How to Start up Your Own Small Business with No Money – and Bad Credit

“I want to start a business, but I have no money.”

I hear you, and you’re not alone. But I can tell you that most of the advice you’ll get on the subject is impractical at best, and dangerous at worst.

See, most people will tell you to explore the traditional options for startup capital:

  • applying for SBA loans
  • raiding your savings and/or 401k
  • borrowing from friends and family
  • finding investors and/or partners

None of these options are in your long term best interest, and I’ll tell you why:

  • You’re not going to qualify for an SBA loan unless you’re starting a very specific type of business, have excellent credit, and collateral. Does that describe you? I didn’t think so!
  • Raiding your savings (if you have any) or your 401k is a big mistake. Having some cash savings on hand does wonders for your outlook and your stress level as you struggle through the startup process. Besides, if you follow my advice you’re not going need to your savings. You’ll see what I mean soon.
  • Borrowing from friends and family? Do I even have to explain why that’s a terrible idea? Best case, you end up with a relative breathing down your neck for his monthly payment. Worst case, you’re the guy nobody wants to sit by at family dinners.
  • Using investors or partners to help fund the business often seems like the best idea. They’re sharing the risk, and there’s something comforting about not being all alone in your first business venture. I’m here to tell you that you should avoid taking money from investors or partners if at all possible.
  • (“Investor” and “partner” are just different words for “boss.” You’re not getting into business to have another boss are you? Not to mention the fact that you’re selling off a big chunk of your business – before it even launches – to someone who most likely doesn’t share your passion and enthusiasm.)

Even if your relationship with your partners or investors is great, I still believe it’s a mistake to take any investment capital (including from a bank).

You’re Better Off Getting a Business Started without Much Money

See, having a bank account full of cash as you get started leads to what I call “the curse of cash,” which is something that afflicts all novice business owners. When you have a full bank account, you make ridiculous decisions about what’s necessary for the business. You’ll buy computers, software, equipment, and furniture you don’t need.

I’ve wasted thousands of dollars on dumb purchases and ideas in my business simply because I had the cash on hand. Starting the business with no money will force you to make decisions more thoughtfully and slowly, which is a great thing when you’re just getting things off the ground.

So, yes, starting up a new small business with no money is going to be tough, but not impossible.

Start a Low-cost Service Business, and Grow Your Operation with Revenue

The simplest way to succeed with a no money startup is a service businesses. I think service businesses are a great way to go for a first-timer – they’re simple and they carry low overhead.

A List of Service Businesses You Can Start with No Money

  • carpet cleaning business
  • lawn mowing and landscaping business
  • cake baking and decorating business
  • window washing business
  • mobile car wash and detailing business
  • dog grooming business
  • dog walking and dog sitting business

Any of these businesses can be started with very little (or no) money. Here’s a quick outline for how you’re going to do it:

1. Instead of borrowing money from friends or family to get your business going, let them be your first customers. For example, let’s say you want to get a carpet cleaning business going. Tell your friends and family about the business you’re trying to start, and tell them you need to get some testimonials to help you get customers. Offer to clean their carpets for free if they’ll rent the necessary equipment. Use the experience with your friends and family to a) get rave reviews of how thorough, careful, and courteous you are and b) to train yourself on the proper technique for cleaning carpet (or whatever other service you’re offering).

2. Using your freshly acquired testimonials, print out fliers outlining your offer, your customer service guarantee, your pricing, and your contact information.

(By the way, the best way to figure out exactly what your offer should be is to call all your competitors, find out exactly what they offer and exactly what they charge. The safest bet is to make a very similar offer with a slightly higher price. Why the higher price? Because you don’t want to get in the habit of being the “cheapest” option. I’d much rather have a person tell me they charge slightly more because they do a better job than have someone say, “we’re the cheapest option around.”)

3. Pick an area of your community and start beating the streets, knocking doors, handing out fliers. Your freshly groomed appearance (hint, hint), your excellent testimonials, and your slightly higher prices will get you our first few jobs. Once you’ve gotten a few people to say “yes,” make arrangements to rent the equipment so you can actually fulfill the jobs you’ve sold.

4. Do a great job, reinvest your profits wisely, market like crazy, and grow a successful business!

So that’s a quick look at how you can start your own business with very little money. Hard work, persistence, and great customer service are the key. Good luck!

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