Can you start a business with no money?

Now one of the questions that I often get asked is can I start a business with no money. Now, the short answer is yes, actually the longer answer is yes as well but it depends on what the business is and what else you can invest apart from money.

So, if you want to start a business but you don’t have a pile of cash then you’re going to have to listen up!

Having no money doesn’t mean you don’t have time and energy and time and energy are just as valuable as cash when you’re starting out.

Trust me, I didn’t have cash when I was just starting out but I did have energy in abundance.

Now, what you need to do is work out ways that time and energy can compensate for the lack of cash and then find creative ways to keep your need for cash to a minimum.

For example, if you need office or storage space then think about how you can do this from home. If you need retail premises don’t be afraid to negotiate with landlords on contracts that give you rent-free periods or rent holidays at the start of the agreement. 

In simple terms, it’s a way of taking the pressure off for that first little period while it’s getting going. Now, you’ll be amazed at how many landlords will enter into an agreement with a rental holiday at the start of a lease, particularly if those premises have been empty for a while. 

The key of course is to make sure that you have a working business plan that will demonstrate that you will be able to pay the rent in full when it’s due. Never start a contract knowing that it will be impossible to honour because that’s not fair on somebody else’s business. You must have that working business plan and your cash flow model worked out. 

Now, when it comes to stock, you can try and secure credit lines with suppliers so that you’ve got a bit of a period of grace before having to pay.

This means you can kickstart your business with positive cash flow, getting paid from the customers before you have to pay for what you’ve sold. 

You’ll need to make sure that you account for every penny you receive on sales very carefully so that you don’t spend money that’s come into the business account that you actually owe to somebody else.  However, if you manage the cash tightly, it can give you the breathing space that you need by dramatically reducing or even removing your initial outlay to practically nothing. 

Deferring costs in this way is pretty much essential if cash is tight but you’ll also need to work out whether the business has other costs, for instance salaries that you’re going to need to pay. 

When starting out, it’s essential to keep that wage bill to a minimum. So the first question is, can you start the business without taking on any staff?

If the answer’s yes, then hold off getting any other staff until it’s absolutely necessary. Ask yourself how much you can do without having that bit of help. Can you call in favours? Can you get family and friends to give you a few hours?

It’s really important to be upfront with everybody. Explain that money’s tight or even non-existent  and that you’re asking for help to get things going because you’ll be amazed at how generous people can be when you ask them for a bit of help. But also make sure that you never over promise. If you intend to pay them, then honour that commitment as soon as you can, okay?  And if you do take on staff, try and pay them monthly in arrears so that you have four weeks trading before their salaries are going to go out.

Now, if you’re intending on working in the business from day one, ask yourself if you need to draw any money from the business initially. If you do, obviously you’ll need to be as frugal as you can so that you can begin to build some cash reserves in the business, which are going to be used to pay the bills, buy stock and reinvest in the business.  

And sometimes when you start a business, you’ll need to keep earning money elsewhere. That might mean continuing in your existing job or working in the evening or weekends to help the money coming in and your business starts off just being a bit of a side hustle. 

I know loads of entrepreneurs who’ve kept their day job while they’re starting a new business as a side hustle or they’ve got another job to support the business with cash when they’re just starting out as well. 

Businesses are like babies. They don’t usually start out self-sufficient, you need to support and grow them before they can start to do things for themselves. 

Keeping costs down, being really clever and smart with cash flow and negotiating everything you can is at the heart of starting out with little or no money. 

But, sometimes even being really clever and frugal isn’t gonna be enough to get you going. So what then? Well, the truth is you really do need some working capital. So where can you get it? 

What I would say is if you don’t have the money yourself, you can look at getting a loan, either from a professional lender like a bank or from friends or family or other investors. What I will say is that borrowing money from friends and family is a double-edged sword, it may seem easier, but when it comes to the emotional cost, if the business fails and you can’t repay that debt, then you’re going to lose more than just money. 

Going to a professional lender like a bank may seem a little bit harder. They’ll want a business plan if it’s a business loan and you’ll have to pay interest but it can force you to be less emotional and more rational about what you need when you’re just getting started. 

So, if you want to start a business, but you don’t have the cash, then it is still possible. It’s hard work, but it’s still very, very doable. 

And these are the things that I want you to remember. 

Number one, negotiate contracts to defer payments and give yourself extra time. Number two, avoid adding fixed costs like staff until you absolutely have to.

Number three, try and remove yourself as a cost from the business as long as you can afford to. Number four, if you do need cash, think about where you can borrow it. Friends and family might seem easy, but the cost can be higher than pure interest payments. 

Good luck, get going, and anything’s possible when you put your mind to it!

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