How to Start a Business with Little or No Money

Posted on: May 29, 2019

Having a great idea for a new business happens all the time. The real question is, can you turn the idea into a profitable business? That's what separates the dreamers from the real entrepreneurs.

Business ideas are relatively easy to come by. Money, on the other hand, is not so much. That is, unless you know where to look. Banks and other lending institutions provide money to entrepreneurs as loans or lines of credit to help new entrepreneurs turn their dreams into reality. Depending on your existing financial situation lending providers will offer new businesses different types of loans to help them get started. There are many other ways to acquire the capital you need to start your business as well.

Establishing a Business Line of Credit

If you can show a bank or another lending institution that your idea is profitable and that there are specific reasons you think you can be successful, you may be able to open up a business line of credit. A business line of credit is more affordable than a bank loan because you're only required to pay interest on the amount of money you've used. A business loan on the other hand, requires a regular repayment of the loan whether you use it or not.

A line of credit is a little riskier for a bank to offer, so typically they'll want a greater level of assurance that you and your business will be able to pay back any money you borrow. It also means that interest rates are a little higher than typical business loans.

There are also significant risks to your credit score if you default on a business loan. Start by doing a lot of research online about the differences between business loans and business lines of credit.

Using a Home Equity Line of Credit

Another line of credit that is available to homeowners is called a home equity line of credit. If you have already paid off a substantial part of your mortgage, using a home equity line of credit can help you get your business started without having to rely on outside lending institutions. Like a business line of credit, you only have to pay interest on the amount of the line of credit you actually use, and not on the full amount of the line of credit.

The major drawback is that if your business fails, you could risk having to pay high interest rates or scrambling to pay down the home equity line of credit in order to keep your home. 

Using Your Own Credit Card

If you have a credit card with a limit that is sufficiently high enough for you to get your start-up purchases for your business, you can use your personal credit card to help finance the beginning stages of your new business. It takes a fair amount of self-control for a new business owner to not only limit purchases to the absolute essentials, but also know that they will be able to pay down the balance on the credit card before the interest rates get out of control.

If you have successfully created a corporate entity, you may be able to get a business credit card from your bank instead of using your personal credit card. This way you can keep your personal credit rating and your business credit rating separate from one another.

Businesses That Require Minimal Startup Funds

There are also many ways to start a business that require very little funding (or no funding at all), and if you’ve got the itch to be an entrepreneur, one of these might be right for you. Here are some ideas that can set you on the path to starting your own business without breaking the bank.

Personal Services Businesses

There are many types of personal services that people need to help with their everyday lives. Most of these activities are just about spending the time doing something other people don’t have the time or desire to do. Some examples of businesses that don’t require expertise or experience, and only take a minimal amount of advertising costs are dog-walker, cleaning help, personal shopper, errand runner, cat sitter, and pet feeder. These jobs can be great to supplement your current income or to create a full-time job for you if you are ready to be your own boss.

Virtual Secretary

Virtual secretaries manage incoming messages for business people who prefer that live people manage their calls rather than voicemails, making appointments, sending emails, faxes, and other secretarial jobs. What makes them virtual is that they work from home rather than having to go into an office. Their “boss” forwards calls from their phone to the virtual secretary’s phone, and checks in when convenient. This position will require little more than patience, professionalism, and working phone and internet lines.

Content Writing

If you have a strong command of your written native language, you can find work as an online content writer. Content writers provide different types of content so companies can promote products and services, provide web content for sites that get their revenue through advertising, or write advertisement and marketing copy. Some content writers have niche topics that they can write about, while others can write professional about a wide range of topics. All you need to begin work as a content writer is a computer, a knowledge of how to do research, and the ability to write well.

Online Reseller and Drop Shipping

Buying things cheaply in bulk and reselling them on other ecommerce sites has made more than one person wildly successful. While being a reseller requires startup capital to be able to afford inventory, once you get started it’s easy to learn how to maximize your profits. You can also resell services, such as web site hosting. Though this might require a high degree of technical knowledge, it’s easy to set up a reselller account and get started.

Some companies offer drop shipping, where they will handle all levels of fulfillment, including putting your name on the packaging slip and bill. This way, all you have to do is make the online sale, and someone else handles the rest of the work.

No matter what type of business you choose to start, remember that the process won’t always be a smooth one, and that it’s ok to take two steps forward and one step back. Being self-employed will be both stressful and exciting. Enjoy the ride!

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