Starting a Business With No Capital – do you Have What it Takes?

By Brian Baulch | Blog

Nov 15

Author: Jim Mcdonald

Do you want to start a business, but you have absolutely no money to invest in it up front? Don’t despair! You’re certainly not alone and you may find that your business will actually turn out better. Chances are your business will be healthier and better equipped to respond to change. You’ll learn creative new ways to handle different challenging situations. However, success will require a healthy dose of time and commitment to hard work on your part.

When you don’t have the money you think you need to start a business, you may feel isolated and alone. The truth is that starting a business with zero funds is so common that there is a word for it–bootstrapping. The term comes from the idea that you can “pull yourself up using your own bootstraps.” Although that might be physically doubtful, it is possible to creatively gather and apply scarce resources to start a business. It may not be the most comfortable way to start a new business, there are advantages to avoiding entangling relationships with investors, lenders or venture capitalists.

Those who support the practice of bootstrapping your new business into existence point out that companies started in this way are usually healthier and more stable in the long run. Why would this be so? Imagine you’ve just started a new business with a big wad of cash courtesy of some optimistic investors or venture capitalists. In this situation, there is very little pressure to make money immediately. There’s no real penalty for wasteful spending or loss of focus.

But when you’re bootstrapping a new business from a zero cash starting point, creativity and problem solving are your highest priority. There’s no safety net of cash to catch you if you fall, so it’s essential to keep your eyes on the task of creating profit. Not only does this make you more successful more quickly, it also provides excellent training for future periods of rapid growth. Many businesses often have difficulty if the needs of growth are greater than current cash flow. Business started by bootstrapping don’t have this problem because this is where bootstrappers live–using scarce resources creatively to meet the needs of business growth.

Do you have what it takes to successfully bootstrap a new business with zero funds? Most business planners agree that knowledge about a particular business or industry is the best asset you can start with. If you are an expert in a specific subject (or you choose to become an expert in an area), then you should also have useful knowledge about that market–the sources, the competition, the major players, the likelihood of future demand, etc. This specialized knowledge almost always helps you to find new opportunities and ways to creatively build a business without the need for a fat bank account or investment fund.

If you want to start a business from scratch without major funding, you’ll have to make up the difference with hard work and a huge investment of your time. So it’s best to stick with something you are passionate about. You need to believe in what you’re doing and believe in yourself. Successful bootstrapping will require personal sacrifice, so be sure you start something that’s worth it to you.

When it comes to starting a business with zero funds, providing services is usually the best choice. Selling products usually requires a cash investment at the beginning to create or purchase inventory. Plus, you’ll have to pay for storage space. But when you are providing services, you really only need the tools of your trade, which you may already own. Lower startup costs will increase your chances for success.

Whenever you consider starting a business with zero funds, you should be open to help from any and all sources. Friends and family can be excellent sources of “in-kind” contributions, like a place to provide services or a couch to sleep on when things are tight. Another option worth thinking about is working a part-time job to make your living expenses and building your business the rest of the time. Once your new business starts showing a profit, you can drop the part-time job and put 100 percent of your time into your new endeavor.

Starting a company without any startup money may seem like a crazy idea, but people do it successfully all the time. The businesses that emerge from this process are flexible, adaptable, and never have cash flow worries. When you start with nothing, it can only get better.

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