Can You Start a Business with No Money?

Starting a business with no money is possible. The real question is whether it's practical. For even the leanest business, it will cost you something at least to start your business.

What Do You Need to Start a Business?

Depending on the business you're launching, you might have to register your business and apply for licenses and permits. These registrations, licenses, and permits often come with fees. You might also need to buy insurance to protect both your personal and business assets and to comply with the terms of your business loan or commercial lease.

No matter the type of business, you'll need a computer, an internet connection, and a website to compete in today's marketplace. Even if you already have these tools, you'll need to factor some costs into your budget to maintain them for your business.

You'll also need a plan to support yourself (it can take six months to two years before your business generates enough money to pay your salary), and a way to attract customers (even the best idea can fall flat if customers don't know it exists). Many social media marketing options are free, but you'll pay in time spent learning these tactics through trial and error if you're not experienced.

You might also need an extra cushion in case something goes wrong and you find you must tweak or change your plans.

That said, it takes less money to start some businesses than others, and you might be able to finance some businesses using other people's money. What's important is to understand at the outset just how much money it will take to get your business started, and to prepare accordingly.

What Types of Businesses Are Easiest to Start With No Money?

You'll spend far less money to start up a service business that relies nearly entirely on your skills, expertise, and time than one that involves making or selling a product. After all, if you are opening a restaurant or launching a clothing line, you can't very well lease space, buy inventory, and keep the lights on for free.

Some of the businesses you can start on the cheap include:

• dog walking or pet sitting
• photography and videography
• tutoring
• resume writing
• business consulting
• catering, and
• nanny services.

You'll need to bring at least some expertise to start any of the businesses listed above, although the amount varies.

For example, having your own pets is probably enough experience to get started as a dog walker or pet sitter, but it's probably unwise to start a resume writing service if the only resume you've ever written is your own.

Potential customers will expect you to have credentials for some businesses, like tutoring (a college degree with a major in the subject matter you are tutoring), resume writing (experience as an HR professional or recruiter), nannying (a degree in child development), or business consulting (a track record running a business).

You can turn a hobby like cooking into a business, such as a catering service, but you'll probably need to first offer your services free of charge to friends and family so that you can show some work experience to gain the confidence of clients.

Photographers and videographers with no work experience and even those who have worked professionally will need to create a portfolio or reel of their work, to demonstrate their skills to potential customers.

The businesses listed above require very little in the way of equipment, assuming you already own basic tools like a computer, a cell phone, and a vehicle to get to job sites. The more equipment your business idea requires, the greater the complexities involved in starting your business, and the more difficulty you'll have bootstrapping your startup unless you have a tidy nest egg of savings (more on starting and financing these types of businesses below.)

What's the Cheapest Way to Start an E-Commerce Business?

Starting an e-commerce business isn't as inexpensive as starting the businesses listed above, but you can cheaply bootstrap some types of e-commerce businesses by using a drop shipping service.

A drop shipper is a manufacturer or distributor that sells goods to e-commerce retailers and also agrees to ship the merchandise directly to the retailer's customer.

The drop shipper charges you for orders only when they're shipped to your customer, so you don't have to invest in inventory, though you'll still need a computer, a Wi-Fi connection, and a platform such as Shopify to create and run your website.

Some companies that supply products like t-shirts and baseball caps will also embellish them with logos, sayings, or artwork and drop ship the finished items to your customers. (Make sure you use only your own original or properly licensed logos, sayings, or artwork, lest you could end up with an expensive lawsuit for trademark infringement.)

It's important to remember, however, that drop shippers price the items you buy from them based on volume. When you buy an item in a small quantity like one or two units, you'll pay a lot more per unit than if you purchase 100 units of the very same item. When you're starting out and you have few customers, you'll have to plan your costs carefully so that your retail prices are competitive.

Starting a Costly Business with No Money

It takes a lot more money to start a business that requires you to rent a facility and buy expensive equipment, than one you can operate from home with nothing but your talent and experience.

Suppose you want to turn your passion for baking into a bakery? Maybe you've got a family recipe for tomato sauce you want to bottle and sell, or you're a cycling enthusiast who wants to own and operate your own bicycle sales and repair shop.

If your business idea is going to take thousands, if not tens of thousands of dollars, it's also going to require you to conduct market research, perhaps set up an appropriate business structure, and develop a comprehensive, written business plan.

7 Steps for Starting Your Business

The more money you must invest to start your business, the more important it is to vet your business idea, write a business plan, choose a business structure that protects your personal assets and allows for arms' length investors (if you will look for these), and follow many other formalities for setting up your business.

At a minimum, you'll have to follow these seven steps to get started.

1. Test your idea. Before you dive in, it's a good idea to consult friends, family, and mentors to test out your business idea. Getting objective opinions can help you determine if your business idea is viable, and the feedback can help you refine your plans before you launch your business.
2. Write a business plan. A business plan is a roadmap that details the methods and strategies you'll use to launch and operate your business. It includes information on the size of the market for your services, how you intend to get customers, and what it will cost to open and run your business. Lenders and others who are considering financing your business require you to present a written business plan.
3. Choose a business structure. The legal structure that your business operates under is also known as a business entity. The easiest types of business entities you can form are sole proprietorships and general partnerships, because you won't have to register these entities, and states don't impose many rules for operating them.
   Limited liability companies (LLCs), corporations, and limited partnerships require you to register your business with the state and comply with certain rules like creating articles of organization and holding formal meetings.
4. Register your business. If you are structuring your business as an LLC or a corporation, you'll have to register it with the state. You'll also need a registered agent who can accept legal documents. Get information on registering your business on the website of the Secretary of State.
5. Obtain licenses and permits. Depending on the business you are opening and the state where you operate, you might need a business license, seller's permit, and other licenses. The website of the Secretary of State provides information on licenses and permits you need.
6. Choose a business name. Sole proprietorships and general partnerships are automatically legally known by the names of their owners. If sole proprietors or partners wish to use a name that's different from the owners of the business, they must register a fictitious business name, called a DBA. LLCs and corporations must include the name of the business when they register it. You'll have to do some research to make sure your business name isn't already in use by another company.
7. Get a domain name. A domain name is the address customers will use to find your business website on the internet. It's best to choose a domain name that is the same as your business name.
   
   

Low- and No-Cost Resources for Setting Up Your Business

A number of organizations offer training, networking, mentoring, and other types of assistance for entrepreneurs starting out. Some are free but in other cases, you must join and pay a membership fee to take advantage of the programs.

These organizations have local chapters around the country, and in some cases, around the world:

The U.S. Chamber of Commerce, through its local chapters, provides technical assistance and resources to help with business plans, getting required certifications, and managing a business.

SCORE, which is affiliated with the U.S. Small Business Administration, provides volunteer business mentors and online training programs.

Entrepreneurs' Organization connects entrepreneurs with each other and with thought leaders through events, networking opportunities, and mentorship programs.

LinkedIn is an online platform for business professionals that offers networking groups on a variety of topics, including marketing, finance, business startups, and industries such as retail, banking, and entertainment.

Network After Work is a professional community that offers events and training courses along with networking opportunities.

What If You Need More Money to Start Your Business?

Keep in mind that you will need to cover more than the cost of opening a business. In most cases, you'll need to have funding in place to run your business for six months to a year or more, or until it generates enough revenue to cover your expenses.

If you're unable to bootstrap your business for that length of time, you'll need to seek outside funding.

Getting a Loan for Your Small Business

Small business loans are available from the U.S. Small Business Administration (SBA) as well as banks and private lenders like American Express and Lending Tree.

The maximum amount you can borrow on these types of loans is typically $50,000. You'll usually be required to meet certain criteria, and you might have to put up collateral such as your personal car or home to qualify.

Economic development agencies that operate in many cities often offer microloans for smaller amounts (typically $5,000 or $10,000). Microloans are usually made for a short term of two or three years.

Getting a Grant for Your Small Business

Unlike a loan, you don't have to repay a grant, but grants are much more difficult to obtain. You'll have to meet a longer list of criteria than banks require, and many grants are offered only to certain types of business owners, such as women, veterans, and minorities.

The SBA maintains a database of organizations and agencies that offer grants to businesses. The federal government, through many different agencies, also provides grants. You can access the database of federal grants at grants.gov.

Starting Your Business with Crowdfunding

Crowdfunding websites like Kickstarter give you access to thousands of potential investors who are each willing to invest small amounts of money in new business ideas, usually in exchange for something like an equity interest in the company or first crack at a new, innovative product.

You'll have to describe your idea, set a fundraising goal and time period, offer a reward to investors, and pay the website a fee (a percentage of the amount of money you raise).