How to Start a Business When You Have No Money

It takes money to make money. If your pockets are empty, it’s time to get creative.
If you are confident that you have a product or service people want, don’t allow the lack of funds to stop you from starting a business. (Photo: lOvE lOvE/Shutterstock)

Like it or not, starting a business requires some level of financial investment. Because bank loans are hard to get, especially with no track record of revenue, entrepreneurs often reach into their own pockets to fund a startup. But if those pockets are empty, it’s time to get creative.

Here’s some advice from small business consultant Bill Burnham of the Florida Small Business Development Center Network and Bob Godlasky, a volunteer startup mentor with small business counseling organization SCORE, for entrepreneurs with little or no startup money.

Beg and borrow


Create capital for your business by liquidating personal assets, suggests Bill Burnham, small business consultant at the Florida Small Business Development Center Network. (Photo: Bill Burnham)

The place many first-time business owners go for funds: friends and family. If someone’s willing to loan you some startup cash, Godlasky suggested making it official with a promissory note. “The contract serves as a gatekeeper on your integrity and your commitment to repay that note.”

Crowdfunding and angel investors may be options, Burnham noted, but both are highly competitive and often work only for businesses with “explosive growth” or “on the cutting edge of technology,” he said.

Related: How to Raise Capital Without a Bank Loan

Liquidate some assets

Burnham said he often advises entrepreneurs to create capital by liquidating some personal assets. When his daughter started her small business last year, he said, she turned in savings bonds to help cover funding. Other clients have held garage sales and auctioned off antiques collections.

Find a partner

Another option is to find an investment partner. Just keep in mind that bringing in a partner to pay the bills also typically means you’ll be sharing control — and profits. Make sure you have a clear operating agreement in place so everyone is on the same page, Burnham suggested.

Tap your credit line or retirement funds

Some owners have successfully funded their startup using credit cards, but it’s not typically recommended since interest rates are so high.

Taking out a loan against your IRA or a 401(k) is another option, but that’s also a risky move. This route is really only remotely reasonable for young entrepreneurs who will have time to recover if things don’t work out, said Burnham.

Start small

“The secret sauce is to start small,” said Godlasky.

“If you start small, you’re going to make your mistakes small. Everybody in business makes mistakes somewhere along the way, so the trick is to make them quickly and inexpensively.” -Bob Godlasky

Unlike most product-based businesses, service-related businesses are relatively inexpensive to launch, said Burnham. They can often be started out of your home with no employees, and can therefore be a great way to generate income as you develop a more robust business plan.

Other ideas include launching an e-commerce store before opening a retail storefront or working an umbrella cart or food truck while you save up to open a brick-and-mortar restaurant.

Related: What I Wish I Knew Before Starting My E-Commerce Business

Leverage freebies


“Most of us are capable of working more than 40 hours a week, that’s what passionate people do.”-Bob Godlasky (Photo: Bob Godlasky)

“Don’t pay for anything you don’t have to pay for,” advised Burnham. Leverage the free and low-cost resources available to small business owners in your area. Organizations like SCORE and SBDC, for instance, provide free guidance on everything from financial feasibility studies to business plans.

Look around to see if you qualify for any small business grants. There are grants for women-owned businesses, minority-owned businesses, veteran-owned businesses and more.

Keep your day job

“Most of us are capable of working more than 40 hours a week,” said Godlasky. If you already have a job, don’t quit too quickly, he suggested. Work on your business as much as you can when you’re off work, until you’re at a place where you feel comfortable stepping into the business full-time.

“That’s what passionate people do,” he said. “Save that money and start your business small.” If you work hard and are patient, in time you’ll have scrimped and saved enough to achieve your dream.

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