- Stop Behaving Like Cattle! By Dan
- 5 Strategies To Getting Your Money's Worth At Seminars & Workshops By Sandra Martini
- Offshore Outsourcing - Better Read the Fine Print By Steve Chittenden
- Keep the Heat On in the New Year By Dan Bliss
- Help Comes From Surprising Places By Dan Bliss
- Why a Startup Business is Like a Puppy By Dan Bliss
- Symptoms of Recession Fatigue By Dan Bliss
- Graybeard Entrepreneurs By Maureen Farrell, Forbes.com
- Segway Inventor Reveals Toughest Question By Thom Patterson, CNN
Paul Orfalea founded Kinko's in 1970. Learn how he grew the company from one tiny room to thousands...
Learn how Tim Westergren's Pandora uses the Music Genome Project to come up with a unique playlist f...
Being Broke Is Not an Excuse!
|
|
Not having money is no excuse to put off your business dreams. As they say, there is more than one way to skin a cat.
Whether you are unemployed, or employed and overextended, you CAN start a business without any money.
I know some of you are saying, “No way! I’m completely broke, and my plans are big.” Here’s a little dose of reality for you... It’s not always easy. An investor or lender isn’t going to swoop down out of the sky and give you a million dollars with a little pat on the back! You are going to have to WORK, and you’re going to have to THINK. Based on your circumstances, you may need to adapt your business to match your circumstances. This means that you may need to start Phase 1 on a modest level, then Phase 2 on a bigger level, etc.
I’ll give you an example of an early business I started with $0. After college, I struggled in commercial real estate (mostly because I couldn’t convince businesses to hire a rookie to represent them in buying or leasing property). With a friend, I started a house painting business. Our only costs were the DBA registration, business cards and estimate forms that we printed at Kinko’s (total cost less than $100). We generated clients by contacting homeowners with peeling paint outside – a perfectly targeted audience. We did some estimates, and we used the deposits from our first two clients to buy ladders, brushes, etc. We then ran some newspaper ads to hire workers. In our first month, we went from $0 to $26,000 in sales. We soon had four crews and more work than we could handle. We were in business!
If you need to start a business that requires more significant capital, well I’ve done that too.
Here’s a list of ideas on how to launch a business, starting with nothing:
1. (This is my favorite.) Instead or starting a new business, buy an existing business and improve it. The seller will often finance more than half of the cost. Plus, you will be able to use the track record of the business to gain immediate credibility. Once you buy it, you can change the business to match your vision.
2. Find customers that will give you an advance for future products or services.
3. Talk to your suppliers or manufacturers. Ask for terms, so you can pay them in 90 or 120 days. They may even invest in your company.
4. If you are in the restaurant/bar business, vendors who supply pool tables, jukeboxes and video games will often lend $2,000 to $15,000, just to get your account. The best part is that they will be repaid from the vending income, so you don’t have to worry about making any payments.
5. Good credit can come in handy, and not just for credit cards. You can often finance furniture, equipment, carpet and building materials to renovate your business.
6. Speaking of renovations, recruit your friends to help you paint and spruce up your business. These are the only people that will work for pizza and beer.
7. Look for barter opportunities. Make a list of the things you need, and try to negotiate a fair trade. Some deals may even require a three-way trade.
8. If your budget requires expensive equipment, consider leasing instead of buying. This will reduce your startup costs.
9. If you site requires extensive web design and programming, consider giving your programmer a stake in the company or simply ask to pay over time. If your programmer needs the work, you might get favorable terms.
10. Write an amazing business plan and find investors or partners to participate. Before approaching anyone, think about it from the investor’s perspective. Is it worth the risk to invest in your business? How will they be repaid? Is the payoff high enough?
Talk to everyone you know. Seek ideas and referrals to help you formulate ideas to get your business off the ground. Watch some videos on PerfectBusiness, especially interviews with entrepreneurs in your industry.
Some businesses just need a little bit of seed money for web design concepts, legal costs or even the entire cost of the startup. I can’t tell you how many people contact me looking for investors of $2,000 to $5,000. It’s just crazy! If you don’t have credit or friends that can kick in this amount, then you might simply have to do it the old fashioned way... EARN IT!
If you want it bad enough, you’ll do it. Try these ideas on for size:
1. Sell your car and buy something cheaper
2. Move into a more affordable apartment
3. Get a roommate
4. Sell your giant flat screen TV
5. Pack your lunch and stop drinking $4 coffee every day
6. Quit smoking
7. Get a side job on Saturdays
Sure, it hurts. But, if you need a little bit of seed money to get your business rolling, you may need to sacrifice.
On a final note, you might want to check out peer-to-peer lending services, such as Prosper.com. If you decide to borrow from family or friends, but are concerned about awkwardness in your personal life, check out VirginMoney.com. Virgin Money will act as a middleman to collect payments on behalf of the people that lent you money.
So, now that you know how to solve your lack-of-cash dilemma, get to work!
Categories: Columns, Small Business & Entrepreneurship, Self Improvement
Very good article with excellent ideas. Very encouraging for young people. Anything that promotes creative thinking and entrepreneurship as an accessible way of life for everyone and anyone is fabulous. I did the same thing when I was 16, except I started with $40 except made less and managed it badly but still made just over $100,000 in the first year which was more than I could have ever earned working at a fast food store. With all due respect but for those that so negatively fail to see the benefits of this article and others like it, it's no wonder you aren't getting ahead!
Dear Dan,
Never say die. I've been married and taken to the cleaners, lost house, weekender, cars etc... Been in a relationship and the same happened. I have dreams of a business which will challenge Microsoft to the core and I need 3-5 million to do it. Hard to fing for a disabled old soldier.
Decided on a float and public offering (cheaper) 300,000 dollars. Did some research and I can do a small scale offering for abot 30,000 easy, bare bone 20,000 dollars.
A far cry from 3-5 mils.
My motto is: if you can dream it you can do it!
I met someone who will design the 2 websites I need for nothing until it's all happening. I started an IT troubleshooting business: small crap but bringing some funding, an MLM in telecommunications which will give credibility with an association with a major telco, bringing in funds and reputation.
Then I go to the big one in another association with Oracle and Sun Microsystems.
You are spot on, keep going and never say die. Working 15 hours/6 days/week is hard but I can see the big picture.
To succeed you need to be a visionary and believe in yourself.
Quitters never win, WINNERS never quit.
Regards
W. L.
Pierre,
You make valid points. Yes, you always need a few bucks to buy gas, food and even make copies at a copy store.
The point of the article is that those are very minor costs that anyone can scrape together without saving money for years and years.
I wasn't sharing the stories to impress people. The purpose here is to let people know that you don't need to be a millionaire, or the child of a millionaire, to get a business off the ground. Businesses can be started by working part time, sharing an apartment and just working hard to make it happen.
Think hard, and come up with ideas on how to kick off a business without that big investor. It can be done!
Hi there. Your 'example' has major flaws...!
You said even if you don't have money...; well, you then needed a 100 bucks to get a few things done AND you needed money to put gas in your car to drive around town to be able to spot the houses with peeling paint! Also, you were living at home with your parents paying for a roof and food and probably the phone lines you were using. And probably were driving your dad's car as well... See my point here!
When writing articles pretending to help people, at least make your 'stories' realistic; we're not all 18 years old, reading in awe of your accomplishments!
Hi Dan I just joined this site today. I have seen two perspectives here on the posts to your article. One perspective seems to be finding out how to implement your concepts, and adjusting their view of starting from "nothing" to that of yours which doesn't use the term "nothing" literally. The other perspective seems to be finding the dissonance between the literal meaning of "nothing" and what you actually advised. Then the aftermath of these perspectives seems to follow an obvious course: the first perspective yields talk about how to succeed, and the second perspective yielded talk about how success might be impossible. The first view is impregnated with a spirit of optimism yielding reasonable efforts, the second is impregnated with defeatism yielding a sense of helplessness. So I think there is an emotional element here that is hard to over look. This element is exactly what I am trying to address in my next book, and in my new concept for a business: the need for Optimistic Training exercises. Also, given your suggestions I have considered that eventually I would like to create and invest in a clinic that approaches all the elements of this lack of optimism, incorporating a wide variety of specialties in psychology and physical training and diet to turn around the lives of people, beginning with a clinic headed by a psychiatrist with psychologists in three specialized areas that I would coordinate using concepts I have found useful in achieving greater optimism. The concepts and techniques I learned and invented, by the way, could help with post traumatic stress disorders. (I learned these things as a travelling religious hippy bum, yes not kidding.) However, I could just bemoan my back injury and lack of a job and give up on life... NOT. Thanks for the advises Dan.
I'm with UpaCreek and mdurwin, spelling and gramatical errors aside. Even though your painting business may have cost you less than $100 before you had clients to pay for the rest, that's still more than the $0 you claimed one could start with. I've been trying to get my own business started for ten years now, 21 months on the Internet, and have gotten absolutly nowhere, and don't tell me I don't want it badly enough or I will choke the life out of you! If I had friends or family I could borrow from, I wouldn't be in the despirate situation I'm in. I'm 36 years old, still living with my mother (in the cheapest, roach infested, one bedroom apartment in this city), never had a car, never smoked cigarettes or drank $4 coffee, too sick more days out of a year than well so I can't work a regular job or accomplish anything on anyone else's schedual. In short, your article told me nothing I didn't already know and hadn't already tried without success. So, thanks for nothing, Dan.
At least in the retail business, If you have a good business concept, sincere, and honest; you would be surprised how many vendors are willing to see you succeed because your sales will impact their sales. No to Low minimums are not unheard of. We have exclusive products by some vendors just based on my relationship via the telephone or email. Building relationships with your suppliers and customers is vital to a successful business. Additionally, being patient and starting out on a smaller scale than what you envisioned may also have to be a reality for some, although usually in the short term.
I spent a lot of time with my Grandmother who was very thrifty. This is something that needs to be taught. Unfortunately, many feel as though resources are limitless so there has been tremendous waste. When we stop attaching our happiness to the accumulation of things and instead value emotions and experiences, we will all feel better and be able to do more with less.
Necessity is the mother of invention is TRUE ! That's one thing about those of us with the true entrepreneurial spirit, we will find a way.
I started writing a book about bootstapping awhile ago. This may be the perfect time to finish it since "how to not only survive but thrive on limited funds" would help a lot of people.
Exactly...I can save thousands of dollars per day just by not buying things, but wait...I don't have the money to save by not buying thousands of dollars of stuff every day. I already work Saturdays, My big screen TV is a small non digital.
Lets get more realistic. If not buying $6 dollar coffees sounds like good advice a person had not thought of yet maybe that is why so many businesses fail...
Excellent article. You are so right. If you want anything bad enough, you will do what you have to do to make it happen.
Dan:
Super article about your listing of solutions with: #1 buying an existing business. We bot a business in another state (217 miles away). Owners were tired of being owners (as they never should have been, as they were great staff but poor owners). Annual volume was $651,000 with net of $27,000. Asset purchase only, closing of $6,100 and monthly payments to them of $8,333 for five years was done through the improved revenues. Within 11 working days we produced everything offsite and within four months the improved revenues exceeded their old revenues by 53% and net profits by 325% increase. (REAL mistake I made was sharing confidential information with them and trusting their judgement as we ended up shutting down the business two years later. (a good lesson, but would not stop me from doing that again, "in a heart beat".)
I find that true entrepreneurs are willing to share with other entrepreneurs, their stories and resolve. In 1959 I wanted to learn how to resolve some financial issues, also called being able to eat and exist (remember-I know that you probably read about that era, that TV was only in the embrio stage) and Paul Winchell was on TV in New York and I was in Montreal Canada. I called him to find out how I could become a ventriloquist like he was and he shared all of the details as well as his suppliers with me and tat saw me through the next ten years. The list went on with similar stories for years and up to the present and that is why I too, am also very happy to share my successes and challenges with others.
Thanks
Greig
I love the number 1 option: If you don't have enough money to start a new business buy an existing one and improve it. Well, if you didn't have the money for the fits business where will you get it for the next one? And how much additional time and money will it take to improve that business then sell it? #9 is also ludicrous since you'll never find a competatn programmer who needs work. They're all swamped!
The rest make sense from a "how to save a few hundred to a few thousand" but not how to finance a start-up requireing hundreds of thousands if not millions of dollars.
Excellent review Dan, I must say that some of those scenarios are exactly what we run into at Empower. We fund businesses from PreVenture Capital to full Equity Venture Capital and see that some people have incredibly great ideas, but no capital. You are right, sometimes you have to get creative and get to work. No funding will come to a venture when a half a** attempt has been made - in any area or stage of the development. Half hearted attempts always show through.
Empower offers PreVenture Funding that helps to bridge the gap between startup funding and growth funding.
Blake Robbins
brobbins@empoweryourbest.com
877.45.EMPOWER ext. 704
www.empoweryourbest.com