Starting a business may require money. Whether you are a student or a graduate, and planning to start your entrepreneurship journey, then the ultimate question that might come to your mind is how to become an entrepreneur with no money. Well, here is the answer.
Embracing the role of being your own boss, making important decisions, and putting in the effort to achieve your goals – these are the advantages that make entrepreneurship the ultimate career aspiration.
However, the question arises:
How can you embark on your entrepreneurial journey with no funds or prior experience?
That’s the topic we’ll delve into in this post.
How to Become An Entrepreneur With No Money
Fantastic ideas can originate from various sources, and often, the most successful business ideas arise from unfulfilled needs. Here, we’ll provide tips for brainstorming. Once you’ve formulated an idea, you can kickstart your journey into entrepreneurship.
In this post, we’ll cover the exact steps to become an entrepreneur with no money or no experience.
7 steps to become an entrepreneur with no money:
- Identify profitable startup ideas
- Find and focus on a growing category (or categories)
- Fill an underserved demand
- Make something better (or cheaper) than what’s out there
- Network with other entrepreneurs
- Research patent applications
- Have a brainstorming session
How to become an entrepreneur with no money?
1. Identify profitable startup ideas
The foundation of successful startups lies in a compelling idea – after all, you can’t establish a business without one. Here, we’ll explore some imaginative techniques for generating ideas for a product or service.
Ask your friends what frustrates them:
Entrepreneurs often strike gold by delving into the frustrations of their friends. Amir Ghorbani shares, “When you embark on creating a product, it’s usually to address an issue that’s been bothering you. That’s why I collaborated with friends who were seeking help with booking party buses, and together we formed Swoop.”
Similar to Amir Ghorbani, other founders drew inspiration from challenges that irked them and their friends:
● Travis Kalanick and Garrett Camp launched Uber after facing difficulties hailing a cab.
● Andrew Kortina and Iqram Magdon-Ismail established Venmo (later acquired by PayPal) when they encountered problems settling debts by cheque.
● Chris Riccobono and Aaron Sanandres introduced UNTUCKit — a line of shirts designed to look good untucked — after becoming frustrated with the wrinkles and poor fit of their regular button-down shirts when left untucked.
As you brainstorm, encourage your friends to note down everyday annoyances. Review their lists and identify problems that you might have the potential to solve.
Get inspired by emerging startups:
Exploring the ventures of emerging startups is an excellent way to stimulate your creative thinking. You can gather inspiration from Product Hunt, a regularly updated collection of the latest apps, websites, and games.
A compelling success story illustrating this approach is Zapier.
According to Wade Foster, the CEO of Zapier, “One day, Bryan [a co-founder] texted me and suggested, ‘Hey, I have an idea that could be valuable – to simplify the process for a business user to connect the tools they’re using. You could integrate Mailchimp and Wufoo or Zendesk and Salesforce with a quick drag-and-drop click UI.'”
Numerous discussions ensued, and today, Zapier is valued at $5 billion.
For entrepreneurs leaning towards physical products, Kickstarter can be a valuable resource for ideas. Additionally, product review sites like Uncrate, Werd, and Wirecutter can ignite your creativity and provide inspiration.
Identify trends to future-proof your idea:
As the world evolves, individuals will require new products to simplify their lives. Take, for example, the emergence of Uber, Lyft, and other ride-sharing apps, which led to a demand for a third-party app displaying the most affordable ride fares instantly.
To stay ahead of the curve, delve into trend predictions for your industry or market. Explore universal trend forecasting publications such as Trend Hunter and Springwise. Then, ponder the question, “If these predictions materialize, what tools will become essential?”
2. Find and focus on a growing category (or categories)
Stephen Key, a licensing expert and intellectual property strategist, suggests selecting a category that captivates you but isn’t excessively competitive.
“I steer clear of industries that are known to be tough, such as the toy industry. It’s a space with numerous creators,” he explains. “Licensing your ideas will be smoother if you concentrate on product categories that are expanding and open to innovation.”
Once you’ve chosen a category, Key advises thoroughly studying all the products within that category.
● What’s the benefit of each product, and how do they vary?
● What’s their packaging and marketing strategy?
● What are the potential improvements?
● What do reviewers say?
Once you’ve picked a product, consider questions like:
● What can I do to improve it?
● Can I add a new feature?
● What about a different material?
● Can I personalize it?
3. Fill an underserved demand
Numerous individuals initiate prosperous businesses by identifying gaps in the market.
Take Laura and Kelly Moffat, self-proclaimed tomboys, for instance. When they were in search of wedding attire, they recognized the challenge of finding alternative options to traditional wedding dresses.
Rather than leaving this issue unresolved, they took matters into their own hands and devised a solution. They created clothing that caters to the LGBTQ+ community, ensuring comfort and confidence on their significant day.
4. Make something better (or cheaper) than what’s out there
You don’t necessarily have to create something entirely new. If you can provide an existing product at a more affordable price, with better quality, or ideally, both, you’ll attract a considerable number of customers. What’s even better is that there’s already a demonstrated demand for it.
As you go about your daily routine, make a list of everything you use. Then, take a look at the list and identify something you could enhance or improve.
5. Network with other entrepreneurs
Utilize Meetup or Eventbrite to discover events within the local startup community. Connecting with fellow entrepreneurs not only assists in building valuable relationships but also sparks numerous ideas.
According to Kim Kaupe, co-founder of ZinePak, “From entrepreneur groups to tech meetups, there are plenty of ways to connect with like-minded individuals and gather resources. So, search for these meetups on Google and prepare to step out of your house.”
For some rapid insights on networking effectively and with purpose as an entrepreneur, take a look at this video.
6. Research patent applications
The United States Patent and Trademark Office (USPTO) releases patent applications to the public 18 months after filing.
While we don’t advise directly copying any inventions, going through these documents can provide you with valuable insights into the direction a specific industry is taking. Locate patents by conducting a keyword search on Google Patents.
7. Have a brainstorming session
If you’re looking to ignite your creative ideas, gather three to five entrepreneurial-minded individuals for a brainstorming session. Request everyone to come prepared to discuss a specific product category or question, such as:
● What’s your favorite type of X, and why?
● Do you use anything to accomplish Y? Why or why not?
The answers may lead to some great ideas.
How to become an entrepreneur:
● Identify profitable startup ideas
● Find and focus on a growing category
● Fill an underserved demand
● Make something better (or cheaper) than what’s out there
● Network with other entrepreneurs
● Research patent applications
● Have a brainstorming session
5 Growth Tips for Entrepreneurs
Entrepreneurs emerge from various backgrounds and industries. Nevertheless, they typically follow a similar path when initiating their first business venture. Here, we’ll provide tips that can assist you in launching a startup.
Here are 5 growth tips for entrepreneurs:
- Validate your startup idea with buyer persona research
- Start with a minimum viable product (MVP)
- Continue to iterate based on feedback
- Create a business plan
- Find a co-founder
1. Validate your startup idea with buyer persona research
Now that you’ve got an idea, it’s not time to quit your day job just yet. Before going all-in, make sure you have customers who genuinely want your product (and note that friends and family don’t count).
To achieve this, start by understanding your buyer persona – the actual people you intend to sell to. If your product doesn’t meet a real need for them, no matter how innovative or cool it is, they won’t be interested. This is why both a well-defined buyer persona and thorough market research are crucial.
Once you’ve identified your ideal customers, conduct interviews with some of them. Present a demo of your product, inquire about their preferences and dislikes, find out how much they’d be willing to pay for it, how frequently they’d use it, and so on.
If you want to gauge the market’s interest before investing in building the product, create a landing page describing your product or service. Encourage people to share their email addresses in exchange for early access, a free subscription, membership, product, or a discount, along with other enticing offers. Then, promote your page on social media or through paid search and observe how many visitors convert to sign-ups.
2. Start with a minimum viable product (MVP)
An MVP (Minimum Viable Product) is the simplest and most basic version of your tool or service. It should be functional enough to satisfy early customers and help you identify areas for improvement.
Let’s say you want to create an app connecting college students with virtual tutors. In this case, you might develop a basic version, manually invite 150 tutors you found online to join, and then share the app link on the local university’s Facebook page.
If you receive a decent number of sign-ups, that’s a positive indication to move forward. If the response is minimal, it’s a signal to reconsider the idea or start fresh.
Commencing with a small-scale MVP keeps your costs low and allows for potential growth as the product continues to be validated.
3. Continue to iterate based on feedback
Your MVP probably won’t be sufficient to maintain competitiveness in your market categories, especially if you have grand aspirations for your startup.
Now enters the cycle: creating interest and demand (marketing the product), acquiring customers (selling the product), assessing satisfaction, enhancing the product based on feedback, and then repeating the process.
Optimizing each aspect of this flywheel generates the revenue necessary to invest in the product. Investing more in your product, in turn, attracts additional interest from:
● Satisfied customers creating word-of-mouth referrals.
● More competitive offerings that attract new customers.
4. Create a business plan
A business plan is a formal document outlining your business goals and the steps you’ll take to accomplish them. This may encompass your marketing strategy, budget, financial projections, and milestones.
As an entrepreneur, your responsibility is to set your company’s mission, vision, and both long-term and short-term goals into action. This strategic planning serves as a guide for the growth of your startup.
According to Ethan Mollick, a professor and the author of The Unicorn’s Shadow, “A business plan increases your chance of success by 10%-20%.”
5. Find a co-founder
Common advice suggests that when initiating a new business, it’s beneficial to seek a co-founder. Three primary advantages come with having a co-founder.
3 advantages of having co-founder:
1. It’s easier to get funding
2. You have emotional support
3. They can provide different skills, knowledge, and connections
1. It’s easier to get funding
Numerous venture capitalists are often hesitant to support solo founders. They firmly believe that having multiple founders enhances the likelihood of a company’s success.
2. You have emotional support
Operating a company is a stressful, exhilarating, and distinctive experience. If you’re navigating the emotional roller coaster alone, you won’t have anyone to celebrate with during the highs or support you when enduring the lows.
A co-founder comprehends precisely what you’re experiencing and provides a sense of shared understanding, making you feel less isolated.
3. They can provide different skills, knowledge, and connections
Perhaps you excel at sales, while your co-founder is more technically inclined. You have an extensive network, and they have prior experience in starting a business. Choosing a co-founder with a complementary skill set is an excellent way to enhance your chances of success.
However, there are also downsides to having a co-founder.
There can be conflict:
Disagreements between you and your partner are inevitable. A bit of healthy disagreement can be productive, but if you don’t find a solution relatively quickly, you’ll end up wasting valuable time and energy. Moreover, prolonged disagreements might negatively impact your team’s morale.
You’ll have to split the equity:
If you’re the sole owner of your company, you begin with 100% equity. As time passes, and you bring on more people or secure funding, you’ll allocate that equity. However, the portion you give might range from 0.005% to 35% to a single entity, depending on their role or involvement.
Having a co-founder means automatically relinquishing 40%-60% of your company in one go.
You’ll have to split the equity:
Discovering someone with matching business ethics, work habits, and a complementary personality can be quite challenging. Moreover, they should share a belief in your vision, bring the right skills to the table, and genuinely desire to be your co-founder. That’s a significant task.
It’s important to highlight that there are numerous instances of successful startups with single founders and unsuccessful ones that crumbled due to co-founder disputes. Base your decision on your unique situation rather than relying solely on conventional advice.
Where to Find a Co-Founder?
If you’ve made the decision to have a co-founder, the next step is to find one. Start by looking within your network. Opting for someone you already know or someone your connections can vouch for is less risky than teaming up with a stranger.
This principle works both ways: You’re more likely to convince them to join you if they are a first- or second-degree connection.
However, if you’ve explored your network without success, consider utilizing “co-founder matching” services such as Stealth.li and Founders Nation. Another option is attending local entrepreneurship events to meet potential partners.
Gaining Experience as an Entrepreneur
There are two primary ways to gain experience as an entrepreneur: either by doing the work yourself or by hiring others.
1. Acquiring Experience Yourself
You can gain experience as you build your new business. Here are some ways you can acquire experience yourself.
2. Networking with other professionals
Networking opens doors to professionals from whom you can learn, and you might even discover a willing mentor. Therefore, consider joining online professional networks such as LinkedIn to stay informed about virtual or in-person networking events where you can connect and meet other entrepreneurs.
3. Conducting independent research
Engaging in personal research from reputable sources and seeking insights from former entrepreneurs will enhance your understanding of your responsibilities. Conducting behavioral research can be beneficial, and discovering resources to streamline your business operations will aid in your growth as you scale.
4. Taking entrepreneurial courses
Embarking on entrepreneurial studies through a college institution or a certification course can provide more in-depth knowledge about entering the industry compared to typical internet sources.
5. Hiring for Experience
Frequently, when entrepreneurs start a business, they hire experienced individuals to guide them in the right direction.
1. Work with a business coach
One paid option to gain experience is to collaborate with a business coach or consultant. A coach assists you in enhancing your competency, while a business consultant acts as a contractor to solve problems for you.
Building critical skills, gaining clarity on the necessary steps for success, and acquiring specific knowledge are crucial for your entrepreneurial growth. Over time, developing a close relationship with your coach while conducting business can help you attain these skills.
2. Add experienced individuals to your team
Learn from the individuals you bring onto your team. You can glean insights from experienced talent and gradually fill the gaps in your own knowledge. This may involve hiring a seasoned financial officer to oversee financial matters that you’re unfamiliar with, or recruiting other essential team members to support your business operations.
When hiring, entrepreneurs should consider the tasks they excel at and those they should entrust to someone else. Avoid hiring someone to perform a job you are already proficient in. Instead, allocate that budget for other talents who can address gaps in your strategy and help scale your business.
While you possess the knowledge and tools to become an entrepreneur, starting your business does come with a cost. Below, we’ll discuss various ways to finance your business from the ground up.
How to Get Funding to Start a Business
Investing money is often a necessary step to generate returns. When it comes to funding your startup, explore the following options.
- Ask your family and friends to invest in your business
- Apply for a small-business grant
- Use a crowdfunding platform
- Pitch to angel investors
- Solicit venture capital
- Use a credit card for a short-term cash option
- Get a microloan
- Bootstrap it
1. Ask your family and friends to invest in your business
A lot of entrepreneurs turn to their friends and family for an initial investment, commonly referred to as a “seed round.” You can exchange funding for a stake in your startup – for example, your cousin might receive 4% of the company after contributing $12,000.
Alternatively, you can seek personal loans, with or without interest, or even consider receiving donations.
2. Apply for a small-business grant
Federal, state, and local governments offer programs to assist small businesses, providing options such as low-interest loans, venture capital, and grants. To discover programs your company qualifies for, visit Grants.gov.
While not every business is eligible, it’s worth investigating because, after all, it’s essentially free money!
3. Use a crowdfunding platform
Platforms like Kickstarter, GoFundMe, and Fundable enable you to secure backing through an online campaign.
This approach not only raises capital but can also provide you with early product feedback, boost brand awareness, and, on occasion, garner press attention if you have a compelling story or an exceptionally cool product.
4. Pitch to angel investors
Angel investors seek early-stage companies with the potential to grow their investment by 10 times or more. Typically, an angel investor may invest an average of $25,000 to $50,000 in your business. Keeping this in mind, they will assess the potential value of your business and how quickly it can generate profits.
Angel investors will be highly thorough in ensuring that you comprehend your target customers, the product space, your revenue-generating strategy, and your scalability plan.
Ensure you are well-prepared with a robust business plan and early indicators of traction, such as “the average user refers two additional users in their first week” or “we doubled our revenue from January to March.”
In addition to financial support, angel investors bring valuable expertise and connections to the table. In return, they receive equity in your company.
5. Solicit venture capital
Venture capital firms seek out young, private companies. Similar to angel investors, VC firms are interested in high-risk, high-return investments. The expected returns vary based on the maturity of your startup. If they invest before your company goes public or gets acquired, a 3X return is considered good.
However, if a VC firm invests at a very early stage, they are likely aiming for a 7X to 10X return.
6. Use a credit card for a short-term cash option
Using your credit card to cover business expenses is generally not advisable, unless, of course, you can promptly pay off the balance.
There might be situations where you feel compelled to do so due to an urgent need for funds. However, bear in mind that jeopardizing your credit score and accumulating credit card debt can have detrimental effects on your business in the long term, not to mention your personal financial well-being.
7. Get a microloan
Applying for a loan during your company’s first year is typically challenging because lenders are hesitant to make high-risk investments at this stage. However, you can explore the Small Business Administration’s microloan program, which offers an opportunity for small businesses to secure up to $50,000, with the average SBA loan being $13,000.
You can find a list of SBA partner microloan providers by state.
Additionally, microlenders and nonprofit lenders are alternative options. These lenders often prioritize minority or disadvantaged entrepreneurs and typically offer fair terms.
For more information, NerdWallet’s guide to the top nonprofit lenders in the U.S. can be a valuable resource.
8. Bootstrap it
You’re not obligated to accept money from anyone else if you prefer not to. Take Mailchimp, for instance—they didn’t receive a single cent in investor funding. The founders covered the initial costs themselves, and as the company became profitable, they eventually sold it for a remarkable $12 billion.
Bootstrapping enables you (and your co-founder, if you have one) to retain a much larger percentage of your company. However, it’s important to note that without substantial cash infusions, your growth might be slower. If you choose to bootstrap, focus on keeping your budget as lean as possible to extend your company’s lifespan.
How to Incorporate Your Business?
At a certain point, you’ll have to determine whether you want to incorporate your business. As a sole proprietor, you and your company are viewed as the same entity.
Upon incorporation, your business becomes distinct from you. From a legal perspective, it can engage in buying and selling property, incurring taxes, filing lawsuits, being sued, entering contracts, and being held accountable for any unlawful activities.
The Advantages of Incorporating:
First and foremost, a corporation provides protection against business debts and obligations. Creditors typically have the ability to seek repayment only from the corporation’s assets, not your personal assets like your house, car, bank account, and so forth.
Additionally, you are not legally liable for the actions of the corporation. In contrast, as a sole proprietor, anyone who sues your business is essentially suing you.
Having a corporation allows you to transfer shares. You can sell, transfer, or give away some of your ownership in a company. If you’re looking to attract external investments or bring a partner on board, having the ability to divest is crucial.
Corporation status also enhances your credibility, making it easier to attract investment capital.
Lastly, corporations can deduct normal business expenses before allocating income.
The Disadvantages of Incorporating:
Incorporating creates an additional tax burden, as you’re required to periodically file with the state and pay yearly fees. This process can be time-consuming, and hiring a lawyer can cost anywhere from a few hundred to a thousand dollars.
Keep in mind that incorporation is not mandatory, as there are various business structures to choose from. However, if you have a co-founder, require external funding, and seek legal protection, it’s a prudent idea.
Once you’ve made the decision to incorporate, you must choose between becoming a limited liability company (LLC) or an S corporation. The SBA offers a handy guide on selecting the right entity structure.
Help and Support for Entrepreneurs
Financial Resources:
As mentioned earlier, entrepreneurs usually foster the growth of their startups by bootstrapping (securing funding on their own), obtaining small-business loans, or securing funding from investors. Here are some resources to explore:
1. SBA Funding Programs: The SBA offers resources to assist you in finding lenders, securing investment capital, winning grants, and more.
2. Incubators: A startup incubator provides resources to aid in the growth of your business in exchange for equity. Many incubators are location- or industry-dependent. Organizations like the International Business Innovation Association and Incubator List can connect you with relevant incubators.
3. Angel Investing: Angel investors utilize their personal funds to invest and assist entrepreneurs in growth in exchange for equity. While many angel investing ecosystems are location-dependent, platforms such as SeedInvest and AngelList can help you present your pitch to accredited investors.
4. Venture Capital: A venture capitalist doesn’t use personal funds for investment. They take fewer risks and have less favorable terms, which is why you might want to avoid VC funding until your business is more established. The National Venture Capital Association and Gust can assist you in raising VC capital.
Counseling and Advocacy:
Overcoming obstacles in entrepreneurship goes beyond just closing the financial gap; you may also encounter a knowledge gap. That’s where training, counseling, and advocacy play a crucial role.
1. SBA Learning Center: The SBA provides a learning platform designed to empower and educate small-business owners. It offers business guides, courses, and development programs.
2. Business Hubs: Some local governments foster business hubs that provide low-cost office space, networking opportunities, and various resources to support small businesses. These are specific to certain locations, so be sure to research if there’s an initiative in your area.
3. Trade/Professional Associations and Business Groups: Joining a professional association can help you build trust with your customers and often comes with additional perks such as job boards, legal resources, training courses, and more. These are usually location- or industry-specific.
Support Networks:
As you embark on your entrepreneurial journey, you may encounter a learning curve in various aspects of business ownership. Remember that you don’t have to navigate these challenges alone.
You can minimize the learning curve by engaging with entrepreneur networks, groups, and events where members share experiences and learn collaboratively.
Your blind spots or struggles might be challenges that other members of the group have faced before, and you can benefit from their knowledge. Similarly, your insights could prove valuable to another entrepreneur facing challenges.
Here’s how you can build your support network:
1. Find and Attend Entrepreneur Events: The SBA offers both online and in-person events for entrepreneurs. Utilize their search engine to identify events that align with your situation.
2. Join Existing Organizations and Peer Advisory Boards: Organizations like the Entrepreneurs’ Organization, the Tugboat Institute, and Vistage provide membership and resources for entrepreneurs.
3. Get a Mentor or Business Coach: Personalized guidance from a mentor or coach can assist you in working through issues one-on-one and aid in your development as a leader.
Final Thoughts
Embarking on the journey to entrepreneurship is a lengthy but fulfilling endeavor. While the path to success may not unfold overnight, you understand the necessary steps to become an entrepreneur, accumulate experience, and finance a business.
We believe that this article will assist you in cultivating the business you’ve envisioned and wish you the very best at each stage of the process.
Hey, I am Sachin Ramdurg. I run and manage futuredecider.com website that helps students, graduates, and professionals, to find and decide on their future career with ultimate future career advices and future career guides. I have an overall 12+ years of career guidance experience in multiple domains which has helped multiple students, graduates, and professionals to find the best career path for their future.