Starting a business is tough, regardless of finances. When you have little or no cash on hand, it’s exponentially more difficult to get up and running. However, you shouldn’t confuse the notion of difficult with impossible. There’s always a way!
5 Low-Cash Ways to Bootstrap a Startup
There’s no clean formula or repeatable mold for building a business. Every startup story is different and it’s up to you to find a path that works for you. Here are a few no- and low-cash tactics you can leverage to bootstrap your startup with minimal financial commitment:
1. Personal Loans
Personal loans are among the most flexible loan products on the market. You can use them for almost anything – from buying a brand-new TV to launching a startup. And while there are certainly pros and cons to using personal loans for funding a business, the biggest advantage is that it’s comparatively easier to qualify for a personal loan than other loan products.
Every lender has its own requirements, but you’ll find the personal loan application and approval process to be very borrower-friendly. Koyo Loans is a great example. They use Open Banking technology, which looks at more than just your credit score. (It takes things like income, expenses, and existing debt into account.) This makes it much easier to qualify for a low-rate personal loan than a business loan.
Can’t get a lender to fork over money? Crowdfunding is another good option. This is basically where you present your idea to the general public and ask for a financial commitment. But instead of asking for, say, $10,000 from one person, your goal is to get 1,000 people to contribute $10 each. In return, you offer some sort of perk.
Crowdfunding works best when you have a tangible product or service that you can sell right away. If you have a prototype or visualization, you’ll get much better results.
Sometimes the best way to bootstrap a startup is to put a little hustle into your step. Delay your plans to start a business by three to six months and devote every single spare hour you have in your schedule – including nights and weekends – to working a side hustle.
Whether it’s delivering groceries with Instacart, driving for Uber, picking up extra shifts at work, or mowing lawns in your town, work your tail off for a few months and you’ll be surprised by how much cash you can set aside. (It’s also important that you strip back your personal expenses during this time to maximize gains.)
One of the best ways to start a new business is by finding an equity partner to help you get up and running.
An equity partnership exists when one partner supplies upfront cash and gets a percentage stake in the company. In other scenarios, the partner simply wants to get his money back with a specific interest rate. You’ll have to work out the details, but be aware that these options exist.
Do you really need as much money as you think you do to get your startup going?
For example, you might think you need $20,000 to build the perfect startup, but who says “perfect” is necessary? There’s something to be said for building a minimum viable product, or MVP, for $2,000 and then iterating after you gather feedback from customers.
An MVP lets you get some skin in the game without bringing a ton of cash to the table. If the idea flops, it doesn’t hurt as bad. If it’s semi-successful, you can improve upon the concept and add new features, improve quality, or pivot to focus on the elements that are working. If it’s a home run from the start, even better! You saved money and got the results you were looking for.
Start Your Business Today
Is it helpful to have cash on hand to start a business? We’d be lying if we said otherwise.
Do you need thousands of dollars to get your business idea up and running? Absolutely not.
Whether you’re looking to launch a small online brand or architect a brand new, industry-disrupting concept, there are ways to grow a startup into a full-fledged business without ruining your personal finances. Get creative, build the right connections, and build that sweat equity!