Your starting Point matters
You are decided to start your own Business but… You have no money.
What should you do first?
On the “Starting your own Business” page, we talked about how the first steps you should follow when thinking about entrepreneur (and how choosing a proper Business Idea).
Moreover, in the “Entrepreneur Golden rules” we gave you some tips about what should you worry about before starting your own business.
* If you have not visited those pages yet, we encourage to do so right now.
Here, we’ll suppose that either you already have an Idea but no money or you are looking for one that doesn’t require much money in order to be carried out.
Hence, we’ll advise you in case:
- You already have a Business Idea but you have no money.
- With ranges of investment needed and what to do in each case.
- Explaining how “Collaborations” may solve all your problems.
- You want to entrepreneur but you have neither Business Idea nor money.
- Well give you different Business ideas, depending on your Hobbies and abilities.
When you have a Business Idea but not the money
Providing it is a reasonable Idea regarding some Business sector you perfectly know, this is the best scenario possible.
If this is your situation, we recommend you to visit our “Raising Funds for Business“.
- There, we talked about what should you ensure when looking for Funds.
Depending on your economic needs, we can establish 3 scenarios:
- You need less than $15.000.
- You need between $15.000 and $50.000.
- You need more than $50.000.
Lets analyze which are your alternatives depending on your needs:
* We’ll explain why Family Friends and Fools should be never a financing option.
1. You need less than $15.000
If your situation is:
- You already have a Business Idea that involves some economic activity you are familiar with.
- You are absolutely determined about carry it out.
- You need less than $15.000 in order to launch it.
What would we suggest you?
Your best option for earning less than $15.000 is getting a job and save as much money as you can.
The last thing you want is to owe money to the Bank:
- You would probably get a Loan for this amount of money, but you would have to pay a remarkable interest rate to the Bank.
- Depending on your country, it can vary from a 5% to an 8% (or much more).
Maybe, this is not the answer you expected, but trust us:
- The more freedom you have while taking decisions, the better for you.
- Being 24/7 thinking about how much you owe to the Bank, the interests… Only distracts you from your only goal: Success in your Business.
2. You need between $15.000 and $50.000
This is the most difficult situation to assess since it depends on:
- Which is your financial situation.
- How much you earn at your job (or could you earn).
- What is your project about. etc.
For this range of money, we suggest you to:
- Earn at least half of the money you need by getting a job.
- Ask for a small Loan.
- The smaller the Loan ($10.000 for example) the lower the requirements you’ll have: not a lot of paperwork or Business Plan details.
Why Family Friends and Fools is not an option?
It is your Business: it is you who should assume the risks, not the people around you.
Unless your family is wealthy and they can afford to literally lose the amount of money you needed, never ask a relative or a friend to lend you any amount of money for two main reasons:
- 90% of Entrepreneur Businesses fail:
- Statistics on hand, your chances of failing are high.
- Try at least not to affect your personal relations.
- You will learn how to look for money for your own:
- Asking for a Loan.
- Saving money efficiently, etc.
As you may expect, the more money you need for your project the higher the risk.
In case you wanted to launch another project in the future you would have to wait longer if the money required were high.
That is one of the reasons why there is so much money invested in IT nowadays: because the money required is not usually very high and there are always new projects to invest on.
3. You need more than $50.000
In this situation, unless you have a very high-paying job, you have no alternative:
You’ll have to:
- Ask for money to third parties.
- Give substantial Business Details.
- Prepare a Business Plan explaining how will you return the money that they have lent you.
- Offer Bank guarantees.
You can opt for:
- Asking for a Bank Loan.
- Looking for a Capitalist Partner.
- Looking for a Venture Capital company.
- They usually offer flexible Loans linked to accomplish certain goals and ask for a company percentage.
If this is your situation, you should visit our: “Raising Funds for a Business” page.
- There we explain all these options in detail.
You can also think about starting collaboration:
Collaboration: the best option
One of the best things about knowing exactly what Business you want to build up is that you can list down everything you need:
- A retail place.
- A big Stock.
- Computers and licenses, etc.
These investments are not cheap and if your Business does not success you’ll find it difficult for having your money back.
You should be open to collaborate with other entrepreneurs or Businesses that may be interested in what you offer.
By doing so, you can reduce substantially the money you’d need, at least at the initial stages.
- Offer your services or products for free.
- In exchange the company you collaborate with, may:
- Let you use its facilities, software or computers.
- Finance certain products you need.
Microsoft IBM example of collaboration
* This is a story we heard from an American advisor we had in a project: We can’t confirm that is exactly as he told us, but it is very instructive.
He told us that:
When Bill Gates had his first Computer Operative system already programmed he started to offer it to different hardware manufacturers unsuccessfully.
Finally he got a meeting with IBM.
- At that time, IBM was the most powerful company in the world: they were THE technology company.
At that meeting, IBM told Bill Gates that his operative system was not bad at all.
They were open to install it in all their computers… but they would pay nothing (or almost nothing) to him.
Instead of “freaking out”, Bill Gates (who is a very intelligent person) thought that:
- If IBM installed his operative system in all its devices, that would be the best Marketing campaign ever.
- Moreover, any other Hardware should install his operative system in order to have compatibility with the IBM one
- Sooner or later IBM could fall (as it happened later) but his software would remain.
He accepted, and the result is well known by everybody.
In this example, you can appreciate how a good collaboration can give much more than any amount of money.
When you don't have a Business Idea or money
If this is your situation, we encourage you to visit our “Starting your own Business” first of all.
Being said that, we must highlight that lot of people get confused at this point:
The most important thing if you want to entrepreneur, is not the money but the activity you choose to develop and the experience you have.
The very first thing you have to do is choosing an economic activity that you like the most.
- You have to be truly passionate about it.
If you can’t think about anything, think about your Hobbies:
Business Ideas based on your Hobbies
* We have started a new section: “Business Ideas“.
- There we explain different Business Ideas with a professional and detailed perspective.
- We tell you the steps you should follow, the investment you should expect and how profitable those ideal could be.
You should visit that section regularly in case you are more interested about starting your own Business but you don’t know how to start.
Being said that, lets explain different Businesses you could start, based on what you love to do:
If you love Music:
- You can buy and sell CD’s from the kind music you love.
- Buy a big stock of CDs and sell them one by one with a certain margin for you.
- Having a website would help
If you love Puzzles or some Craft games:
- You can start a Blog doing reviews.
- Moreover, you can buy and sell them through Internet.
If you love Video-games:
- You also can start a Blog or/and a YouTube Channel.
- Buying damaged consoles (they are very cheap) fixing and then selling them may be a good option for monetizing.
If you love Fashion:
- Obviously, you could start a blog.
- However, a Good option would be creating your own fashion line.
- It is much easier than you would think:
- You just have to:
- Contact some textile companies on Internet.
- Propose them your designs; what are you thinking about.
- Then, talk about manufacturing and delivery prices.
- Doing both things at the same time would be the best option: a Nice Website with your e-shop.
If you have any talent (you play violin, piano, you paint…):
- Start giving private lessons.
- As soon as you start earning a wage out of it:
- Look for other teachers and offer them some of your students in exchange of a 10% commission, for example (be generous or nobody would accept).
If you speak a second language:
- You can do exactly the same as in the previous point.
If you know well any programming language:
- You can offer you services through Internet.
- Also you can follow the two previous points (you can teach to people).
- You can associate with a small business (you can be the technical support):
- Then you learn the business from inside.
- In the future you can open your own shop.
If your dream is owning a bar, a retail shop or some Business that needs a physical location:
- Don’t start one from scratch unless you have plenty of experience.
- It requires a lot of money and your chances of success without having any previous real experience are almost 0.
- Take one that is being transferred.
Some of these Ideas are not immediate to implement. We know.
However you can initially combine them with a part-time job until you can make a living from them (sometimes it takes years, sometimes it takes just months).
The main idea is:
- Start earning some money as soon as possible.
- Meanwhile, you can learn how to scale the Business.
- Don’t rush into spending money.
- Do real things, adding value or solving someone’s problems.
- Combine different activities so your income sources are diversified.
Never "trade" or play with money
Internet is full of “Gurus” that encourage you to start trading with money.
- Stock Market.
- etc, etc.
Please, avoid these “businesses” unless you have a close friend that has actually made real money with those methods.
Don’t you know anyone? Neither do we…
As you know, we have broad experience in:
- Venture Capital investments.
- Restructuring broken companies.
- Assessing whether or not to invest in a business, and how much to invest.
We know how Businesses work, and we would never put a single euro on any business based on those “economic activities”.
If you want to invest in the stock market, regard it as long terms invest: nothing else.
Moreover, the first thing those “Gurus” ask for is your bank account.
No matter which is your starting point:
Whether you already have a Business Idea you’d like to develop or you have no idea what to do, you have to be very conservative regarding money expenses.
The less money you owe, the better.
Our main recommendations are:
- You should try saving the money you need for your Project on your own.
- There are lots of different ways of earning money doing what you love.
- If you need any additional money, ask for a small Loan, but always as a last resource.
- Combine different activities, part-time jobs… in order to have diversified income sources.
- Friends and Family should not be a financing option: Your Business, your responsibility.
- If you really need a lot of money, you have to develop an outstanding presentation, full of numbers about your project and how will you return every single dollar.
- If someone promises you money, run away from him/her.
And be patient. Success takes time.