First of all, don’t. Don’t start a business without money.If you have no money, don’t start a business. In fact, don’t start a business at all. Just continue with your 9 – 5 and enjoy your job security for as long as you can, hopefully till you’re retired.
Startup mortality rates are incredibly high. And it takes a whole lot of work to run a successful, profitable one. Especially in Africa. Even entrepreneurs who started out with a truckload of capital ended up throwing in the towel after a few years.
Wait, are you still reading? Wow! So you still want to know how to start a business without money?
Chances are you either believe you have a great solution to a problem people have, or you know for a fact, that you have what it takes to succeed where many others have failed.
So congratulations and let’s get to it.
First things first, keep your current job, if you have one.
Being practical is extremely important when you are toying with the idea of starting a business. You need a steady source of income before you can set up your business, so it’s advisable to hold onto your current job.
By retaining your present job, you will be more secured when you need to take risks. The longer you keep your job, the less pressure you put on yourself.
You will, of course, need to spend extra hours and work harder. Your day job mustn’t suffer (or you risk getting fired) and you will also need to draw extra reserves of energy to run your side hustle. But the good news is you can keep paying your bills as you grow your business.
See? The hurdles are already piling up.
It’s hard but the transition from being an employee to a business owner will be far smoother as you won’t be in any serious debt as you set sail.
Stick with something you know
Build on your passions and experiences. Instead of trying to start a business in a niche outside of your comfort zone, stick to something you know. Build your business on your skills and knowledge.
It is true that you can learn new skills, but it will take time. If you want to start a business quickly, you have to focus on what you can do now not years from now.
Also, Read How I started company without a dime
Learning new skills will require more time and additional expenses. You might have to take courses, get licenses, pay consultants, etc. Starting a business in a field familiar to you will give you additional confidence.
Offer services in exchange for money
If you’re going into a service-oriented business, you’re in luck.
Most commercial services can be carried out with your current resources e.g. your car, your laptop, your internet subscription, your contacts and so on at little or no extra cost to you.
The beauty of this is, first, you provide services, and then you collect funds.
On the other hand, if you’re trying to start a product-based business, it’s a bit trickier because this kind of business often requires significant up-front capital to get it up and running.
Nevertheless, if you’re in this situation, consider selling services to generate cash flow and to build up funds for a product-based business.
For example, by offering services such as web design, graphic design, proofreading and editing, copywriting, courier services etc, to other businesses and entrepreneurs, you’ll be able to raise sufficient funds to execute your own business plans in no time.
Make it public
Don’t keep your plan a secret. Tell everyone. Literally. Call your friends. Explain it to your family members. Make it public.
Telling people will help you in several ways. For starters, it will give you extra energy. In addition, it might help you land some of your first customers. People in your network could also make valuable introductions.
Grind it out. There’s no substitute for hard, gritty work
As we’ve said before, being an entrepreneur goes beyond having great ideas.
For one, you have to get real with yourself. Consider your business in the context of your current financial situation. You have almost no money.
How good is your business idea? Can it still work based on your bootstrapping approach? What adjustments do you have to make to increase your business’ possibility of success given how much funds you have at the moment?
Considering the fact that you’re strapped for cash, you’ll be doing most, if not all, of the heavy lifting. Registering, marketing, branding, and calling in every favor you can, are just some of the things you’ll find yourself doing in the proceeding weeks.
Develop your Minimum Viable Product (MVP)
Eric Ries, the author of Lean Startup, popularised the concept of using MVPs in business. An MVP is a version of your product/service that contains the barest minimum needed for you to deliver your service or conduct your business.
Like Reid Hoffman, founder of LinkedIn said, If you are not embarrassed by the first version of your product, you’ve launched too late.1 The idea is the problem your business/product is solving is so needful that, customers won’t mind that your website is still just a landing page and a contact page. Or that, it’s just a Google form.
What matters is that you can solve their problem. And they will gladly pay you for that.
As entrepreneur-in-charge, you’ll be responsible for closing the deal with these first customers (early adopters). Close enough of them and you’ll soon have enough money and traction to seek institutional funding if that’s your desire.
Get creative. Funding sources are everywhere
Now that you’ve been able to prove to yourself (and whoever is interested) that your business idea evidently solves real problems, and there are real customers out there willing to pay real cash, you’ll want to increase your reach and move your service/product from MVP into full-fledged version 1.0.
For this, you’ll need to inject some major amount of cash into the business in order to increase your company’s ability to acquire and attend to more customers. This is called scaling.
Contemporary entrepreneurship philosophy suggests that to do this, you should seek institutional funding a la Venture Capital and Angel Investors. This is misleading.
If you’ve been able to build your business so far without external investors, you may want to consider bootstrapping it all the way to world domination.
If you decide you need external funds, there are a number of creative things you can do, such as the following:
Use current resources in new ways
If you have a car, have you considered turning it into an Uber? If you have coding skills, you could start a weekend training. Whatever you currently have at your disposal should be optimized fully, leave no asset fallow.
Use an Incubator.
If you get accepted, these programs provide funding designed specifically to financially assist a startup company. Sometimes they offer office space or shared administrative services. Most incubation programs are sponsored by local or regional economic development organizations, seek them out.
Find an Accelerator
These are much like incubators in that they are designed to provide funding. However, an accelerator expects a rapid response to its investment. If you are prepared and ready to hit the market quickly, this is a great option.
Crowdfunding platforms have offered entrepreneurs a fantastic safe line. It’s a really great way to finance your business because it’s the very customers who you want to sell to, that will fund the business i.e. the customers become the investors. Platforms such as Gofundme and Kickstarter allow the public to invest a small percentage of money in return for a future buy-in.
Every week in Africa, a startup announces a fundraising round. That’s because investors are eagerly looking for the next big thing in Africa. You may attend pitching events,
You may attend pitching events, startup focused meets and so on, you can improve your network considerably and run into a few potential investors. Most venture capitalists and investors are also quite active on social media, so if you can wow them with your idea you may find a great way to get started on your business dream.
Find a co-founder with money
Come to think of it, you could save yourself all that stress and just find a rich partner. Many successful businesses are started by two or more founders. With two founders you will also improve your chance of success.
Tell people in your network that you are looking for a co-founder. Team up with someone you trust and who has access to the funds you need. It’s a bit like getting married with the partnership agreement acting like a prenuptial.
You can search for potential cofounders among your friends, family, old classmates, past coworkers, local startup networking events, former business partners (if you have been in business before) etc.
Starting a business with no money is hard but not impossible. This list is just a guide, trust us, it’s a lot of hard work. But if you are confident you have a product or service that people want, you will eventually breakthrough.
This list is just a guide, trust us, it’s a lot of hard work. But if you are confident you have a product or service that people want, you will eventually breakthrough.
First published on TheStarta