How to start a business without money?
The entrepreneurial adventure attracts you. You would like to become self-employed and start your own business, but the lack of financial support can dissuade you or at least raise some questions for you: how to create a place without money? How to become self-employed without contribution?
Undertaking without money is undoubtedly more difficult but far from impossible. However, this will require more method, anticipation and persuasion. But if the motivation is there, nothing is impossible!
Find in this article our advice for opening a business without money and the different steps to follow to see your project come true despite your lack of contribution.
Creating a business without money: in which cases is it possible?
Certain situations are more suitable for starting a business without contribution than others, in particular when the material needs necessary to carry out the activity are limited.
In general, most service activities require little equipment to start, and it is also very often possible to begin training part-time while retaining paid work. For example, if you want to become a coach or independent consultant, a self-employed building contractor.
Opening a business without money turns out to be more complicated when the creation requires a significant initial investment (no door/security deposit for the premises, purchase of furniture and specific equipment, purchase of the initial stock, communication budget, etc.).
When it is necessary to make an initial investment, bank financing is still possible, even if the banks require a contribution almost systematically. Do not be discouraged; however, when the initial investment is limited, the requested donation is not out of reach. And also know that there are several ways to build up a personal gift, as we will see later in this guide.
Beyond the launch of the business, also keep in mind that your business must be able to be competitive vis-à-vis its competitors, and therefore have sufficient financial means to develop.
Also, it will probably take you a few months to build your customer base and reach your breakeven point. It is, therefore, necessary that you have an initial cash flow or sufficient capital to last during this period.
If your means are limited, the return on investment must therefore be incredibly rapid, and the company must generate profits as soon as its products or services are marketed. This parameter should be taken into account when defining your business model.
Step # 1 to start a business with no money: do market research
As with any business creation, but perhaps even more so when you have to set up a business without money, it is first necessary to carry out a detailed market study.
It is from this market study that your entire project will flow. The main objective is to verify that there is a business opportunity at the local level; otherwise, your task would very quickly fail.
Market research is also used to assess consumer expectations and the level of competition. This data will allow you to estimate your turnover potential. We, therefore, better understand the interest and even the need to start any entrepreneurial project at this stage.
The letter must identify the major trends in the sector and the primary factual data that characterize it: turnover of the industry and evolution of the latter, as well as the factors which explain this evolution.
The market study must also lead to the identification of the players in the sector. It will be necessary to understand which players are present on the market (share of large groups, independents, franchisees, etc.). Finally, the market study must lead you to study in a very detailed way the competition in the geographical area where you want to set up: identify the offer offered by your competitors in terms of price, services, products, and commercial positioning.
Step # 2 to create a business without money: assess human and material needs
To create a business without money, it will be necessary to anticipate human and material needs. These should indeed appear in your financial forecast.
The material investments needed to start a business.
Starting a business with no money doesn’t necessarily mean starting a business from scratch. You may already have other than financial capital that you will use to set up your company such as premises, work tools (computers, specific equipment, etc.), or even an address book.
Even if this is not hard cash, remember to highlight these possessions with your financial partners. They will be reassured to know that you already have some of the resources necessary to launch your activity.
The recruitment needs of a company
If your contribution is almost nil, you may have to think about going solo and relying only on yourself at first. So check that you have the required diplomas to exercise your activity.
Just because you are going to start your business with no money, doesn’t mean you can’t think about your future labour needs. Depending on your financial forecast and the cash flow that you anticipate, you can define when you can hire and the terms of hiring: number of people, profile, hours, salary, etc.
The ancillary services necessary for starting a business
Even without a contribution, you will have to pay essential fixed costs such as insurance costs, payment terminal, professional bank account.
At first, you may be able to do without additional services such as maintenance. But be careful, some tasks may require real skills such as bookkeeping, and even the simplest of them can be very time-consuming.
As soon as you develop your financial forecast, you can start estimating when the benefits will allow you to delegate these tasks.
To better anticipate expenses and obtain the best service at the best price, systematically request quotes from several professionals. You will be able to compare and play the competition.
Step # 3 to start a business with no money: make a marketing plan
It is not because you have to create a business without input that you have to ignore the marketing plan, on the contrary. You will indeed have to build up a clientele very quickly and expand it.
It will therefore be necessary to think about the means to implement to acquire your customers and to retain them: street marketing, local press campaign, advertising on social networks, creation of a website. The options abound. It’s up to you to judge which ones are the most relevant according to your target and your sector.
Be careful, however, as your budget is minimal, carefully assess the costs associated with each communication action. You will have to prioritize the activities to be carried out upstream by first putting in place those showing the best return on a potential investment.
Also read How to start a business with 5,000 € or less? Best Idea ever
Step # 4 to create a business without money: make a provisional budget
To create a business without money and not to risk going straight into the wall, it is better to establish a detailed budget estimate.
In particular, it will make it possible to estimate the amount of the initial investment and to assess the feasibility of launching the business with limited capital. It will also make it possible to ensure that the project will be profitable and to determine after how long the first profits can be made.
It is therefore based on the estimated budget that you can decide on the procedure to follow:
- Abandon the project
- Seek financing and associates likely to provide funds
- Launch the task on your own full-time to meet any labour needs that you will not be able to recruit
- Start your project part-time, possibly working on it only in the evenings and weekends to continue earning an income that will allow you to both lives and finance your new activity.
The provisional budget lists all of the company’s income and expenses. Also called financial forecast, it has several tables: the income statement, the forecast balance sheet and the cash flow table.
How to build it? The provisional budget is based on the market study and the marketing plan to establish the sales forecast. From there, you will be led to deduce and quantify the human and material needs necessary to achieve the growth objectives.
Then add the other overheads, calculate the amount of depreciation and any financial costs, then calculate the forecast result and deduct the amount of tax.
Finally, establish a cash flow forecast and identify any possible financing needs. Yet, it will be necessary to balance the financing plan and to verify that the objectives are realistic.
These different steps may seem very complicated and technical to you, and rightly so. If you are not an expert in financial management, know that solutions exist, you can, for example, use an online forecasting software.
Using software to carry out the forecast of your business has several advantages:
- The software takes care of the calculations and creates for you the forecast financial statements (income statement, balance sheet, cash flow statement, analysis of the breakeven point, etc.)
- You can take inspiration from budget forecast models.
- This will give you a ready to use document, formatted, and you can set it to the banker.
Also note: if you choose to seek funding or partner, you will have to complete your estimated budget to carry out a business plan in the rules of the art. In addition to the costed part of the estimated budget, you will have to add a written part presenting the project, its assets, your market study, your marketing plan, your choice of legal status in particular. Our software also manages this part.
How to finance a business without the contribution
Financial partners almost always ask for a personal contribution because it ensures that your interests are aligned with theirs. Indeed, if you have invested part of your money, the risks are shared because you too have something to lose if the project fails.
Creating a box without money is, therefore, a challenge. However, stay optimistic. Several solutions exist.
First of all, several means can allow you to build up a contribution.
Another possible and less radical solution: solicit money from your family and friends (it is the famous “Love Money”) or from strangers via a crowdfunding campaign.
You can also look for partners who can enter the capital of your company to strengthen its funds and thus provide additional guarantees to banks. Be careful, however, to choose your partner (s) in business and to be on the same wavelength, even (primarily!) If it is a relative with whom you get along well.
If you want to take out a bank loan, also note that the contribution is not the only criterion that comes into play. The presence of additional guarantees, your loyalty to the bank, your history and your reliability (absence of overdraft, personal loan paid on time), and the commercial potential of the project for the bank (rental of bank terminal, insurance, account commissions, interest on the loan, etc.) will also weigh in the balance.
Do not forget either, before giving up, to send your request for financing to several banks. You will be able to put in competition the various banking establishments.
Finally, the last possibility to take into account: aid intended for business creators and buyers. Opening a business without money is also possible thanks to honour loans from several networks.
Our article is coming to an end; we hope it has given you a better understanding of how to start a business without money. If you would like more explanations and advice on any of the points mentioned above or any other element relating to the creation or takeover of a business, do not hesitate to contact us.
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