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Erica Douglass is using Brazen Careerist to share ideas. Join now to become a member and start networking with Erica Douglass and other professionals just like you. Learn more.
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photo by aperryz
I often receive emails from those of you who want to start businesses. Often, you want to start a business from home to make a little extra cash. It would be nice if it turned into a million-dollar moneymaker, but it doesn’t have to. Your goal is to explore a passion of yours and make a bit of money on the side.
Typically, two major obstacles come up: time and money. I addressed time previously. Now I’d like to address how to start a business with no money.
First: Two Major Misconceptions
Let’s clear up a major misconception: It doesn’t take a lot of money to start a business — even a million-dollar one. I started my business just after quitting a job, with a few thousand dollars of severance pay from my job. The year after that, my parents gave me a $15,000 loan so I could expand my business. So I “started” my business with just over $20,000.
On the other hand, let’s clear up another common misconception: Businesses that are good ideas don’t necessarily blossom into multi-million dollar enterprises right away. In fact, in May 2003, nearly two years after I started my business, and 8 months after I received the $15,000 loan from my parents, my business made a whopping total of $461/month in revenue. I could have made more money by consulting!
But I wasn’t discouraged. I could see that our revenue graph was going straight up. My customers really liked me. I was making a difference in their lives by running a web hosting company whose owner actually cared about who they were and what sort of business they ran. I knew I was in the right place, in a growing market. So I stuck with it.
It took six long years for my hunch–that web hosting wasn’t dead–to be validated, but I stuck with it and achieved success.
How can you do the same thing (with no money)?
The Four Values that are the Core of my Success
Interestingly enough, when I outlined my plan for Inspiring Innovators to another friend of mine, he said words quite reminiscent of my friend who started the web hosting company that fizzled. I asked him why, and he admitted he had owned a content-driven membership site that had failed. “The customers didn’t stick around,” he said. I acknowledged to him that my business plan may change, but I’m also not listening to his predictions of failure for my business! I’m quite confident I will succeed, even if the game changes a bit along the way.
Notice, that among these traits (determination, persistence, specific and measurable goal-setting, and a willingness to challenge others’ beliefs), “money” is not mentioned. Neither is time. If you have the drive, the determination, and the willingness to succeed, you are much more likely to succeed - regardless of how much money you start out with.
How do you get started? That’s a forthcoming post. Please subscribe to see my ideas on how to get started creating a million-dollar business (or just a business that will earn you a little extra cash) from home. As always, I promise to be honest and blunt in my appraisals of many ways to “make money online.”
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Well done and thanks for the advice. Passion is what it comes down to, as you say, and any book I've ever read by a successful entrepreneur starts with the words passion and making your own luck.
Years often go by before riches strike in each case - so well done for sticking with it.
Even with all your good advice and of other small business gurus, 4 out of every 5 small businesses fail within 2 years of inception.
As John D. Rockefeller once said: "I had no ambition to make a fortune. Mere money-making has never been my goal, I had an ambition to build"
This truth is fundamental to building anything great. Your post seems to capture what JDR believed, that it is very rare that a chasing after money will lead to something great.
Thanks for the great post!
very good article
A book you may want to check out that goes deeper into this topic is The Toilet Paper Entrepreneur. Really good stuff.
@jrandom42
Thank you, because I now know that in the within next 7 year's I'll have a successful business :D
Great story. And you are right about "Stop listening to those who tell it can’t be done.". I bet as a creative entrepreneur you might like the follinging series on Youtube.
Have you paid your parents back yet?
This is a great article - except for the bit where you say that $20K isn't a lot of money. It kind of is really, unless you've already got a lot.
For those who were discouraged by that, be assured you can start a small online business for a couple of hundred bucks, no worries.
Apart from that quibble - good advice - especially the bit about selective deafness.
Thanks for sharing that information. Its so good to know that small business can survive. I know that passion with your work can translate into something good one day. So I keep plugging away and hoping I can achieve my goals. When you get a chance check it out and give me some suggestion also!
Thanks again!
Advice on starting a business with no money is useless advice when coming from an asshole who started a business with his parents thousands. I mean, come on, $20,000? That's a year's work worth of work for some people. Not even close to no money. Not. Even. Close.
Hi all,
I'm Erica - the author of this article. First of all, thank you so much for your comments!
@jrandom42 - That should encourage you to start a business! One of the reasons I started a business was to prove that I could be successful. Admittedly, it's not the best goal to have long-term, but short-term (especially since I was just 20 years old when I started my hosting company) it was quite effective. To be one of the few who did succeed is an excellent feeling. You can capture that feeling now and use it as motivation to move forward.
To those of you who are questioning how $20,000 isn't a lot of money -- I'd like to clarify this statement. Notice how I started the business with severance pay from a job. The severance pay totaled about $6700, but I had to live on that, too. So I did everything myself -- from the website to the order form to marketing and promotion to installing servers.
I also did consulting for nearly three years to "pay the bills" while my company developed. I started my business in July 2001, but it wasn't until 2004 that my business made enough money for me to finally be comfortable quitting consulting.
The $15,000 my parents gave me in 2002 was an inheritance from my grandmother, who had died. It was all my dad received from her, but he agreed to loan it to me. (My mom thought he was crazy and said he'd never see a return.) Interestingly enough, when I sold the business last year, I asked him when he'd like his money back, and he said "I'll ask for it someday when I need it." I plan to invest the money for him -- right now it's sitting in a high-yield savings account, earning interest for my dad and I to share.
To summarize quickly:
July 2001 - I start my business with severance pay that also has to pay my own living expenses. I have no job, but a couple consulting gigs that help keep me afloat. I lived pretty frugally at that point.
September 2002 - My dad gives me a $15,000 loan when my grandmother dies. I dedicate my company to her memory and use the money to buy server hardware, which I then lease back to customers. I lease all of the server hardware within 3 months, and my company is growing faster thanks to my new customers.
-Erica
You are a very smart girl!! i like how you think. Read your article made me realize a lot of good things that are going to change my life.
I like people who is very positive and very enthusiastic, Like yourself : ) I am like that too. Being that way makes me a very happy person and i like to think i make people around me happy as well.
I just started my business of selling healthy BUT delicious muffins, cookies, home made bread, mini cheese cakes and things like that, at my office where i work, is a very small business but i think that small dollars that you earn make BIG dollars, if you understand money.
Anyways... Thanks a lot for your article and keep it going!
Bye
Great summary of thoughts on overcoming the issues that most startups face. I tagged this post in Del.icio.us to return for further reference. Now, I'm moving on to your "time" blog.
Thanks for the tips! I love reading about people who made it on their own, who didn't listen to those who told them they will fail.
I will check out the links!
Even though we all know that for every success like this, there are tens of thousands of sad little failures you never hear about, I love reading stories like this. Kinda gives you hope.
"a content-driven membership site" hahahahaha
Perhaps I missed it, but I don't see where you explain how much you're earning right now. I'll go stop by your blog.
Either way I like what you have to say here. I truly believe what separates the successful people from the unsuccessful ones are motivation and commitment.
If you can't stay motivated and committed to being successful than it's not going to work.
This is a most excellent article and I really enjoyed reading it. This is the part of business that most motivational speakers don't teach, but yet these four areas are part of the keys to success.
Well written and very honest speaking.
Keep up the great work.
Tim
Here's the thing: Most of us don't get severance packages. Most of us don't get inheritances either, so $20,000 is a LOT of money for those of us who don't get handouts like this. The title and premise of this post is misleading at best.
Your enthusiasm and passion certainly go a long way to ensuring the success of your business. The one thing that I did not see in print but was clear by the way you speak was that you envisioned yourself as successful before you actually reached success. I think that is key. I love to see success stories. Congratulations for sticking to your goal and your dream.
40billion.com helps entrepreneurs raise money for startups through friends and family rather than through traditional financial institutions. It is the first friends-and-family funding network for small-business entrepreneurs. Using the Internet-based service, entrepreneurs connect with their social networks - friends, family, friends of family, colleagues, and others - to raise capital, and entrepreneurs can share their fundraising pages on MySpace and Facebook too. 40billion.com’s scalable platform facilitates the funding requests and to make it easier for an entrepreneur to manage many lenders and donors (social investors), who can provide $50 to $10,000 each. For more information, visit http://www.40billion.com .
One way to "make money with no money" is to take over someone else's business who either wants to retire or wants to move on and do something else. Then grow that business with everything you've got. Pay the owner off each month with a percentage of the revenues.
Great tips. I think that branding and opening new sales channels are the most important parts of a new business. You can outsource the sales channels if you need to conserve time.
Great post. Every business I've ever started has been for less than $1000 and several for less than $200! My current offline company is growing faster than anything I've ever done before and I started it for $32!! You don't need all the "fluff" to get started. Just got to be willing to do whatever it takes with the resources you have. If you believe and are passionate about what you're doing, people will support you in your venture!! Gotta be willing to "fake it until you make it!!"
Sage advice to listen to! I think that having a great idea, and excellent execution is key.
I started my business with "no" money. The company I worked for went bust and bounced my last paycheck. No severence and two weeks behind. I talked to a friend and he agreed to lend me 1,500.00 but a week later his wife pitched a fit and I had to give it back. IT was tough going but I made it and for 12 years kept the company going through thick and thin. I also started this business in the recession of 92. Did I also mention that I was a female in a male dominated business. It can be done.
Being passionate about what you are doing is very important, I believe. But it took me awhile ( 3 years!) to figure out why I was passionate about my biz - baby gifts? Then I realized that it was not the gifts, or even babies, where my passion lay, but in providing a great service. Since the bulb flashed, I have been working on the biz every day with passion to achieve my goal of providing a great service.
A very successful friend of mine said to me, when we were both in seventh grade (!!!), "Do what you love and the money will follow." I sadly got memorized by the shiny coins - he followed his heart and now has the shiny coins!
As for trying to find support among your fear mongering friends, again I agree. I have learned it is best to remain quiet yet determined around them. (Psychic Sabotage!) When I succeed, they may believe....and then maybe do something new and different with their lives.
For now, just Be the Light!
Thanks for the info!
Great Article. Some of your advice would be great for my web forum. Check it out sometime!
A must read for those who seriously aspire to be entrepreneurship.It is indeed a great boost to those who want to venture out with a shoe string budget.
Excellent keep it up!!
This strikes a chord. I'm currently writing about setting up a freelancing business abroad and your post rings true, it can be disheartening and a long slog (especially when others constantly tell you that what you're doing is insanity) but perseverence seems to win out every time in my experience.
You're also right that it's not always all about the money :)
Great article just her story. Stop critiquing her, if you were looking for something on the web then go find it. If this wasn't it there are billions of sites go find what you're looking for. She did what she wanted and is sharing for your knowledge so enough about all the things she is doing wrong. And on a side note if you like trendy fashionable clothing stop on over to www.breatheonapparel.com.
-Nico
Owner, Designer
Breathe On Apparel
www.breatheonapparel.com
$20 thousand is money and a lot of it!:(
Very intelligent and well written post. I am currently working at a major ad agency, just graduated college a little less than a year ago, and I know that 'starting my own business' is what I want to do. I have been extremely discouraged because I just don't have the money saved up to support a start-up right now, and I don't have the parental support there to loan me the cash I would need to get the ball rolling - so for me, money (and a lack of dedicated time and focus) are the two major things hindering me right now.
I think that realistically, everyone has to 'pay their dues' for a little while, but I know that the lifestyle I lead right now, sitting behind a desk at an 8-5 every day, is not how I want to spend the rest of my life. Your post is encouraging and inspirational to folks like me who need to hear that it IS possible to follow your passions and be successful on your own.
This is great info. Making mistakes out of action is always better than making mistakes out of sloth. This is how I've developed online business flipping websites! Flipping websites allows me to work from home or abroad and answer to none(this is a huge perk) Constant work and persistence. I have a downloadable eBook on flipping websites detailing every step if interested http://www.website-flipping-secrets-exposed.com
Just a pre-sell page with some affiliate links at the bottom, don't buy the un-hype!
Thank great article i want to star my own bussiness in the food bussiness but i have no money well no more taht 4,000 what can i do any ideas
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