The following is a guest post written by Nina Sharpe. Nina is a content champion for various outlets, covering various business topics from finance for startups to small business accounting tips.
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The first rule of capitalism is that it takes money to make money, but what if I told you that some rules are made to be broken? There are other approaches, and, yes, you can launch a business idea without capital.
We’ve been conditioned to think of entrepreneurship in terms of finding a gap in the market, then putting a chunk of money into launching an enterprise to fill it. The traditional approach usually includes determining what resources are needed for the business idea and then writing and presenting a business plan to potential investors.
If we’re lucky enough to receive funding, we can get on with setting up the enterprise. If not, we give up on the idea and get on with our humdrum daily lives. That’s the traditional approach for you. Not particularly encouraging, is it?
That’s why we’re here to help you kick this outdated notion to the curb.
The following ten ways tell you how to buck tradition and start a business without capital. If you’ve got an appetite for success but a bank balance that doesn’t quite match, keep reading.
10 Ways To Launch Your Business Idea Without Capital
Start With What You’ve Got
Getting a business idea off the ground without much or any start-up capital requires a change in mindset.
First, you need to believe that it’s possible.
Second, you need to take a different approach to looking for gaps in the market and then trying to fill them.
Start with what you’ve got by asking yourself two questions:
- What do I know?
- What do I have?
List your skills, areas of knowledge, your experience, and the resources you own and can access.
This approach takes time. You need to not only consider your resources and areas of influence; you also need to experiment with different combinations of them and then put them to the test. Do this until you find an offering that the market loves – and that has the lowest possible start-up costs.
Consider Who You Know
There’s an old saying that explains the secret of success as
“It’s not what you know, it’s who you know.” – (source unknown)
I think it’s a bit of both. Combine what you know, what you have, and who you know for your business idea to have real power. This can help you to launch it without the need for an obscene amount of capital.
Relationships such as equity partnerships with the right people and enterprises can help create new markets. If you use your connections, you can spread the word and possibly get buy-in from other interested parties.
Keep Your Current Job
Wait, what? I know this bit of advice might seem contradictory, but it’s true – if you currently have a job, hang on to it. The amount of work that goes into starting a business can make it tempting to give up your job to focus on your new project.
However, until your business idea takes off, you’ll still need a steady income. It’ll pay your bills, and the sense of security it offers can give you the confidence you need to take risks with your idea. A 2019 survey showed that as many as 78% of respondents relied on an existing job to fund their start-ups and get them off the ground. Follow their lead.
Invest What You Can
Invest any money that you can afford to lose in your business idea. Do this without expectation of a return of a set figure. Adopt the mindset of putting a certain amount of money in and seeing what you can do with it.
This way of thinking can help you to stay flexible and prompt you to be daringly creative. Even if the idea doesn’t work, the lessons learned from the experience can make it worthwhile, which means the money you lost wasn’t wasted.
Be Flexible With Your Idea
Maintain a flexible approach while working on launching your business idea. Modern life changes quickly and in so many ways. You may need to make a few adaptations to your idea so that it will still be relevant to your intended market when you do launch.
With COVID-19, we’ve all been bombarded with information about the importance of being able to pivot. Make this a golden rule regardless of whether there’s a pandemic or not. Be ready to adapt, adjust, and update whenever necessary.
Be Prepared To Experiment
Following on from point 5, don’t be afraid to experiment. The traditional approach to entrepreneurship demands that you crystallize your idea in the form of a business plan, and then you aim for that goal, and that goal only.
The traditional approach isn’t really designed to deal with change, and if a change is too drastic, it can destroy a business before it has had a chance to succeed. If laws or technology change while you’re still working on your idea, see if you can adapt it in a way that takes advantage of those changes.
Have A Trial Run
Give your business idea a trial run, even if it means handing out a few freebies. Rather than giving free products or services to your friends (who’ll probably all tell you that they love it), focus on people in your target audience.
If they respond well, you know you’re on to something. If their response is lukewarm, or if they have issues with some or all of your product or service, use their responses to perfect or enhance your offering.
Take Note Of Feedback
Feedback can help you tweak your idea in ways that increase your business’ chance of success. The feedback you receive from those who participate in the trial run mentioned in point 7 is important, but it’s not the only response you should be looking for.
Turn to other entrepreneurs and business owners for advice, especially if they know the market you’re trying to enter. They can offer valuable insights and help you to anticipate some of the challenges you may face.
Assess The Market And Identify Challenges
Your target market’s response to your product or service and the feedback you get from other business people are not the only things you need to assess. Take the time to analyze the market and the challenges.
It’s not enough to acknowledge that there may be rival businesses with the same target market. You need to assess your idea and whether they will be able to copy it or do a better job.
When you have analyzed your market and the challenges you’ve identified, use your analysis to make improvements or develop potential safeguards against those challenges. For example, look into patenting your creation or copyrighting your product.
Explore Various Funding Options
Sooner or later, your business idea is going to require some capital. You can build it up yourself by selling your product or service in small batches from home. When you’ve saved enough to go bigger, you can do exactly that.
For example, I met someone who used a cheap and cheerful ice-cream machine to make homemade ice-cream. Paul would invite friends to his house a few times a month, and on those days, the $5 fee they paid got them a fresh waffle and a few scoops of ice-cream. The result was that more and more friends started ordering tubs of his ice-cream. His friends also brought their friends to his ice-cream days, which resulted in even more orders.
Paul used the money he made from those early sales to purchase a couple of larger ice-cream machines, which allowed him to make bigger batches at home. He then started selling ice-cream at local markets and online. He eventually saved enough money to open an ice-cream store at a local mall, which quickly led to a second store at another mall on the other side of the city.
This is a prime example of growing a business without taking out a loan or relying on funding. However, if you need a cash injection to get you going, use a loan calculator to work out how much you ideally need. Once you have a set sum in mind, try crowdfunding platforms, approaching a small loan program, or pitching to venture capitalists if you don’t want to go at it alone.
Go For It
There’s a whole lot of truth packed into the statement Nothing ventured, nothing gained – or, as my first boss liked to remind me, “No’ you’ve already got; ‘Yes’ you can always get.
If you don’t do anything about your business idea, nothing will come of it. If you put a bit of time and effort into making it a reality, even if you don’t have a chunk of capital to devote to it, there’s a chance that it – and you – could succeed.
