I have started side hustles with an investment that a student can afford with pocket money.
In this article I will cover:
- How to start a business with no money
- Which are the ventures you can consider starting
- How to pick between among multiple ideas
- How to move from idea to implementation phase
“I want to start a small business but have no money. If I had the capital, I would quit my job and start right now.” Have you heard people say so? Maybe you’re the one saying that.
Such statements are only an excuse not to begin. I have started many side hustles for less than 50$. Not all of them have succeeded, but I take the blame on myself. The success or failure had little to do with the initial money invested.
Starting a venture is more about the willingness of your brain than the depth of your pocket. If you want to begin, you can start today. If you intend to postpone the plan, you will find one reason or the other.
- The myths about starting a business
- How your mind thinks when you plan to start a business
- How to Start a Business With No Money – The Right Approach
- Finding business ideas you can afford
- Step 1: List down your skills
- Step 2: Order all your skills in the sequence of your love for them
- Step 3: Rewrite the list considering the long term
- Step 4: Pick the top 3
- Step 5: Generate ideas around your skills
- Step 6: Research online for ideas
- Step 7: Add more ideas to your sheet
- Step 8: Revisit previous steps if required
- Step 9: Check for other options
- Step 10: Take a break for a few days
- Step 11: Narrow down ideas
- Pursuing business ideas you can’t afford
- Advantages and disadvantages of each approach
- Advantages of starting a business on your own
- Disadvantages of starting the business on your own
- Advantages of getting an investment:
- Disadvantages of getting an investment:
The myths about starting a business
Let us examine the above words again “I want to start a small business but have no money. If I had the capital, I would quit my job and start right now.”
The statement has 2 famous myths you should know about:
I need a significant capital to start a business
No, you don’t. Sure, you do need a large sum of money if you intend to open a hotel or start a car wash. But you can find many other businesses you can start with the money you spend on pizza and alcohol in a month.
In today’s world, you can start your venture on the internet, sitting on your chair in front of a computer. For example, I started this blog for 9$. I paid 5$ for the domain for a year and about 4$ for the first month of hosting.
If you explore the internet world, you have a bazillion opportunities to begin something of your own. Will you succeed with ease? No. If it was easy to start a venture without money and a high chance of success, everyone would have done the same.
You will need a more significant investment of another commodity of yours – time.
I need to quit my job to start a business
Again, no, you don’t. Some people run successful businesses, along with a full-time job. Some people run multiple companies at the same time.
You do not need to quit your job to begin. You can start while you are still working.
Will it be easy? No. You will need to put in a lot of sweat to make time beyond your working hours.
“But I have no time whatsoever. I am busy the whole day.” Is that what you’re thinking right now?
But ask yourself the following questions:
- Do you watch two or more hours of TV in a week?
- Do you scroll through Facebook, Instagram, and Snapchat every day?
- Have you attended some meetings this week which were of no use?
If you answered with a yes to any of the three questions, you have time. You can start a business only when you admit that you have time to spare.
If you still believe you have no time to spare, unfortunately, I cannot help you. Starting a venture with a full-time job will require stretching your limits and making some sacrifices.
If you are unwilling to do so, you’re better off not starting a venture because you will have a hard time in the future.
How your mind thinks when you plan to start a business
Here is visual which explains how your mind thinks when you have a business idea.
You start with a thought which soon progresses into the money required to set it up. The moment you realize that you cannot afford the capital, you sigh saying, “I wish I knew how to start a Business with no money.” You give up before you start.
The idea dies and never pops up again. Even if it shows up, you dismiss it for the reason of not having enough money.
How to Start a Business With No Money – The Right Approach
You can use two alternative approaches.
One, you can reverse the thought process. Instead of finding the idea first, you think of possibilities of a venture which you can begin with an investment you can afford.
Second, you can consider the option of raising investment to get your business up and running.
The biggest barrier to learning how to start a business with no money is, assuming it is impossible. Once you believe you can, you can at least make an attempt using the above two ways.
I will cover both methods in the article.
Finding business ideas you can afford
“I have no money whatsoever, so this does not apply for me,” you sigh.
Hold on, captain. Before you dismiss the method, try out the exercise below. You can set up a business for 100$, sometimes even 10$ or no money whatsoever.
Maybe you do not have 100$ at the moment either. But I am sure you can afford 100$ if you cut down your expenses for a short period.
So, let’s start working on your business. It is time to start a business with no capital or money or in a budget you can afford.
Since this will be an activity-based process, pull out a notepad and a pen. Though you can do the same on a laptop, I would recommend using paper.
The reason is, you can write faster than you can type. Therefore, paper eliminates any thought blocks that occur due to the restriction on your typing speed.
I leave the final decision about using paper or a computer up to you.
Before you begin, you must understand that you do not have to rush through the activity. Take as long as you like.
Do not hurry through one step without thinking enough. Some people finish the activity in a few hours, and some need weeks.
Doing the activity right is more important than doing it fast. Moreover, this isn’t a 100m Olympic event where you need to run faster than Usain Bolt. Complete the race at your pace.
Let’s dive right in.
Step 1: List down your skills
Start writing down the skills you are good at. Here are some pointers:
List down the areas which are your top expertise. Write down your skills which you know have jobs in the market.
List down other related areas that you’re knowledgable on. You do not need to have complete expertise. Even a fair amount of know-how works.
List down all the skills you have learned out of self-interest. You can include hobbies like playing the guitar, training a dog, dancing, beatboxing, practicing a sport, or anything else.
List down all the other random things you’re good at or enjoy. You might excel at computer games. Maybe you have a wonderful sense of humor. Your fashion sense could be incredible. Whatever those are, list them down.
Do not worry about building a business without money out of it yet. Go on a writing spree, with a careless and free mind. Do not stop until you can’t find any more skills to jot down.
Do not decide on a number before you start. For example, if you make up your mind that I will stop at 10 skills, your mind goes blank right after 10 or 12.
If you want to fixate on a number at any cost, I recommend stopping at 100.
Get, set go. List down 100 things you are good at or stop when you can’t find anymore. You must spend a minimum of 1 hour on this step. There is no maximum timeline. Take as long as you like.
Step 2: Order all your skills in the sequence of your love for them
Now that you have a long list, rewrite the list with a rank. The first item on the list should be your skill which you love the most. The first item takes rank one, second items take number two, and so on.
If you have a hard time choosing between two options, feel free to assign the same rank to multiple items. As much as possible, try to avoid setting the same rank to many skills. If you can’t make up your mind on what you like better upfront, you will have a harder time later.
You have to understand that the top item does not have to be your passion. As far you can resonate with it, you’ll do fine. You do not have to love it from the bottom of your heart.
Cal Newport mentions how the passion hypothesis is flawed in his best selling book, So Good They Can’t ignore you.
Passion comes after you put in the hard work to become excellent at something valuable, not before.Cal Newport
Step 3: Rewrite the list considering the long term
Starting a venture is a small part of the challenge. You will face more significant obstacles with running and growing your business.
So rank the items on your list again considering the following:
- Can you do this for 5 years?
- Will you continue doing it if you do not notice any initial results?
You do not have to like doing the activity every single day of your life. For example, though I am working towards a business with my blog, there are days when I hate writing. I feel like my head will burst open if I write that day.
Such thoughts are normal. As far you believe you can continue doing it even if you hate it on an off day, do not reduce the ranking of the item.
Step 4: Pick the top 3
Now that you have a list which you have given a thought about, pick the top 3. Before you feel the fear of missing out, let me tell you that we will come back to the rest soon. We aren’t throwing those down an abyss.
Step 5: Generate ideas around your skills
Pick 3 different sheets and write down one item per sheet in the center. If you are using a computer, open 3 different documents and type the item on top.
Spend at least 30 minutes per sheet, listing down all possible related business ideas to the item. Do not bother if you can run such businesses or not. Do not at any cost lookup online yet because the next step has it covered.
List down whatever comes to your mind. You do not only have to list the businesses which exist today. Add your own business ideas even if they do not exist today.
Do not think about the feasibility, cost, or skills required. Let the scribbling(or typing) begin.
If you find your head heavy after finishing one sheet, take a break. You can finish the other sheets later or the next day. Do not force yourself to complete the step if your brain isn’t functioning normally.
Step 6: Research online for ideas
Once you have finished listing down the ideas for all 3 sheets, look up online. At any cost, do not begin this step until you finish dumping your own ideas. In other words, do not perform step 6 before step 5. If you do, you will kill some of your best ideas before they’re even born.
On the web, look for other similar businesses. The internet is one huge place, and you will find more ideas. Even if your skill is collecting dog poop without leaving any trace, you will find another person in the world who has a business idea around it.
Oh, you thought I was kidding? Here is a business that picks up dog poop.
Anyway, the time required to research online can vary. If your skill is time management, you will find loads of business ideas like blogging, creating Youtube videos, coaching, online courses, public speaking, and whatnot.
If you have a niche skill, like throwing a frisbee, you might have to dig deeper to find business ideas.
Spend time understanding what the others around the world are doing in that area.
Step 7: Add more ideas to your sheet
Once you understand how others have built businesses around your skill, add more ideas to each of your sheets. Do not just write down the exact idea. Also, jot down what you can do which is related or different from those ideas. If you can think of a method to improve what someone else is doing, list them too.
If you have a thought, “My idea must be original and my own,” get it out of your head. You do not have to reinvent the wheel. You just have to design a better or a different wheel.
Good artists copy, great artists steal.Pablo Picasso
Step 8: Revisit previous steps if required
By now, you must at least have a total of 15 ideas with 5 on each sheet. If you don’t, chances are, you have rushed through the steps. If you find yourself short on the number, revisit the previous steps and spend more time on it.
Many people will assume they lack the acumen to generate ideas and give up. But anyone can add more to the lot if they spend enough time. So keep the spirit high, trust yourself, and give it another shot.
Step 9: Check for other options
Remember the list of skills you prepared and picked only the top 3? Glance through the rest.
You know what the purpose of the exercise is. So, try to identify a skill that has the potential for business opportunities. Even if you do not love that skill the most, do not turn it down.
You will not always have the chance to start your venture with the skill you love the most. If you spot a better opportunity with a skill lower down the list, you can still go ahead. As far as you don’t hate it, you will build the love over time.
Too many books and articles have glorified the follow your passion hypothesis. Instead of finding your passion and chasing it, you must identify an area you like, get better and start loving it.
Step 10: Take a break for a few days
Once you’re done, stop the activity with the paper for a while. It’s time for you to hunt for business ideas in real life while you take a break.
I will let you decide on the length of the break. I recommend choosing anywhere between 3-7 days. Do not give a gap of more than two weeks because you will end up procrastinating your plans.
While you’re on a break, observe the world around you. Can you spot anything which you can turn into a business idea? Think on the lines of:
- Can you notice a problem people face which does not have a solution?
- Is the solution to a problem not good enough?
- Is there a way to improve the current solution provided by the market?
Try asking such questions to all businesses you observe. Focus on those which fall within your skills.
Whenever you notice something interesting, write it down. The biggest lie you tell yourself is, “there is no need to write it down, I will remember it.” Now that you’re performing the activity in real life, you might spot an idea when you are taking a stroll or feasting at a restaurant.
You will not have any paper to note down the idea. Some people carry small notepads to write things down, but I suggest noting spontaneous ideas on the phone.
You can transfer them to paper later. I find it tedious to carry pen and paper with me everywhere. But if you can do it, go for it.
One exercise that I do is, no matter what the business is, I ask myself, “If I was the owner, what could I do to make the business better?”
For example, if I notice a store selling dry fruits, I ask myself how I could do better if I were the owner. I could put up a brighter board, or keep some gift packed packages ready.
Though it does not help generate new business ideas, you will start thinking from an angle of growth. Such thoughts will help you in the future.
Step 11: Narrow down ideas
You have now reached the final step. Now that you have spent hours and days on generating ideas, you must narrow them down.
Out of all the ideas you have, narrow down to 5. Out of these, you cannot have more than two ideas that require an investment you cannot afford. The rest must be ideas which can you can start with little to no investment.
You will have a hard time narrowing down the list, but you have no choice. You cannot pursue multiple ideas at the same time. You will not find enough time and lose focus on all of them.
After you have filtered down to 5 ideas, cut down to 3. This time, you can have a maximum of 1 idea which requires a substantial investment. Having all three ideas with low investment works too.
If you had an idea that requires a substantial investment, keep it aside. We will talk about finding ways to raise money for the idea in the next section.
Among the ideas which you can afford, pick just 1. I won’t set any criteria to help you make a choice. It is your business, so use your best judgment. You can pick the cheapest business to start, the one which requires the least effort, the one with the highest long term potential or any other criteria under the sun.
So there you are. By now, you should have one strong idea which you believe you can start your business on. If you still have nothing your plate, redo the activity. You never know when your brain can flash an idea of brilliance. Keep trying.
If you have one business idea which requires higher investment and one with low capital, finish the rest of the article. You can take a call at the end.
Decide if raising investment is a route you want to take.
Pursuing business ideas you can’t afford
So you have an idea which you believe will succeed. Unfortunately, you cannot manage the initial capital on your own, no matter how hard you try. What do you do?
You can still arrange money in different ways.
Today, you can raise money from random people off the internet. We call it crowdfunding. Crowdfunding is a model where you raise money online for your idea by people all around the world.
The model works like a donation where you have to prepare a pitch of your idea and state the amount that you wish to raise. Interested people donate small chunks to help you start.
Crowdfunding does not always take place over donations alone. Some crowdfunding models involve equity too.
Take a look at Kickstarter. You will find many entrepreneurs pitching their idea and seeking funding. Kickstarter is a donation only crowdfunding.
The donors donate money without any equity in the company. They receive some rewards such a free enrollment, free product samples in the future. For example, one film assures a reward of a private viewing link and a mention in the credits.
On Indiegogo, the people who support your project buy a stake in your venture. Similarly, you have debt crowdfunding. Crowdfunding also involves other aspects such as all or nothing and various other models.
Here is a website that explains crowdfunding in detail. They will provide many answers to your question of how to start your business with no money using the funding route.
2. Seed Fund:
Seed funding is the investment during the early days of the venture in exchange for equity. Many individuals with the big bucks are on a lookout for businesses at any idea stage to invest.
It works for them because they get a higher stake on a low investment. The risk involved is the chance of failure and losing their money.
For example, if you have an idea of skates that kids can use without any balance practice, a seed fund will help you build the necessary product.
A seed fund helps you get the business from an idea to a product stage and make some initial sales. It sets the tone for the next rounds of venture funding.
Venture funding involves a large sum of money after a business has shown potential. When you begin, the chances of venture capital are unlikely.
3. Raising money from known people:
This method is no different than a seed fund except that you gather the cash from known people instead of an investor. The people funding your business can be your parents, relatives, friends, or other acquaintances.
The deal works differently in each case because they work on relationships. Some people provide money as a goodwill gesture, some offer it as a loan, and some take equity in exchange. No standard protocol exists for obvious reasons.
Friends and family invest because they trust you, not necessarily the idea. You must live up to that trust by stating the truth upfront. Do not hype up the potential of the idea and create false dreams.
You must state the truth and help them understand what your road map is, when, and what they can expect as the return on investment.
A word of caution before raising money from your friends and family. When your business changes for the good or the worse, your relationships can change too.
In many cases, it costs people relationships itself. Here is one article which covers the pros and cons of raising money from friends and family.
That said, many of the successful businesses you know started with investments from friends and family. Amazon is one of them.
Advantages and disadvantages of each approach
Now that you have learned how to start a business with no money and how to raise investment, you must know about the pros and cons of each.
Advantages of starting a business on your own
1. You maintain complete control over the decisions
This is the biggest advantage of starting the venture on your own. In his book Drive, Daniel pink explains how autonomy, the freedom of choice, plays a crucial role in human motivation.
Once you bring in investors to the party, they have their interests too. Whether they are professional investors or your friends, you cannot just brush off their ideas.
They have contributed their money. Even if you make it clear upfront that your call the shots, it isn’t easy to put it in practice with known people.
2. You can set or change the direction
If you believe you need to pivot and move in a different direction, you can do so. You are answerable to no one. Doing that with an investor isn’t easy and sometimes impossible.
Take for example, you started a business of supplying homemade cheese. You’re making profits by selling it via retailers. But you see the long term potential of selling the cheese exclusively in your stores. With the investors involved, you won’t have the liberty to take that call alone.
Sometimes, a second opinion can help you make the right choice too. Therefore, it works as a double-edged sword.
Disadvantages of starting the business on your own
1. Personal risk
You end up risking all you have. If your idea fails, you might have a hard time recuperating. If the investment is small, that works fine because all you lose is time.
There is also personal asset risk beyond the business. This can be in the form of being sued by a customer or vendor and having creditors come after your personal assets like house, car, etc. The quickest way to protect yourself is by officially forming a company (on your own, with an attorney, or through an online formation service) and ‘acquiring’ a corporate veil.
2. Longer time for growth:
The lack of capital can hinder your potential to grow. Having a cash surplus will help you take some risks and spend on other areas such as marketing to speed up your growth.
Advantages of getting an investment:
1. You can grow faster:
Let us take the same example where you plan to start a business of homemade cheese. You invested a bare minimum and reached a point where you make a profit of 2000$ a month.
You have the potential to expand to 3 more locations, but that will need more investment.
At the rate of 2,000$ profit a month, you need a long time to accumulate the funds to expand. You might think of taking a loan. Well, the banks may not approve a large loan when your business is new.
Having additional cash in the bank helps you expand faster. It comes with risks and challenges, but then, what doesn’t?
2. Increases your confidence:
When an investor invests money, it indicates they trust in you, or the idea, or both. The willingness of another person or a company to invest money in you tells you that you are on the right track.
You will have further motivation to do better.
3. Covers your expenses:
If you are funding your venture without any investment, you might face trouble paying your bills if you quit your job. Your salary will have to come out of the profits your company makes. During the early days, the income may not suffice to pay your bills.
With an investment, you can draw a reasonable salary to cover your expenses.
4. Gaining mentorship and business knowledge:
If you are raising money from an angel investor with a proven track record, you also receive mentorship and knowledge.
They can suggest valuable changes and help you avoid pitfalls. The industry experience they carry helps them notice gaps that you don’t.
For young founders or those with no prior experience, the knowledge and mentorship adds as much value as money, if not more.
5. Additional services such as legal, tax:
Most investors already have a successful business. They are familiar with all the nuances of the legal formalities, the taxes, the accounts books, and so on.
Their existing team can handle your books too, or they could suggest a trustworthy set of people at a reasonable price.
6. Improved network reach:
The venture capitalists and investors are well connected with the other big guns in the market. For example, if your product sells in retail, the investor can set up a meeting for you with Walmart at a snap of his fingers.
Using your own reach, you might have to knock on a hundred doors to get there.
Disadvantages of getting an investment:
1. Loss of ownership:
The investor looks for a certain stake in the company for the money he invests. For example, Peter Thiel invested 500,000$ during the early days of Facebook in exchange for 10.2% equity in the company.
With equity, the investor also becomes a partner in the company. You no longer run the venture only by your own rules. Though many investors allow the founder to run the company, you do not have the comfort to make any decision you like.
The bigger the investment, the more involved the investors are.
2. Undue pressure:
Any investor puts in money with the intent of making more from it. Therefore, once you receive the funds, targets and milestones become the norm.
As a founder, your passion could lie in the growth of your idea. The investors might have a different perspective and expect you to target profits first. A tug of war between investors and founders are common everywhere.
3. Forced Changes:
With the industry experience the investors possess, they might force changes for growth and profits.
For example, let’s say your product sells to a niche audience like adventure motorcyclists. The investors could force you to tweak the product for the mass motorcyclists too.
The founder thinks about his love for the idea while the investor thinks about money. It is plain and simple.
4. Your Equity Reduces:
No investor pumps money into your venture as a charity. In exchange for the money, you have to forgo a percentage of your company.
Through the various stages of growth of your business, you might need to raise more money. In the process, you lose a portion of the company.
Every round of investment you raise stimulates faster growth, but leaves you with less ownership of the company. Mark Zuckerberg currently owns about 28% of Facebook.
Do not consider that a bad thing because the overall net worth of your company increases with investment. It is better to have one half of an extra-large pizza than the whole of a mini pizza.
5. Time Consuming:
The process of looking for investors, preparing a pitch, following up, and negotiating will consume time. If your product has gained fame in the market already, the process becomes much easier though.
But since your ideas in the early stage of their growth, prepare yourself. You will have a lot of running around and convincing to do before securing the first investment.
Even after receiving the money, regular updates, meetings, targets, and milestones will consume more of your time.
6. The feeling of “not my money”:
Have you noticed how employees visit expensive restaurants for corporate lunches? You would have. You might have been in one yourself.
The same people would never visit the same restaurant if they had to pay on their own. Spending someone else’s money seems easy, but spending your own money makes you feel the pinch.
Similarly, spending investor’s money is easy. If you have invested your own money, you will make more careful decisions. You may not splurge the investors’ money, but your mind can think differently. You might spend more than necessary on marketing, promotions, or hiring because you have the money, and it isn’t yours.
Now that you know the challenges and advantages of raising money for your idea, think it through. Do you prefer the idea which requires an investment or do you prefer starting with capital you can afford?
No one can help you with the right answer. You have to make your choice. Anyone who tells you one option is better than the other is only speaking from his perspective.
If you want to start a business, you can do it today. If you want to find a reason not to, you will find millions. Learning how to start a business with no money isn’t that hard. Moreover, today, you can learn how to start a business online sitting at home.
If you want to start your business but cannot do so, it is not because of the problems outside but the resistance inside.
You are at a point in technology where opportunities are all around. All you need to do is look, spot, and begin.
Whether your business requires 10$ or 100,000$ dollars to begin, you can find a way to start. The question is, will you?
Maxim Dsouza has spent over a decade experimenting and finding various time management techniques to improve his productivity. He strongly understands the fact that time is a limited commodity and tries to make every second count. He has extensive experience in leadership in startups, small businesses, and large corporations.
He has helped people of different professions and age groups gain clarity on their goals, improve focus, revise their time management skills and develop an awareness of their psychological cognitive biases.