The goal of entrepreneurship can be a broad one. Sometimes, all we know is that we want to be our own boss, live according to our own vision, and make our way independently. We may not have our whole future mapped out. We may not have the ideal product designed in all its detail. Most of all, we may not have much capital to work with.
That’s just fine.
In fact, when you’re in this more broad phase, you’re more “ready” than you think! Entrepreneurship isn’t about creating some magic product or taking the gamble of indebting yourself to investors. It’s about learning how to market, sell, innovate, and repeat the process. It’s a marathon, not a sprint. And sometimes, the most important thing is just getting started.
If you’re looking to start your first business— or even your 5th— but you don’t have much by way of money, there are options. With very little startup cash, you can get in the game by choosing the right kind of business and taking advantage of the new economy. I’ve personally done it more than once. It’s a great way to minimize risk, test out ideas, and generally practice your entrepreneurial skills.
One thing you can sell that doesn’t cost a dime to produce: a skill you already have. Design, writing, photography, whatever it is you can do, sell that. The overhead is 0 or close to it, aside from whatever equipment you might need (but you probably already have that anyway). Selling a skill is the first and most obvious way to get your independent business rolling— but it’s not the end of the story.
One mantra we like to preach here at The $100 MBA is that time is NOT money. Trading time for money is a means to an end, not a business model. It’s not really possible to scale up a business when you’re the only source of labor! Therefore, the next step is to find others with your same skill, bring them onboard, and take your cut.
The term is arbitrage. For example, one of my early projects was a graphic design business. At first, I did the designing. As the business grew, I did less. Eventually, I did very little of it. I simply found other designers, and brought my clients to them. My business was the hub; my job was simply to arrange the service. The point is, starting a service-based business doesn’t have to mean you’re doing the service, at least not indefinitely. Of course, if the work is your passion (understandable for artists or writers), you’re free to do as much as you wish.
Service businesses, especially arbitrage, are perfect for low-to-no capital entrepreneurs. There’s no significant overhead, no inventory, no membership services. There’s just you, your brand, and a Paypal account. To expand your business, simply offer discounted services; as a graphic designer, I would offer a heavy discount in exchange for referrals. That’s exchanging time for growth!
While service-based arbitrage is a great way to go, there is a product-based version. Put simply, it’s the oldest model in sales: buy low, sell high. Cars, clothes, electronics, you name it. Scour the internet for the best deals, and resell at a profit. This is nothing new or revolutionary, but it is effective. Ebay and Amazon are rife with steeply discounted goods just waiting for a middleman to find greater demand for them. I personally bought and sold cars this way, making hundreds or thousands per transaction.
Another way to start turning a profit without investing much is affiliate sales. I’ve said and written a lot about this model, but in a nutshell it’s this: you become a salesperson for another business, leveraging your reputation to move their product. Commissions can be high— some affiliate marketers get from 50 to 90 percent of the profits, depending on the situation (it’s even not unheard of to get 100%).
Making money this way requires putting a great deal of time and effort into marketing, especially content marketing. If your recommendation is going to be worth anything, you have to be recognized as an authority in your niche. You have to consistently produce engaging, valuable content. You have to be someone that people trust.
A great example of this (and one that shows you how to avoid the pitfalls of affiliate marketing) is Pat Flynn of smartpassiveincome.com. His ethical, honest approach to affiliate marketing utilized and boosted his own credibility to great effect. He only ever recommended products that he used, and that worked. Nowadays, he still does some affiliate marketing, but mostly he’s focused on his own products— for important reasons.
What’s crucial to remember is that affiliate marketing is a stepping stone, not a goal. If you overplay it, if you don’t have your own product to sell eventually, you won’t be able to sustain your business. Your audience will grow tired of getting nothing but sales pitches for other people’s products, and wonder why you don’t offer something of your own. Affiliate marketing can be a great boost, but only within its limits.
All of these three options can be used to build a foundation for your independent enterprise. They’re low-investment, low-risk, and practical. Most importantly, they help you develop the abilities you’ll need, no matter what industry you ultimately thrive in. These early projects are the first steps.
Don’t wait until you have the perfect product, the perfect plan, or a massive stockpile of capital. Start doing business now, and see where things go!