So you have a business idea that solves a problem and will be useful to a certain group of people but you have no startup capital. What do you do? Starting a business with limited capital requires a shift in mindset that entails assessing your options, pivoting your business, grit, and hard work. Funding does not come easily and you will have to prove that your business will be viable either to a bank or prospective investors.
Traditionally, the process to start a business involves getting an idea that fills a need, then pitch your idea to an investor or a bank to finance your business and hope they like it enough to proceed. But, if they don’t, you’re pretty much stuck. Starting a business without capital is not easy but is doable. In this guide, we will explain how you can develop the right mindset to help you achieve the goal of getting your business started without capital.
What do you have available to get you started? Right at the beginning, the first thing to do is to take stock of what you have at your disposal. Look at what you can do, your experience, and the resources that are available. It is important to take this seriously and go deeper while taking stock. Collating your available resources, both tangible and intangible, will help you identify how best to execute your business idea. After doing this, look at your existing relationships to know who to contact for assistance. Map out your network of contacts and figure out how your connections can help you use your resources in an effective way for your business.
Next up, make up your mind to only invest what you can afford to let go of. Doing this helps you to be flexible and reduce the stress of managing it. If you come from a mindset of “I will invest only what I can afford to lose and see if it works” instead of “I am investing a certain amount and I want to see a certain fixed percentage of profit”, you will be less likely to stall starting up. For example, imagine someone with a full-time job that is not sure about leaving his job to become an entrepreneur and start a business, particularly because of funds. Which mindset do you think would allow them to make a move?
What type of businesses can I start with limited capital? Businesses started with limited or no capital typically have certain characteristics. They are either service or education-based. Service businesses utilize the skills and time of the person starting the business therefore making it relatively cheap to begin. What is most needed are the tools required to do the work. So if you’re a graphic designer, look at investing in the software required to do your job as opposed to starting a billboard advertising company you would have to invest huge amounts in for billboard space. For education-based businesses, as far as you have the skills and insights that others are willing to pay to learn, you can start. Additionally, the internet has made it easier to set up online classes and lectures making it even more accessible. In the education arena, low capital opportunities are endless.
Now, while you can indeed successfully start a business without capital, there are also some limitations to doing business this way. First off, the business could become tightly linked to you, the owner. You become almost one and the same, and scaling up could be difficult because it’s based on the entrepreneur’s time and skills. It also could be difficult to sell the business because it would not be worth much without the owner. To solve this, create systems and processes that replicate what your tasks are and train people to do this, then delegate. This way, you add more value to your company and it can stand alone without you.
Key takeaways Make sure to take stock of your available resources, both tangible and intangible to help you know where to start from
Move to a mindset of investing only what you can afford to lose, this way, you get to start without stress
Consider service and education oriented businesses as they can be started with little to no capital
Make sure that your service/education-oriented business has processes and systems in place. That way, you add value to your business.