Last updated on November 25th, 2022
One question I am frequently asked is how can someone start a startup business without any funds at all?
I always thought that the answer was a no-brainer but after checking out some other similar articles online, I found that there was quite a bit of misinformation about startups and funding. So, I thought I would write this article to help address the topic.
Disclaimer: I am not a financial advisor or expert, even though I do handle my own businesses. This means that I won’t be advising you to start your own business, but I will be sharing some of the things I did to prepare for my business before I landed any funding.
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Why All Startups Need Money? (Sort Of)
It’s no secret that a lot of people struggle to set up their own business.
According to a 2021 poll, one of the most popular reasons why Americans are not starting their own businesses is because they lack funding (see also, ‘What Causes Lack of Productivity?‘).
63% of the survey respondents identified funding as a barrier for entrepreneurship and a whopping 74% of Americans stated that if they had more funding, they would be more likely to start their own business.
This has led to a lot of people wondering if it’s possible to start their own business without any money behind them at all.
Most of the articles I’ve seen online covering this topic talk about how ‘easy’ it is to start your own business without any funds at all – but they’re ignoring the fact that to start a startup with no money, you still need access to equipment, skills, and knowledge.
For example, I saw one article that said starting a business with no money was easy – “Just grab your pressure washer, go knock on your neighbors doors, and offer to wash their drives or exterior walls for a fee.”
This article clearly ignores the fact that not everyone has a pressure washer lying around their home, or knows how to use one, or have a spare $250 in their bank accounts to go purchase one.
Money is needed to get the right equipment, the right knowledge, and the marketing to find a customer base – no matter what industry you are trying to startup in.
This is also backed up by statistics. In 2021, 29% of potential entrepreneurs stated that the reason why they haven’t started their own business is because they didn’t have access to business tools.
A further 26% said it was because they didn’t know how to work with the tools or technology necessary for their potential business to run.
The same goes if you simply want to start your own blog. Sure, you probably already have a laptop or computer (93.3% of households do) but what happens if that computer suddenly breaks?
Do you have the funds to fix it or get a new one? What about transport to get to your local library to use their computers?
The same is true whether you want to start a digital marketing business, an online blog, or sell lemonade on the sidewalk – you need money to buy your equipment, to equip yourself with the qualifications and information you need, and the materials to build your products or services.
So, can you start a startup business with no money?
In my opinion, no – but there are steps you can take to begin your startup business before you land the funding you need to really lift it off the ground.
Things You Can Do To Start Your Business
Here are some steps you can take to build up your business before you land your funding and actually start getting customers and clients. You can do all of these tasks for free, and they are the kind of tasks I usually do before officially launching a business.
Build A Website For Free
Websites are incredibly important for businesses, as they offer a range of different benefits that businesses can use to their advantage.
According to Forbes, reasons why a small business should build itself a website includes increased credibility, better branding, to act as a hub for business updates, and the ability to use online marketing.
8 out of 10 customers are more likely to engage with a business if it has a website – so, it’s highly recommended that all small businesses build themselves a website.
Clearly, businesses themselves can see these benefits. In 2022, 71% of small businesses have a website. To build your own, you can use free website-building resources like Wix or WordPress.
If you don’t have a computer or internet connection to do so, then just visit your local library to get started.
There are a lot of benefits with small business networking. Better connections can lead to better opportunities, shared knowledge, and increase your confidence as a business owner.
Networking can also help you find future customers, as 40% of meetings end in a close (that means a sale, or near enough).
To start networking, I always start out online by looking at social media but I also attend conferences and other meetups. You don’t have to be best buddies with your networks just yet – but you can start to put feelers out to see who can help your business the most.
Research Your Target Audience
If you start to research your target audience before your business is fully developed (see also, ‘Top Tips to Start a Research and Development Business‘), then this will give you a huge advantage when it comes to marketing.
Research can help you make better informed decisions when it comes to marketing. For example, 92.1% of businesses use social media in their business marketing and of those that do, over half (57.2%) say that their social media efforts have been effective.
However, which social media platform you use depends on your target audience research.
Only half (51%) of teens are on Facebook despite it being a market leader in social media so if your target audience are young adults and teenagers, you may want to use your audience research to focus on a different social media platform.
And Your Competitors
Just like with audience research, competitive research can also help you make informed business decisions.
You can help you understand your market better, learn effective marketing strategies, and find gaps in your audience needs that your competition is not filling. 20% of businesses are outcompeted so competitive research is definitely important.
I always start by identifying my main competitors, checking them out online, and maybe going undercover as a ‘customer’ to see how they work. I can’t do this for every main competitor, but I have found that this gives me a lot of insight into their marketing strategies.
Access Free Business Advice
Some of the biggest reasons why businesses fail is due to poor business decisions, whether it’s business planning, marketing, or financing.
As only 9% of business owners have a bachelor’s degree in business and 32% have only taken a few business courses, it’s easy for business owners to make mistakes because they don’t have the knowledge or skills necessary to make a successful business.
So, I recommend you learn as much about business as possible before your startup officials start (see also, ‘What Kind of Business Startup Can I Start with 20k?‘). You can check out blogs just like this one, the Small Business Association (SBA), SCORE, or local trade groups or SBDCs in your area.
So, I don’t believe that it’s possible to start a startup with no money at all. After all, you still need resources, marketing, products and equipment – and they all cost money!
However, there are some things you can do for free to help lay the groundwork for your business while you work on securing funding. Check them out above and I hope you have found this information useful for starting your own business. Good luck!