How to Start a Business with No Money

Learn more about starting a business when you have no money. Includes useful techniques and information about lean startups.

Updated on June 1st, 2020

The SMB Guide is reader-supported. When you buy through links on our site, we may earn an affiliate commission. Learn more

Starting a business with no money may seem like an impossible feat, but it can be done with some creativity, confidence in your idea, and lots of hard work. In fact, there are many successful companies today that started with little to no capital.

Below, we've provided a step-by-step guide to help bootstrap your business and turn your dream into a reality.

How to Start a Business with No Money:

1. Be prepared.

Consider your skills and experience – You may not have any money to start a business right away, but you do have experience and a set of skills. Think about what you're good at and what you can offer, whether it be consulting, website development, or social media marketing skills. These can all come in handy down the line.

Research your target market – Before you launch your startup, it's important to research what your prospective customers like and dislike, what they need and don't need, and whether they'll find value in your product or service. You should also be prepared to analyze current trends and identify any challenges that you may need to overcome.

Write a business plan – It's important to put together a lean startup plan to summarize your business idea, including your value proposition, target market, and cost structure. This is essential for applying for funding later on.

Network – Forming connections with other business owners and successful entrepreneurs will allow you to learn more about what goes into starting a business, along with the benefits and shortfalls you're likely to run into.

Download our Free Business Plan Template:

Customize your business plan with our free business plan template in Microsoft Word format.

Download Now Instant download. No email required.

2. Build up savings.

Keep your day job – You've got a great idea for a startup business and convinced you can make it work, but don't give up your day job without building up at least six months' worth of savings first. Your current job provides a steady source of income and security while you are considering the idea of setting out on your own.

Offer a service to generate cash – It's easier to start a service-based business than a product-based one, as you'll need sufficient funding to build, market, and sell your product(s).

With a service-based business, you can start almost immediately with the resources that you have, offer the service to clients, and make an income, allowing you to scale your business once you've generated enough money or start the product-based business you've been dreaming about.

Typical service-based businesses include catering, nail salons, consulting, accounting, graphic design, copywriting, and cleaning services, etc.

3. Ask family and friends for funding.

A great way to secure funding is to pitch your business idea to family and friends. You might have an uncle or aunt who's willing to offer you an interest-free loan, which you can pay back later.

4. Try crowdfunding.

Crowdfunding platforms like Kickstarter and Indiegogo allow you to introduce your business idea to the public and request donations. If investors like what you have to offer, they may decide to invest a substantial amount in your business in exchange for company shares or free products.

5. Apply for a small business loan.

There are various types of loans that entrepreneurs can apply for, each with their own pros and cons.

Types of Loans:

Bank loans: – Traditional bank loans include term loans and lines of credit, but you will need to have a good credit score, collateral, a minimum annual revenue, and be in business for a certain length of time to qualify.

Small Business Administration (SBA) loans: The SBA provides federally-backed small business loans at low-interest rates to businesses that do not qualify for traditional financing. Loans range between $5,000 and $5 million.

Online lenders: – Online lenders, such as Lendr and Ondeck, provide term loans and lines of credit up to $500,000 within 48 hours. Some of these lenders loan to applicants with lower credit scores and do not require collateral if the loan is under $100,000. On the downside, interest rates can be higher than other loan options.

Microloans: Microloans are small, short-term loans provided to small businesses and startups with low capital requirements. They typically have low-interest rates and range between $500 and $50,000.

6. Use balance transfer and zero percent APR credit cards.

If you've already racked up some debt, consider transferring your high-interest balance to a credit card with a 0% annual percentage rate (APR). This means you won't have to pay interest on the balance or any purchases you make for 12-18 months, saving you hundreds of dollars and giving you the chance to pay off old debt sooner. This will also give you the opportunity to finance large purchases like equipment or machinery.

However, there is a downside to this option. Many credit cards with 0% APR periods charge balance transfer fees of between 3% and 5%. And once the free period is over, you'll pay a variable APR of 12.74% to 25.74%. For this to work, it's essential that you pay down your debt.

Be sure to compare balance transfer cards to find the right option for your needs, and don't hesitate to speak to a financial consultant or accountant to help you make the right decision.

7. Follow "The Lean Startup" method.

The Lean Startup approach is a methodology that entrepreneurs use to determine if their business model is viable. It entails developing a prototype or Minimum Viable Product (MVP), having it tested by customers, and gathering feedback to discern whether or not the product or service needs to be tweaked or changed altogether.

Instead of spending years on developing a product that costs lots of money, the Lean Startup approach can save you time, funding and other valuable resources that could very well lead to a product or service that no one wants or needs.

According to Eric Ries, author of the Lean Startup, there are five key principles that should be applied when starting a small business:

1. Entrepreneurs are everywhere.

Entrepreneurs can be found in all industries, from healthcare to entertainment. Most entrepreneurs start working on projects in their spare time.

2. Entrepreneurship is management.

Each startup is different, therefore your managing style should be flexible and effective.

3. Validated learning.

In order to build a viable business, lean startups should run experiments to test their product or service. Learning who your customers are and understanding their problems, and then using this information to provide a solution through experimentation is key.

4. Build-measure-learn.

The MVP enables lean startups to rigorously test their product or service and gather customer feedback on the user experience. Different iterations are made to determine whether you need to persevere or rework the product (pivot).

5. Innovation accounting.

This process involves holding yourself accountable by prioritizing work, measuring progress, and setting up milestones to achieve the desired outcomes.

To find out more, go to

8. Use a bill payment service to make payments with your credit card.

Once your business is up and running, make things easier for yourself by using an online bill payment service like Plastiq. These services allow you to maximize your cash flow and pay for rent, taxes, business supplies, etc., using your credit card – even if the recipient does not accept credit cards in person.