Who said you need a lot of money to start a business? You don’t! These are some tricks I learned that allowed me to start eight businesses with less than $1,000 each.
You Don’t Need Everything from Day One
- You don’t need to incorporate from day one.
- You don’t need an office.
- You don’t need a fax machine, fancy business cards or that desk you really like.
Don’t feel like your business has to look like a “real business” from day one. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.
Have Contractors, not Employees
Having contractors has many advantages:
- You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
- They don’t need a desk or office space.
- When work is slow, they get paid less. When there’s a lot of work, they make more money. Try to do that with an employee.
Pay for Results
It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals.
Use Relationship Marketing to Your Advantage
This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?
- Find the people that have access to your audience.
- Offer them a commission for referring business to you.
- Let them market your company at no risk to you.
Let’s say you offer city tours in Paris. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to millions of travelers and that’s your target audience. Pay front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.
Be Smart About Your Inventory
These are two great pieces of advice I learned from my mentor:
- Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
- Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.
Do As Much as You Can Yourself
Build your own website, design your own business cards and write your own marketing copy. This won’t look as great as work done by professionals, but it’ll free and fast. Once you’ve sold a few thousand dollars worth of products, you can always re-do your website, business cards and marketing copy using experts.
Barter as Much as You Can
Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.
Leverage Other People’s Businesses
You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.
Good Enough is Good Enough
There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t work with a web-based application that is $5 a month because it doesn’t have all the features they want. They can’t stand using a template for a website; they want a custom-made site. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.
Bonus Tip: Don’t Quit Your Job Yet!
Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there. Several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.
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17 Responses
Solid overview. It would help if you listed some options like 99designs.com for graphics, elance.com for coding, and godaddy.com for easy domain registration and push button CMS setup. There are way more options – those are just a few I have used in the past.
Hey man.
Great reading. I have tried telling people the same thing for years. Nice to know that someone out there thinks the same. A man once asked me how I could even think of starting a company with the amount of money I had availible(less then 800 dollars) and this was a store.
I said what problems are you thinking of? He said I needed to rent something big because I should show a lot of products and buy this and buy that. I said…NO.
Since you wrote about this I will post a story of mine about that store on my blog tonight. Share some of my experience.
Keep it up, Zeke. You are an inspiration.
Thank you for sharing your experience, Joakim!
Have a great day!
Zeke
Hi Zeke,
Your points struck a chord. I have used most of the points you have mentioned here in the article when I was starting up and it has definitely helped me in keeping my burn rate low.
I would also like to add that currently I have an office but share the office space with another start-up company and this model also works out pretty well. I get to have an office at a central business location with office running expenses cut to half.
I’ll pass on the article to my network of start-ups. I am sure everyone will gain from it.
Great Article…
Thanks
Rajeev Lochan
Excellent article !!
What if one has really good coding-design-analysis skills and wants to go for a stratup but doesn’t really have ‘an idea’ of what startup should he start…then??
It looks to me that you have a pretty good idea of what your skills are. Build a business around them!
Zeke
Really insightful article. I grinned when I read the para about perfectionists – I must confess, I was in that boat a few days ago. I was already doing much of what you mentioned – which is really a great validation since its best to be modest when you start out. The frills and the jazz can happen whenever the business takes off and is on the healthy side of the ledger.
i would like to add that entrepreneurs have a bunch of FREE apps that can be exploited and leveraged. A few are – google sites, facebook fanpages, youtube, picasa, blogspot, twitter, knol, etc.
Good work!
Rajiv Jadhav
CEO
Mobile Fundaz
Thank you for sharing those resources, Rajiv!
Zeke
Thanks for sharing such good tips with us.
i thank u for sharing such good ideas .
How do I get $80,000 to buy a business
Some ideas: relatives, friends, business line of credit, credit cards and angel investors. If you think you need $80,000, borrow $40,000 and make it work out with that much money. Working with less money than you need forces you to be a lot more efficient and creative.
Zeke
Wonderful stuff, thanks for sharing.
Priya.
I wanted to start IT outsourcing bussiness without invesment and without disturbing my current job.. please help me out wid some tips
Abdul, i am also about to embark on the same based in Dubai. One thing that gives me confidence is some networking contacts who have promised to outsource their IT to me. So i’m gonna jump right into it!
Hi Zeke,
U r an inspiration for all those who want to get a start in business world….. Im an fresher just working in an MNC,having a target to get a start in this business world….still, i dont know that how i will reach upto my goal…… but i will surely reach….and after reading all this i got some more ideas and inspiration….
But the main idea is that Business can be started with No money…….and after reading about your start i got one more person who thinks that it is possible….
Thanks Zeke…
Rekha
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