by working for free, i.e. trading your time for money.
- Trading your time for money
We don’t have a lot to say here, other than it’s time to grind.
This is where you’re going to have to put up with some needy clients, work late nights, and even on the weekends.
You’re going to feel like a workaholic.
But as long as you are gaining momentum, you will eventually be able to use the money you earned to get back more of your time.
- Trading your time for growth
So once you start rolling, there are going to be some opportunities that just fall in your lap. And sometimes, you’re going to have to trade your time for that opportunity.
It may be an opportunity to speak at an event or network with other like-minded entrepreneurs.
And sometimes, you’ll even have to sacrifice taking on a new client for this growth opportunity.
Step 6: Start Organic Digital Marketing
Now steps 5 and 6 are closely related because they both involve using your own time.
Of course, if you have a new company and no one knows you, then you’ve got to start getting your name out there.
The problem is that most marketing and advertising out there is either:
- very expensive, or
- very ineffective.
So as we mentioned, we run a marketing company and one of the things we did to grow was to use organic marketing strategies.
What is organic marketing, by the way?
Well, it is a simple way that allows people to discover who you are, without you paying for that reach whether it is through sponsorships or advertisements.
The two biggest forms of organic marketing are social media marketing and search engine marketing.
It costs you absolutely nothing to post on social media, write comments, use hashtags, and send direct messages.
And it costs you nothing to write a great blog or article around your industry that could show up in search engine rankings.
Being aggressive with social media and search engines can help you to explode your reach and get massive brand awareness without money.
Step 7: Track Your Financials
So at this part in your journey, you may have started a service business, you have skills, you’re incorporated and you are starting to land some clients.
So what’s next?
Track your finances because as you’re operating, you probably are going to find some necessities or just some really cool tools that will help you maximize your workflow.
Now keeping track of your transaction is important for two reasons.
- You are going to need to report your business income when you file your taxes and you definitely want to report everything correctly to the IRS.
- It’s important for you, as the entrepreneur, to know exactly what is going on with your money so you can make important business decisions.
Step 8: Reinvesting Your Profits
You started this business with no money, so don’t jump too quickly into spending the money you make. And that’s the biggest mistake new entrepreneurs make.
They start upgrading their lifestyle so they go out and get a new car, a new house, etc.
So try not to upgrade your lifestyle unless you need to because remember, you are likely trading your time for money and we want to take back some of your time now that you have money.
So what does that mean? It’s time to reinvest profits.
Now there are a lot of reasons why you may want to reinvest profits. For example, maybe you want to reinvest into an advertising campaign that could bring on more profits.
But the two big ways that we would suggest you start reinvesting profits are to hire people or buy technology.
Hiring people is a no-brainer.
If you are finding yourself working 12 hours a day or just constantly saying to yourself, “I’m too busy”, “I don’t have time”, “I wish I had some help”… then you need to hire someone.
Even if you’re just hiring an intern, contractor, part-time employee, or outsourcing to a company…
…you can take back some of the time that you may be spending on entry-level tasks and start back focusing on business growth.
The second big reinvestment we’d recommend is buying technology.
People, of course, are not the only way to save time. Especially today, you have so much artificial intelligence and tools that can save hundreds of hours in a month.
Now the type of technology to buy/rent will be different for everyone.
But in general, if you find something that can legitimately save you time, then it may be a good investment for your business.
Step 9: Don’t Stop Learning
If you had money then you may be able to get away with hiring a consultant to help you navigate uncharted territory but still, consultants are expensive.
So the advice we have for people who want to learn how to start a business without money is to do exactly what you are doing now.
Consume as much free content from reputable people that you can.
Now, a quick disclaimer on free content: you have to be careful because some people use their free content as a way to get you into their paid content, which is of course smart.
So what you need to know is that, most of the time, with some of the free content you consume, there are going to be holes left unfilled.
Or in other words, you won’t get a complete lesson.
But you can still fill in those holes, but learning more and consuming more free content from other places.
Even today, we try to read at least one business book or self-improvement book every month. And we are constantly consuming business content on TV, social media, and YouTube.
Step 10: Review and Optimize
Our last step on how to start a business without money is to review and optimize.
After about 1-2 years of running your business, you should have accumulated enough time and data to make thoughtful decisions.
So now is the time to access.
Are you happy with what you do? Are you passionate about it as much as you thought you would be?
Yes? Then, are you making money? Are you profitable?
Yes? Next, what’s stopping you from growing more? Do you need people? Is it time to reinvest?
Take the time to stop, review and optimize.
As entrepreneurs, we get so caught up in doing the next thing… but we think it’s Bill Gates who takes a week off every year to reflect, reassess, and plan for the future.
If everything is going great then congratulations, you have officially joined the bootstrapped club of starting a business without money! We can’t wait to see what you go on to do.