Starting a business with little or no capital may sound totally impossible. Common sense leads us to believe that we need money to make money. The truth is that with a little resourcefulness, you could easily start a business with almost nothing. It will be a challenge, but a worthwhile and fun challenge that could lead to the makings of something huge. All you really need to start a business is confidence, a great product and a little forethought. Once you have your product and you have orders filed away, the rest is pretty much downhill. The uphill battle is actually getting your business off the ground. Here is how to start a business with little or no capital.
First and foremost, you need to have a great product in mind. Without a great product, you most likely won’t get anywhere. Even if it is about having a picture of the product you want to sell, you want to have some representation – a prototype can work too. The key is to gather orders and to convince a manufacturer to produce your product. If the product is subpar or if there is no market for the product, it will be hard to get your business off the ground with no capital.
When it comes to getting your product produced for little or no capital, you want to show a manufacturer that you have purchase orders lined up. However, in order to do this, you need to shop and market your “product” to potential buyers. For instance, if you are selling kitchen sinks, you want to have samples of your product line that you can show. Based on these samples, buyers can write orders. After you get a bunch of these purchase orders, or POs, you can then move on to the manufacturing phase.
Next, in order to convince a manufacturer to make your product with a small upfront payment, you need to show that there is demand for the product. The strongest proof will come in the form of purchase order forms. Most of these orders will have net thirty or net sixty payment agreements, which means that you will get paid by your clients within a thirty to sixty day time frame, which will give you ample time to pay your manufacturer in full and still make a profit at the end of it all. You can then use this profit to continue growing your small business capital.
Lastly, you can also use these purchase order sheets to partner with a factor company or a cash advance firm, like Express Capital. You can take these purchase orders and then offer some type of collateral to get paid in advance for your product. You can then use that money to produce and ship your product. When it comes down to it, starting a business with no capital – or very little capital – can be difficult, but it is a challenge that will certainly pay off if you are passionate about what you do and if you have a long-term plan for success.