Please check out my new video on Youtube. Here I give 10 tips about how to start a business without any money or capital. My targeted audience are all those, who want to build up an existence without having the risk to lose money. It is not one of these videos, that promise you fast money on the internet – no, it´s more for people like craftsman, private teachers, merchants etc. If you have questions or if you need more details, please use the comment function of the video.
Here you find the complete text of the video:
Tip #1 – Find out, what you have to offer
At first, you should prepare an inventory of all your abilities. Maybe you are a good carpenter, or an accountant, whatever – include everything that comes to mind.
Then, you should consider all those competencies, which you can learn quickly easily – without having to invest in expensive training. You can use them to extend your portfolio.
The most important criteria for this inventory is: saleability of the skill. For example: knowledge in Nepalese art history is very interesting, but more difficult to sell, than the ability to repair a car or to handle a certain computer program. Here are some examples for what I mean with skills that are easy to learn: cleaning, painting, blogging, web design (small projects), office services, telephonist jobs etc. There are a many more examples.
I´m sure, if you think seriously, many ideas will come to your mind for jobs, that fit your interests.
Tip #2 – Check the market if there is a demand for your products
Before you take the risk of running your own business, you can take a test, which can help you to predict how high the demand will be for your goods. At this point in time, it is important, that you don´t listen to those friends, who tell you how fantastic your idea is. They‘re just trying to be polite.
Consider! Good products do not grant success. It is for example a great idea to train the balance of your body, but it is not easy to convince people to do it. And it´s much more difficult to convince others to spend money for it. Would you pay a coach for that?
If you want a realistic outlook on how your chances are you should test your idea with a virtual company. You can establish a virtual company, where in you act as if the company was already running. Promote your products on those channels, which you planned to use when you start your business. Then you will see, if your advertisements can generate enough attention amongst your target audience.
In case of success, you can tell the potential buyers, that you are so fully booked, that you can´t take in any orders at the moment. Or, if you can already deliver, then you can start earning money immediately. If the market reacts with disinterest, you can rethink your activities and maybe try to improve something. The advantage is, that you will have to spend only very little money to learn this lesson.
Tip #3 – Create a portfolio which you can run without investments
Think very seriously about the question, which investments you have to make for your business and how you can avoid them. Is it really necessary for a craftsman to establish a workshop, full of machines and equipment? Or would it be enough to work from your garage and to do your work on the customer’s premises? If not, you should try to revise your plan until you can make it possible.
A loan form the bank is not easy to get, and if your business fails – you lose everything and keep the outstanding debts. It is better to have lower turnover and to shrink your portfolio, than having the risk of going into total bankruptcy.
Tip #4 – Keep your cost level at a minimum
Try to avoid fixed costs as much as possible. Fixed costs are all those expenses, that you have to pay for, even if your business is not working – such as: Insurances, rents, fees, your car, advertising space – things like that. These costs can ruin you in a very short time, especially when your income does not grow as fast as planned. Try to organize your business with as few fixed costs as possible.
For example: If you plan to sell clothes in a second hand shop, think if it is really necessary to rent a store, or if it´s enough to create a web-shop. Maybe the web-shop will not generate as much income as a real store, but the cost level is almost zero and you can close your business anytime – for as long as you want, if you want to have a rest for some weeks.
Tip #5 – How to make a realistic business plan
Many people say, that a business plan is the most important step, before starting a new business.
But after 10 years of experience as a financial analyst, I can tell you, that business plans and budgets are often not worth the paper that they are written on. But I‘ll tell you which figures really count:
Plan the expenses first. This is the only part that you can predict reliably.
Secondly: check how much revenues you have to achieve, to make a profit, which is high enough to make a living.
Check then, how much your hourly wage has to be, to reach this turnover with a 40-50 hour working week. If this result makes sense, then your business has a real chance of survive.
Now you only have to decide, if you should start as a full time entrepreneur, or if you will have to keep an additional part time job.
Tip #6 – Use free marketing tools
A high awareness level is very important. It is a good source for occasional customers, who come to you, because they have seen your advertisements. For a new business with only few references, it is essential for survival to generate attention – as fast as possible. There are two ways to achieve this: a cheap and an expensive way.
You can take out advertisements in the newspapers, on TV or hand-out brochures everywhere. This kind of money is easy to spend but the effect is uncertain. It takes a lot of experience to predict the additional income from a marketing campaign. The question of cost vs benefit is not easy to answer.
This is the reason why I think of classic marketing as a high risk investment, that I would not take. To eliminate risks like this, I suggest you: use as many free marketing tools as possible. These days, this can be as effective as classic marketing but it is much cheaper. Almost everyone can create a website with tools like word press today. YouTube-channels, twitter accounts and Facebook-sites are easy to create – even for beginners. A very effective way to reach as many people as possible is to hold roadshows and free public presentations. You can make a name for yourself within a few hours and minimum of cost.
In my opinion, start with the free tools first. They are easy to use and can theoretically reach millions of people. When your business is up and running, you can try to boost your turnover step by step with paid channels.
Tip #7 – Use networking to increase your income
When I started my business, I quickly realised, that people will react negatively to a sales pitch from people they don‘t know. This is why I say, it´s not good to knock on doors. Make the customers come to you instead. Make them come to you, because they want what you have to offer.
You surely remember this from your own experience in life. We don´t like to do business with strangers. It doesn´t matter how good their products are. We prefer to do business with people whom we know we can trust.
This is why I stopped trying to make first contact by phone or email. When I want to do business, I look for someone I know in the company. If there is no one, I ask a friend who knows someone in the company to establish contact. This leads to a higher level of trust when communicating with the potential customer. I can thus be sure that when I am invited to the company they are already interested in what I am offering – this makes a huge difference.
Tip #8 – Making mistakes is normal
The theory is: know your customers and give them what they need! Great idea, but difficult for a startup company. I can´t remember how many times I‘ve had to change my marketing and the way I try to sell my product. Almost none of my plans worked out – but: I was able to do a lot of business with people I never thought I would. For example:
When I started giving speed-reading courses, I planned to work mainly with students, as they are the people who need it the most. I focused my marketing on universities and schools. But I was wrong, they didn´t come. Instead, working people came and now I make my money with customers I never really focused on. Therefore I´ve changed my marketing mix more in this direction and it´s working much better now.
What I want to tell you is: don´t plan too much. Get started and then see, if you can improve your business. For every new problem you will find a solution with the trial end error method. your business will thereby evolve as you learn from the mistakes. Every solved problem will raise your experience and your income – like a kind of evolution.
Tip #9 – Watch successful companies and learn from them
The best way to have success is to do, what successful people do. It doesn´t matter if they are competitors or not. You can learn something from almost anyone. Take a look at the websites and the marketing mix of successful companies. Maybe you will find better channels to advertise your products. Watch people who are good at selling things or networking and try to adopt their behavior and their ideas.
To copy other people´s strategies is a very simple way to avoid mistakes and to spend less time in the trial and error phase, mentioned earlier.
Tip 10 – Try to have a job while you are building up your company
Most entrepreneurs, that I know, told me, that it took 2-5 years, until they could make a living from their business. Almost every one of them had a second job during that time and they kept it until their customer base and their awareness level was high enough to live of their business.
Do yourself a favor and try the same. A second job will help you through hard times and – very important – it will also generate money, which you can invest in your business. This can additionally accelerate the success of your expansion.
Link to the Youtube-video: