Lack of funds is an obstacle which many aspiring entrepreneurs encounter on their path to founding their own business. Whilst there are many who do not let it discourage them, there are some who give up on their dreams altogether.
If the fact that you don’t have sufficient savings to invest in your business idea disheartens you, this article will help you figure out how you can start your own business with little to no money in your account.
Test The Market
The first step that you need to take before you think about setting up your business is to ensure that there is a demand in the market for the product or service that you are going to provide. You can use the search engines and social media to conduct market research to understand what your target audience wants.
You must be wary about launching a product without doing proper market research as it can damage your reputation and make it difficult for you to build a good brand image. You should test the waters first by examining your market and gain a good understanding of what your customers expect from you.
Prepare a Good Business Plan
An excellent way to arrange the capital that you need for your business is to apply for funding. However, unless you are planning to ask your friends and family, you will need an impressive business plan to acquire a start up business loan from a credible source.
You can pay someone else to write one for you or you can keep the costs low by writing one yourself. You must focus on the numbers and be modest about projected sales. This will allow investors to gauge the potential of your business to grow in the near future. Preferably your business model should be such that it starts making a profit in the immediate future.
There are several options that you can explore if you require external funding. The most tried and tested method is to apply for a bank business loan. However, business loans are known to be difficult to acquire and misusing funds acquired from banks can get you into lots of debt which must be avoided at all costs. Such a crisis can be averted by keeping your purchases made to a minimum.
You should avoid trying to buy everything at once, especially if you are using a credit card. The right approach would be to use the revenue that your business generates to finance your expenses.
You could even use crowdfunding platforms such as CrowdFunder and Kickstarter. On these platforms, you may receive small anonymous donations from the public for your product. However, you may need to provide some reward in return for the donation that you receive. You will also get a better clue as to the actual demand for your product as these platforms also allow you to accept pre-orders. You could also consider participating in startup competitions for entrepreneurs such as the Responsible Business Awards and The Pitch.
Service Oriented Businesses May Have An Edge
Compared to product-based businesses, a service-oriented business may be relatively easier and cheaper to set up as they are more likely to get funded and often require less funding to get off the ground. It may become easier for your business idea to attract external funding if you are planning to provide a service which you know people need. The funds that you acquire can also be used to generate cash flow for a secondary business which could be product based.
An effective way to keep your operational costs low is to provide a service in return for a service, also known as a barter. The barter system has been around for as long as a millennia and it has enabled people to exchange services and goods which eliminates the need to have money.
If your business produces a product or service in excess, you can barter it for some other service or product which you do not have the resources to produce. If there is a software application that you need for your business, you could even try searching for products which offer free subscriptions. Even if they only offer free trials, you can use them until you have no option other than to purchase the product.
Use Free Marketing
In the absence of funds, you may find it difficult to spend money on marketing your product or service. But instead of giving up on marketing your product, you can rely on free marketing tools to spread the word around about your business. You could ask your business contacts, friends, family, and past colleagues to bring in business for you.
You could also make use of social media platforms to attract clients without having to spend a lot of money. By creating a Facebook page, Twitter handle and LinkedIn profile, you can get in touch with your potential customer base at no added cost. Twitter allows you to manage a business account for free and notifies you each time a person tweets about you or your product. If you have friends working for local media, you could politely ask them to give your business some free publicity.
Put Your Skills to Use
If you build a business around what you know, you can keep the operational costs low as there will be no need for you to hire additional staff. You can put your knowledge and skills to some good use in the initial stages of your business to save money. When your business begins to generate revenue, you may have to shoulder other important responsibilities such as expanding your business and meeting clients.
At this stage you can afford to hire an employee who brings to the table the same skills and commitment that you possess. If you have good knowledge and personal expertise, you will not have to pay hefty fees to consultants and you can use the funds that you save for the expansion of your business.
Simple tricks such as these can make a lot of difference to your balance sheet and put you in a better position to start a business with little or no money.