How to Start a Business When You Are Broke
By Andrew Amaechi Original: 12/1/2020
Nathan James was a 24-year old recent graduate with $160,000 in student loans. Nathan had a great idea for a startup when he was still in college and was desperate to start a business instead of doing what everyone else in his class did – get a job in a big company.
But how do you start a business when you’re broke? That’s a question that deeply troubled Nathan. He had to find a way to make something happen, but where was the money for it? His parents had their own problems and he didn’t want to trouble them. Banks are not all that eager about providing loans to unemployed graduates up to their necks in debt!
However, despite all of the odds against him, he was able to successfully start his business. Not only did he get the startup idea off the ground, he was able to bootstrap the business to success by following some of the ideas discussed here.
Starting a Business When You’re Broke
Is it possible to start a business when you don’t have the money or funding for it, without investors, venture capitalists or financial support from your family?
Yes. It’s not easy but is certainly possible. Let’s see how….
1: Find a way to put off your loans
It is hard to put all of your resources into your business when you’re strapped for cash. Especially when you have student loans looming over your head. How can you put off paying the student loans without defaulting on them?
Take advantage of the government’s loan deferral and forbearance programs which is offered to recent college graduates who are facing a serious economic hardship. You can also apply for the income-based repayment programs which cap the monthly loan payment to about 10% of your income. Yes, you will have to pay a higher interest over time, but at least this will give you the financial legroom you need for starting the business.
2: Find a job, work hard and live on a budget
When you are short on cash for the business, it makes sense to find a stable job, whether on a full-time or part-time basis. This is necessary to pay your bills and other expenses. You can focus on the business after-work hours and invest some your income into the business. You must be willing to LIVE UNDER YOUR MEANS for a few years which many find somewhat difficult. Create a target amount to save each month and minimize your expenses as much as possible. Ultimately, that means no coffee at Starbucks for your daily cappuccino. Preparing home-cooked meals instead of eating out. And finding less expensive ways to entertain a date or your significant other. Be creative!
3: Make money from the very beginning
Find a way to make your products or services inexpensive and market them on various ecommerce marketplaces. For example, if your business involves the selling of goods, sign up as a seller on eBay, Amazon, Etsy and other online marketplaces. You only need to pay a small monthly fee to be able to sell on these platforms. You will get to benefit from their notoriety and large daily traffic volumes. This will get your business going without having to develop your own website which could be very costly and time consuming.
4: Freelance for extra Income
If you have the time for it, you can start freelancing to earn extra income. You can make a lot of money as a self-employed freelancer on top-rated freelance marketplaces such as Fiverr, Upwork, Freelancer, Guru, etc. provided you have a marketable skill that is in great demand. For example, there are freelancers that design whiteboard presentations on Fiverr who make over $2,000/month. If you have a skill the best way to capitalize on it is to monetize it and invest those funds back into your business.
5: Use Old Fashioned Bartering
Do what most people do when times are hard and there is no money – barter your products or services for the things you need for your business. So, if you don’t have the money to pay the graphic designer or the photographer, do something useful for him/her. Set up their website or agree to be a private math tutor for their kids. You can think of something!
6: Use low-cost outsourcing services
You can hire overseas freelancers on sites such as Fiverr, which we spoke about earlier, for designing logos, content marketing, web design, graphic design, SEO and much more for your business at 1/10th of what it would cost you to get the work done locally. You could, for example, get a professionally designed website for as little as $250. This will help you keep your business expenses low in the beginning which is pivotal to keeping your business functioning.
Conclusion
It’s not easy to start a business when you’re broke, but it can certainly be done. We have given you 6 great tips on how to get your business going even when you’re seriously short on cash or in a lot of debt. Many of the successful businesses that we see today were started with little to no money or with hundreds or even thousands of dollars of debt. This includes super companies such as Apple, Walmart, Hewlett Packard and Starbucks. The lesson to take from these successful stories is that the founders of these respective companies didn’t let the lack of capital prevent them from launching their ventures. They all just chose to focus on solutions more than the actual problem. This is the difference between success and failure in today’s society. Are you in the same situation as Nathan? Do you want to start a business but don’t have the funds to get it off the ground? How can you use these steps to get started?? Sound off below.
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