Can I Build a Startup With No Money?
There’s no need to sugarcoat it: starting a small business without any money is a tough position to be in. But if you’re an aspiring entrepreneur whose pockets are currently empty, don’t give up on your startup dreams just yet! If you have a startup idea, you already know that you are going to have to find a way to bring in cash flow to turn your dream into a reality. While you may not have all your startup funding to start off, there are plenty of ways you can raise money for your new company.
At Briggs Law, we want to help small businesses thrive in their market-place. Whether you are looking for advice on small business law or you are ready to hire a startup lawyer, our team of attorneys is ready to guide you. To help you get started, we’ve created this guide of tips on how you can build startups with no money.
Take Advantage of Free Steps Forward
Thankfully, today’s business landscape offers multiple ways you can push your start-up forward without having to spend a dime. Such opportunities include:
- Social Media – Most social media platforms nowadays are free to join. Pounce on all of them. Create a business page on Facebook. Post pictures and videos that capture the essence of your start-up on Instagram. And if your start-up entails the selling of individual products, try selling them via free online venues like Etsy.
- Offer Your Skills as Payment – Long before currency existed, people survived by hunting for their dinner and bartering with their services and acquired resources. Hunting stopped being a bankable start-up strategy ages ago but bartering remains as reliable an option as ever.
If someone has a skill that can help your start-up build traction (website design, photography, etc.), see if they’d be willing to engage in a win-win by exchanging services with you.
- Hire Interns – If your startup is set in an attractive industry and has the noticeable potential for growth, there’s a good chance you’ll be able to hire recent college graduates who will work for you for free. Everyone prefers paid positions, of course. But college-aged kids often find the industry experience and resume boost alone to be worth their time.
- Rally Your Family and Friends – Entrepreneurs like Steve Jobs, Mark Zuckerberg, and Bill Gates are so synonymous with their industry-shaping start-ups, we tend to forget that they had help. But the fact is that each relied heavily on their family and friends in the early going to be either investors or business partners.
Find people who you enjoy working with and are as excited about your start-up idea as you are. Even if they can’t contribute funding, they can at least provide much-needed legwork and support. Some family members may even allow you to borrow money until you get your feet off the ground.
Look For Ways to Secure Funding
Unless your last name is something like “Bezos” or “Kardashian,” it’s unlikely you’ll have a family member who can write you a check that covers all your hefty start-up costs.
Thankfully, the rest of us normal folk have several viable potential funding options that we can pursue, such as:
- Start-up Loans – Having a solid credit rating puts you in prime position to secure a start-up loan from either a bank or an online lender.
Both have their pros and cons. A traditional bank will be a stickler about your credentials (they’re likely to demand that you have a credit score of at least 680) but will offer you the best terms. Conversely, an online lender will be more flexible with their requirements but typically charge significantly higher interest rates.
If instead of an upfront lump sum of money you’d prefer having access to smaller amounts of capital over an extended period of time, you can also consider asking your bank or online lender for a business line of credit. This lands you a credit card that you can use toward “break open glass” business expenses. Unlike taking in donations from family and friends, you will have to repay the loan in the future.
- Angel Investors – You don’t have to audition for “Shark Tank” to find a wealthy angel investor to fund your start-up. The world is filled with jaw-dropping rich entrepreneurs who, despite the massive wealth they’ve already accumulated, are still hungry to latch onto the next big thing in business.
When working with angel investors, be particularly wary of their terms, as many will demand that their initial investment be rewarded with an outrageous stake in your company’s future revenue.
But on the plus side, angel investors not only provide considerable upfront funding but are also valuable mentors who were once in your shoes.
- Crowdfunding – For funding free of terms and interest rates, post about your small business on a crowdfunding platform like Kickstarter or IndieGoGo and set a goal for the dollar amount you’d like to hit. If your start-up idea is an inspiring one, you have a decent chance of raising funding from several people, none of whom are expecting anything in return for their investment.
Whether you’re approaching your bank or your mom for a startup business loan, make sure you’ve prepared a detailed business plan. This should include:
- Reasons why you think your start-up is worthy of a loan
- The next action steps you intend to take
- Your financial projections
Launching a start-up with no money in the bank is a daunting challenge, but it’s not an insurmountable one. As an entrepreneur, you already know that raising capital for your business is all part of the equation. Keep your eye out for potential investors, and until one comes through, keep your ear to the grindstone.
“This blog article is for informational purposes only, and is not a substitute for client- and fact-specific legal advice from a qualified attorney.”