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Starting a business with no money

This guide will help you successfully start a business – even if you currently have no money to fund it.

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Matthew Boyle
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If you want to start a business but have no money available to launch it, hope is not lost. There are several ways to finance a new business and get your career as an entrepreneur off the ground. In this guide, we’ll explore your best options for starting a business when you don’t have money.

What's in this guide?

How to finance a business

  • Business loan. A business loan is one of the most popular ways to launch a startup and it’s also one of the simplest. You choose your lump sum and desired term, then make monthly payments to repay the capital plus interest. As part of your application, you’ll need to explain what your business is and what you’ll spend the loan on. The lender will then make a decision on whether to grant your loan, based on your perceived ability to pay it back.
  • Business credit card. With a business credit card, there’s no fixed term. You’ll pay monthly interest on whatever you owe. You can order several business credit cards for employees to use. Plus, many of them come with extra perks, such as the ability to earn cashback or air miles. These reward credit cards tend to come with a monthly fee though, plus it’s tough to find credit cards with interest rates as low and borrowing limits as high as a business loan.
  • Business line of credit. This works the same as an overdraft or a credit card in that you only pay interest on what you owe. They tend to have much larger borrowing limits, though.
  • Get funding from investors. This involves convincing investors to buy a share of your company in exchange for a sizeable cash injection. Convincing investors that your business is worth the punt tends to be very difficult. In fact, it can be tough to even get in touch with these high-net-worth individuals.
  • Crowdfunding. This option involves setting a fundraising goal and asking for donations from other people. Most crowdfunders give their investors something in return for their contribution once they reach their fundraising goal. A number of popular crowdfunding websites have launched in recent years, making it easier than ever to spread the word of your campaign.

    Opening a business bank account

    A business bank account basically works like a personal one – the main difference is that it’s dedicated to your business’s finances. You should therefore expect the same features, such as a debit card, the ability to make and receive payments, an overdraft option, a banking app and so on. You can find the best business bank accounts to open here.

    How to write a business plan

    With most of these finance options, you’ll need to present the lender(s) with a business plan. This helps them get a better idea of how the money will be spent and your ability to pay the loan back on time.

    Even when you’re not applying for business finance, it’s a good idea to create a business plan. It helps you to set targets, create a clear direction for your business and spot potential hurdles before they hamper you.

    Every business plan should include the following sections.

    • Company overview. This section should include the business name, the business address and the business owner’s name as well as the business type (sole trader, partnership or corporation) and the business registration number.
    • A mission statement. This is a brief explanation of why your business exists and what you hope to achieve in the future.
    • Your target market. Be as specific as you can. Explain why you’ve chosen this market over others.
    • Products and services. This is a full list of what your business offers, an estimate of how much it costs to deliver these products and services plus how much you’ll charge for each of them.
    • Key competitors. Who are your competitors? How does your business differ to theirs? Why should customers choose you over them?
    • Marketing plan. Highlight where and how you’ll market your business. What is your monthly budget for each platform?
    • Financial plan. How much will it cost to launch your business? What do you need to purchase? Also, what are the estimated monthly running costs? What are your monthly sales forecasts (minimum, target and stretch goals)?

      It’s a good idea to review and adapt your business plan at least once a quarter.

      How to choose your business type

      Your business type determines how much tax you’ll pay on your profits, plus how personally liable you’ll be for business debts.

      Here are your main options.

      • Sole trader. You’ll continue to pay income tax and national insurance as an individual. You’ll be held personally liable for business debts or lawsuits against your business.
      • Partnership. This is essentially the same as a sole proprietorship, except profits are shared with your business partner(s). You’ll be equally liable for debts and/or lawsuits.
      • Limited company. Here, your business becomes an entity in its own right and your finances are separate from your business’s finances. You’ll pay business taxes and you’ll have to pay yourself a wage from company profits. You can’t be held personally responsible for business debts. You will have reporting and management responsibilities.

      There’s more about these options on the government’s website.

      Setting up your business space

      The great news for low-budget entrepreneurs is that setting up an online business is incredibly cheap. All you really need is web hosting and a domain name. On top of that, it’s completely free to list your business on social media, Google Maps and most listings websites.

      If you think you do need a physical business space, investigate whether a virtual office, serviced office or a co-working space can fulfil your needs. These options are far cheaper than traditional office space rental.

      Am I ready to employ people?

      You might think you’re ready to employ people once you’re too busy to do everything on your own.

      However, you should also wait until you can comfortably afford to pay them. That means you could comfortably make payroll for the last few months at least.

      Running out of cash is one of the most common reasons that start-ups fail and hiring an employee too early puts you at a huge risk of doing that.

      Also, being unable to pay your employee will have a huge impact on them and their family.

      Don’t jump into this decision lightly.

      Marketing on a budget

      Marketing on a strict budget is a Catch 22 situation.

      It costs money to reach a lot of people, but without this reach, how are you supposed to make a profit? The solution is to ensure your business finance includes a large marketing budget. If your marketing strategy is successful, you should be able to scale it and scale your profits.

      For more detailed steps to successfully launching a business, see our full guide to launching a business.

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