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Starting a New Business With Little to No Capital

Discussion in 'Starting Your Business' started by djbaxter, Nov 5, 2017.

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  1. djbaxter

    djbaxter Administrator Moderator Member

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    4 Tips for Starting a New Business With Little to No Capital
    by Ivan Widjaya, NoobPreneur.com
    November 5, 2017

    It may sound impossible to start a new business with little to no capital, but it is always a possibility....

    1. Do Not Venture Out Into Uncharted Territory
    Build your business around your knowledge and skills. If you are familiar and have experience with what you are going to be offering consumers, your business will have a higher chance of survival. If you are not familiar with what you are going to be offering, you will need to hire outside assistance or consultants. These services could end up costing you thousands of dollars over a short period of time.

    2. Spread The Word
    Once you make up your mind to start a business, you should immediately start spreading the word. You can do this through social media networking, family, friends, co-workers and past colleagues.... By spreading the word early on, you will be a step ahead in the process of marketing your brand. Take advantage of everyone you are acquainted with, because they can help spread the word about your brand.

    3. Avoiding U
    Read more...
     
  2. Edvin

    Edvin MVP Member Top Contributor

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    Great article...
    I'm going to hijack this posting...

    Lets also consider a business model that requires a capital; or perhaps, we have outgrown the "No Capital model". In such stage we need to manage our funds effectively; that is, keep an eye on the cash-flow.
    Without properly managing your cashflow, you might as well close doors before you open them. This article highlights 5 points for managing cash-flow for new business, and how I measure up:
    • Don't over-estimate your sales volume
      In my case, I've contacted several franchisers in my areas; so, I feel that I have a realistic forcaste

    • Engage in Impulse spending during early stages
      Oh, I know I'm going to mess this up; for example, I have all the research telling me why I need a shiny store-front signage. How much do you think I will spend :eek:
      And what about the my marketing budget? Well, I'm using Franchise Disclosure Document (FDD) of numerous vendors to estimate that I should spend $3000-$4000 a month on marketing. But, will I be spending it effectively?
      How about my furniture? Fortunately I got used furniture from a store that was closing-up; but, now I feel the need to refinish these old/scratched furniture so that my facility looks new; after all this will reflect my image!

    • Being passive about past-due receivables
      Hmm, I hadn't put much thought on to this. What happens when the automatic withdraw is rejected? How can I automate the penalty fee?

    • Not using a cash-flow budget
      Arghhh, here we go again with the accounting (income statement, balance sheet, and of course the cash-flow statement, etc).
      See why proper accounting is a must; I have so much to learn :(

    • Not keeping a cushion of cash
      Hmmm, even if you have a cushion, should you use it?
      I'm fortunate enough to be in this situation before I try spinning the entrepreneurial roulette.
      Perhaps, I should apply for a loan and use that as my operating cash. This would have tax-benefit while maintaining my cash-reserve. Alternatively, I can try to apply for a loan to have cash available; the loan would act as back-up cushion.

      I already have a line of credit available against my home (I can use for my business); so, I'm not sure if the bank would approve me for a business loan when there is no respective revenue!
      However, I can get $50k loan against my 401K. Taking a loan against one's 401k has 1) business tax-benefit against the interest, 2) You pay the interest back to yourself. The downside is that the 401K money is no longer working. Now this becomes an opportunity cost; that is, how much will you pay back into your 401k versus how effective is the market going to be during your loan period.
      You would think I know what I'm talking about; but, the truth is that I'm no sure what to do yet :rolleyes:
     
    Last edited: Nov 6, 2017
  3. Johnatan23

    Johnatan23 Member

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    Hey,

    from my standpoint, the best way to start an online business with little Capital is drop shipping. Actually, you don't need any upfront investment, as all of the products are shipped to your customers from the supplier.

    What you need to spend money on is advertising, but once you get the sales rolling you just keep reinvesting.

    Edit: formatting fixed and link to own site/self-promotion deleted. @djbaxter
     
    Last edited by moderator djbaxter: Nov 7, 2017
    ctfranklin28 likes this.
  4. Small to Feds

    Small to Feds MVP Member Top Contributor

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    djbaxter likes this.
  5. azgold

    azgold MVP Member

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    The no capital business model is so often used by newbie affiliate marketers. Some are able to make enough money to switch to paid ads and tools, most do not.

    It can be done but takes more time, energy and oftentimes, knowledge. I don't think it's a model for the feint of heart but if someone just cannot raise starting capital but has enough dedication, patience and motivation to succeed, they at least stand a chance.
     
    djbaxter likes this.
  6. Peter Johnson

    Peter Johnson Member

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    It is really important to know your business and to keep learning as you go on. There is always more to learn. Research is absolutely essential for success.
     
    Gin likes this.
  7. Gin

    Gin Member

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    I read an article about the huge brands of today that started from nada. They became successful because they filled a need or found a need by accident. As Peter said, research is the place to start. Statistics show strong and weak areas as do industry reports.
     
    azgold and djbaxter like this.
  8. Jrob

    Jrob Member

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    It depends on what kind of business. It cannot be done in some like Retail, but some service businesses is possible. One way is to have affiliates for a service. If you have credit cards and plan your cash spending wisely, you could have revenue coming in before your credit card payment is due. You could attach your business to charity events to grow your business with little capital.

    It is going to take a lot more effort this way, than if you have the funds to grow your business.
     
    Brittney likes this.
  9. Rais

    Rais Member

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    Well agree with part that there are businesses that could be started with little capital however the other part that is starting with no money is impossible. Even if it a single dollar counts as investment...
     
    Brittney likes this.
  10. Daniel Jameson

    Daniel Jameson Member

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    If you are starting a new business with very little capital then you need to plan everything very carefully and conserve all the cash you can. It is very challenging but not impossible.
     
  11. annagreenang

    annagreenang Member

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    I completely agree with you
     
    djbaxter likes this.

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