If you have been working for someone else for years, you have probably thought more than once about owning your own business and operating for yourself. The biggest issue most people run into when they start considering business ownership is financing. It is an endless cycle for many: you are short on funds because you are underpaid working for someone else, so you can’t afford to move on and start something of your own.
Believe it or not, you don’t have to be trapped in this cycle of rolling rocks uphill. It is entirely possible to start a business with no actual capital of your own. Here are some ideas.
If you are ready to start a business and don’t have any cash on hand for a startup, you are not left with no options. If you have reasonably good credit, there is more than one startup funding option on the market. If you have an excellent idea for a business, make a business plan. If you can demonstrate the financial viability of your business concept, there are loans available.
Contact the Small Business Administration for financing options. There are small business startup loans available and grants that might not even have to be repaid. This option will have to rely on your credit since a business needs to be in operation for years to establish credit for the company itself.
Buy A Business
This one seems a little confusing when we are discussing starting with no cash. You are probably asking how to buy a business with no money, but surprisingly, there are many options here.
If you can find a business with an owner who is ready to retire, they will likely need someone to run their business. In many instances, you can find someone who wants a change of industries or is older and maybe looking not to work at all. In either case, they have a choice to sell the business or trust a manager to maintain their operation.
If you are passionate about the business, you might be able to convince the owner to allow you to run their business at a reduced salary. At the same time, they apply an agreed-upon amount to the sale price of the company. This might be a dollar amount reduction from what the salary might have otherwise been, or it could be that you agree to a pay rate to run the business, and they agree to apply a percentage of profits to the sale price.
A percentage-based strategy is a perfect option if you can find a distressed business that you believe you can turn around. In this case, you might be able to negotiate a much higher percentage, as the owner isn’t used to making much profit. This could be a win/ win.
This is fairly similar to the sweat equity option, with some key differences. Instead of running the business for another owner and getting some (or all) of your pay applied to the business’s purchase, you agree to a sale price, and the owner allows you to take ownership of the company immediately. You would then pay a set monthly payment for the business while having complete operational control. Most owners will require very strong credit to do this, but it is feasible.
In conclusion, you can start a business with no cash, as long as you are willing to be creative. Instead of starting from scratch, look for a struggling company that you can rescue, be ready to put in the work, and you can quickly turn it into the business of your dreams!