How to Start a Business with Little or No Money

Do you think you need a lot of money to start a business? You don’t! I’ve started eight businesses with less than $1000 each. These are the tricks I use.

You Don’t Need Everything from Day One

Don’t feel like your business has to look like a “real business” from day one.

• You don’t need an office.
• You don’t need to incorporate from day one.
• You don’t need fancy business cards, a fax machine or that desk you really like.

People can often become distracted by the things mentioned above and lose focus on what matters. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.

Use Relationship Marketing to Your Advantage

This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?

1. Find the people that have access to your audience.
2. Offer them a commission for referring business to you.
3. Let them market your company at no risk to you.

Let’s say you offer city tours in London. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to millions of travelers and that’s your target audience. Pay the front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.

Do As Much as You Can Yourself

Design your own business cards, build your own website, and write your own marketing copy. These won’t look as great as work done by professionals, but it’s free and fast. Once you’ve sold a few thousand dollars worth of products or services, you can always re-do your website, business cards and marketing copy using experts.

Good Enough is Good Enough

There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t stand using a template for a website; they want a custom-made site. They can’t work with a web-based application that’s $5 a month because it doesn’t have all the features they want. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.

Have Contractors, not Employees

Having contractors has many advantages:

• You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
• They don’t need a desk or office space.
• When work is slow, they get paid less. When there’s a lot of work, they make more money. Try that with an employee.

Pay for Results

It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals.

Be Smart About Your Inventory

These are two great pieces of advice I learned from my mentor:

• Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
• Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.

Barter as Much as You Can

Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.

Leverage Other People’s Businesses

You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.

Bonus Tip: Don’t Quit Your Job Yet!

Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there; several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.

What other tips do you have for low- or no-budget startups?  Share your comments below!

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3 Mental Preparations for Opening Your Own Business

The phrase, “It’s a cold, cold world out there,” is an American classic.  The main driver for the phrase’s popularity is that, it actually is a cold, cold world out there.   It’s not a firm rule, though typically business lends itself to the thought that there is an inverse relationship between risk and reward.

Well, the more rewards that you actively pursue, the colder the temperature is going to get.  These are not tangible concepts; rather they should lay an understanding that the aforementioned theories are usually spot-on, and this is what you will be dealing with.  In a nutshell, mentally prepare yourself for the uphill physical and mental battle that will constantly be waged against you via both external and internal forces.

Ask any basic office manager – it’s pretty warm making a $1,200 weekly paycheck.  Also, there is nothing wrong with any bit of labor, regardless of how much it pays.  If it’s honest, in my eyes, it’s respectable.

As the business makes its first headway and you are away from the mother paycheck for about a month, the warmth slowly fades as you get deeper into opening your own entity.  There’s no turning back, however.  Take the jacket off, feel the chill, and simply stop reflecting on that guaranteed paycheck.  That was a different life.  Instead, envision the possibility of a $20,000 weekly profit intake that could not be achieved via a puffy jacket, a scarf and gloves.  Then, begin working your way to that paycheck.

With the opening remarks made, listed below, you will find some common psychological and life changes that encompass opening one’s own business.  These are to inform, not to scare, though to simultaneously be realistic.

You Will Second Guess Yourself – It’s Part of Human Nature

If you are mentally prepared, or at least anticipate and recognize the pending self-doubt that rears its ugly head from time to time, then you are very much ahead of the entrepreneurial pack.  However, before you open your business, take some time to fully embrace and eagerly anticipate the fact that there will be upsides a.k.a. times that you feel like you could conquer the world.

Conversely, there will be downsides when you feel that you couldn’t sell a free sports car to somebody out of gas.  More or less, this psychological factor is “what it is.”  Go with full confidence, and also go in with full confidence that self-doubt arises, you’re going to be able to swiftly recognize and squash the hindered thoughts.  Work hard enough and become good at what you do and the following becomes the God’s Honest Truth: it’s always darkest before….

The Computer Is Going To Be Your New Best Friend

Before you quit your day job, make sure that you have saved enough money for a very nice, functional computer.  Personally, I swear by MACs and they’re easy to use, but prior to purchasing the new machinery, understand that you are buying your new best friend.   The mentality that goes with a brand new computer upon firing up a brand new company is much more positive than starting with old equipment.  No mental excitement.

Think of it as the equivalent of your pet, only a little more advanced.  You must have the mentality that this new piece of machinery is all that matters for 12 hours each day.  If you’re not prepared to sit at a computer that long, find one of the few businesses to start that don’t require heavy, heavy internet work.

Try to save a few hundred dollars and use an old, outdated piece of equipment, and a single virus from a far-off land, can make your new organization go near belly-up.  As an animal lover myself, I prefer to adopt older pets as they need the homes more, but the same rules need not apply for the screen and, subsequent hardware attached to your keyboard.  You’re going to be staring at her all day and night, make sure that your prom date is pretty.

Getting A Mentor Is Great, But In the End…

Finding a good mentor is difficult, but rewarding and many swear by finding one, but it is not all that easy.  Moreover, there is a huge misconception that a mentor can make or, otherwise break your business.  Simply not true; unless you become a slave to every word and action that the mentor says and you become dependent, one of two things will happen:

1. They won’t have the time to provide all this guidance.

2.  You will get, for lack of a better term, annoying and turn the individual off.

I, at a time, was lucky to have a strong mentor by the name of Harvey Cohen, but was unlucky enough to see him die of cancer.  The only difference in my mentor is that he was extended family from my sister-in-law’s side.  Still, I could not always run to him for advice, as he was busy and, I was not the first and foremost thing on his mind.

As a new entrepreneur, you are consistently going to be referred back to the “cold, cold world” reference.  Don’t heavily reply upon a mentor; instead use them when advice is direly needed.  Again, bear in mind to never be overly needy.  Go into the business with the mentality that it is you against the world and think of a great mentor as a gift from the heavens, not something that is owed to you.

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Five Mistakes to Avoid While Doing a Startup

Many of us who have either started our own firms or are in the process of doing so, would agree that trial and error is a good way to learn as we tread the entrepreneurial path. It works best if we are quick to grasp the learning and pledge never to make it again. However, here are few mistakes, which could be avoided early on.

1. Don’t ignore your family and friends: As an entrepreneur, it is normal to get too busy working on your idea — raising funds, meeting prospects, traveling. But that does not mean you start to behave like you are running on a result-oriented treadmill and end up ignoring your loved ones. Support of friends and family is important for your venture and you must value that. It is all right to sometimes take phone calls of your daughter in the middle of business meetings. Nothing wrong in allocating a day in a week for family or showing up at every parent-teacher meeting at your son’s school, or picking up your spouse from work. Did you remember to wish your best friend on her birthday? By making efforts, no matter how small, you would soon realize that you have their full support in doing a successful startup.

2. Don’t ignore your health: Taking your health for granted is a bad idea. In the rush to make things happen with your startup, you could be missing those important health check-ups. You need to keep yourself healthy to deal with that extra pressure of doing a startup. Get yourself a health insurance. Richard Branson, the founder of Virgin Group, is a big votary of physical activities that keep entrepreneurs healthy. Take a leaf from his life and launch marketing campaigns that would require you to do go out and get involved.

3. Don’t be under-funded: Sometimes it just seems like a good idea to start without having the necessary seed capital, but this path is ridden with perils. The reason being that a number of expenses line up after you have started, and in the absence of enough money to back up, the initial enthusiasm could fade. So before you take the plunge, be as clear as possible to the possible expenses that your startup would have to incur before you break even. List down the possible sources of funding, friends and family being the first one, and how you would be spending the money. Cash flow problems could arise once in a while but case of chronic cash trouble could take a beating on your self-confidence.

4. Don’t depend hugely on one customer: Spread the risk by ensuring that your customer base is a good mix, spread across geographies, if possible. Repeat business is a good sign but you might soon feel comfortable with your repeat customers to the extent that you would stop taking work from new ones. It is a bad sign. There would be new things to learn from every customer, so don’t miss the opportunity. No more than 15-20 percent of your business share should be from a single customer. Reach out to newer markets in different countries and you would soon realize that the learning experience for you would be tremendous.

5. Don’t lose patience: Hang in there even if things look a hazy. Rather than worrying, spend more time in finding out what the problem is and what solution could be found. Read, learn and ask. Meet with other entrepreneurs in your industry and talk about the business problems you face rather than brood over them. Instead of searching for a psychologist, it is better to seek a mentor.

Feel free share your experiences as an entrepreneur and how you overcame difficulties of work-life balance, funding and customer acquisition.

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10 Business Ideas for the Teen Entrepreneur

Many of the most successful people in business today started out as teenage entrepreneurs.  For many teens, the realization that building something of your own beats working for “the man” comes to them naturally, but coming up with the right idea isn’t always easy.  So here are 10 ideas to get your creative juices flowing.  Most can be started by anyone, and a few will require some specialized knowledge, but might get you on the right path or spark another idea, even if you don’t have that knowledge right now. 

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The Easiest Way to Raise Money

It's simple: Don't spend it. Here are 10 ways entrepreneurs waste their hard-earned capital. 

If entrepreneurs could recover all the time and money they waste, our GNP would soar. I can't prove that scientifically--researching the topic would be, well, a waste of time and money--but I've seen it often enough, in business plans, on income statements (including my own), during bankruptcy proceedings and just looking around.

To win the startup game, you need to be a miser with your money. You need to spend it on things that will make you a success, not on what will simply make you feel or look like one. You need to pander to what your customers need, not to what you need.

So before you sign that check, swipe that credit card / ATM Card or sign that contract, ask yourself, "Will this bring me business?"

If the answer is no, consider it one less dollar you need to beg, borrow or spend.

Based on my experience, here are 10 of the most common ways entrepreneurs waste money:

1. Custom logos, fancy letterheads and other icons of success. They may make you feel like an entrepreneur, but they don't bring home the bacon. Instead, design your own with one of the many templates that come packaged with your word processing software. They include matching business cards, letterhead, envelopes and invoices. You can find templates in the Project Gallery of Microsoft Word or the Template Chooser in Apple's Pages. If you need more choices, HP.com and Avery.com offer free templates for use with their specialty forms and paper.

1. Fancy offices. Speaking of bacon, maybe the dining room isn't the ideal office, but working there beats not eating. If you don't need a formal office, don't pay for one.
2. A company car. The latest luxury car doesn't make you a better businessperson, it makes you a poorer one. If the wheels you have already get you back and forth to the grocery store, new ones are a waste of money. Just be sure to log you business travel so you can deduct the usage.
3. A slicker-than-you-can-afford website, brochure, sign, ad, etc. In the beginning, good enough is often good enough.
4. Consultants. Sorry to say, many of them will borrow your watch to tell you what time it is. If it's not rocket science, figure it out for yourself.
5. Falling for the pitch "You'll be getting in on the ground floor." You're not in a position to be someone else's venture capital. If a rep for a new advertising outlet gives you the hard sell about how wonderful it's going to be, invite them to call you back when they can prove it. Leave the experimenting to others
6. Starting a Business because your friends love your idea. It's one thing to like or even love an idea--it's an altogether different thing to be willing to plunk down money for it. There's no substitute for test marketing where real money changes hands.
7. Basing your marketing strategy on what you think is wonderful. Good chance your customers are nothing like you (or them you). Instead, research your market thoroughly. What do they read? What do they eat? What do they watch on TV? Then craft your message based on what appeals to them, not you.
8. Underestimating the competition. Or worse, thinking you don't have any. Any business plan that proudly states it has no competition earns itself an immediate place in my round file. If you don't understand your direct and indirect competition, you don't understand your market. And if you don't understand your market, you may be trying harder and harder to get better and better at something you shouldn't be doing at all.
9. Thinking that your product or service is what sells. Here's the sad truth: A great marketing strategy beats a great product every time. Business owners can (and will) go on and on about their wonderful products or services. The successful ones spend their time scheming about who's going to buy it and how they're going to reach them. Products don't sell, marketing does.

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Philanthropy - - Direct from Dell

By bringing business principles to philanthropy, Michael and Susan Dell are improving the odds for children in need.

When Michael and Susan Dell became parents, they did a lot more than make room in their house for their own children. They made room in their hearts for underprivileged children they might never meet. “Being a parent of four children and seeing many who are not so fortunate, we knew this was a great area to focus on,” says Michael Dell, the 45-year-old founder of computer giant Dell Inc. “When you become a parent, you are suddenly aware of how important good health and quality education are for the well-being and success of children.”

The Dells’ philanthropy is a lesson in hope economics. Through an endowment of about $1 billion, the Michael & Susan Dell Foundation helps underprivileged urban children become educated, healthy and successful. “Susan and I wanted to extend the charitable giving we had done in the past, so the foundation was a way to do that in a much more focused way and at larger scale,” Dell says.

Established in 1999, the foundation’s overarching goal, as Michael Dell sees it, is having “the greatest possible impact on children’s lives. That means focusing on the opportunities that have the greatest potential to directly and measurably transform the lives of children living in urban poverty.”

“Michael and I had already been philanthropic around Austin,” says Susan Dell of their Texas hometown. “We had to figure out how to make a bigger impact. We didn’t want it to be scattered…. We think education and health are the most important things. Kids must be healthy to learn, and kids who can’t learn won’t be successful.”

As goal-directed achievers, the Dells bring valuable skills and personality traits to assisting children in the United States, India and South Africa. They provide microfinance and scholarships, combat child abuse, and support medical research, health insurance, physical fitness, child care and education initiatives.

“Focus is very important,” says Michael Dell, who draws on his experiences leading Dell Inc. in his foundation work. “Patience is also important because measuring progress takes time—sometimes years—to show the full results and impact. We are trying to drive systemic change in areas where there are big problems with big challenges.”

Applying Entrepreneurial Savvy
It was Michael Dell’s impatience, rather than patience, that contributed to his entrepreneurial drive from an early age, as well as a keen interest in finding ways to work smarter. During his early teens, he organized a sale of collectible stamps that earned him $2,000. To increase his success rate in selling newspaper subscriptions, Dell researched lists of marriage licenses and home mortgages, then targeted newlyweds and new home owners.

At 18, personal computers distracted Dell from his University of Texas coursework, and his dad challenged him to get his priorities straight. “What do you want to do with your life?” his dad asked. “I want to compete with IBM,” the freshman replied.

Although Dad wasn’t amused, the statement proved prescient: Michael Dell dropped out and started a direct-to-consumer sales model that leapfrogged competitors as it rose to the top tier of personal computer companies. He led the company as founder and CEO until stepping down as CEO in 2004, while continuing to serve as chairman of the board; he resumed the role of CEO in January 2007.

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Why Young Entrepreneurs Fail

Founder of Under30CEO.com, Matt Wilson, shares tips to avoid failure. 

Face it. Nothing will go as planned. Ever.

Failure is inevitable. Your world will be flipped upside-down on a daily basis, and even the best-laid plans--accompanied by the best intentions--can go belly-up.

To make it as a business owner in the real world, you need to learn to fail like a pro, adapt at will and pay attention to detail in order to make informed decisions that will keep your business moving forward. Your ability to plan for the worst-case scenario and maneuver around unforeseen circumstances will be the keys to finding success as your own boss.

What was your biggest failure as a young entrepreneur?
MW: My biggest failure as an entrepreneur came at Under30CEO after wavering from our mission of inspiring young entrepreneurs. We were frustrated because our market wasn't buying what we had to sell, so we took on an enormous re-branding campaign and changed the name of our company to incorporate a larger audience and drop our under-30 demographic. We spent a lot of time and money trying to expand our market. Still, nobody bought.

It doesn't matter how big your market is if nobody likes your product. It wasn't the market's fault. Our product was bad, and we ruined our brand and had to start from scratch. The most embarrassing part was going back to our old brand and apologizing to our old customers we wanted to welcome back.

That being said, now we spend a lot more time getting to know our market instead of trying to sell anything to anyone. We were in a hurry to turn cash-flow-positive when we needed to stay focused and be patient.

Are there specific obstacles young entrepreneurs need to overcome vs. older generations?
The biggest thing for a young entrepreneur to overcome is credibility. Why should someone invest in you? Why should someone trust your advice? What will make people think you will get the job done with no track record? Building credibility is best done with a stepping-stone approach. Do one thing today that will make you more credible tomorrow. If people won't pay you or invest in you, give away your product or service for free, get testimonials from customers and build your track record that way. Show customers what value you can provide them, and if you can quantify that value, even better. The more things you can come to the table to brag about, the better.

What about some typical missteps you've seen young entrepreneurs make?
One of the biggest mistakes young entrepreneurs make is neglecting their revenue model. Today there are so many businesses that haven't figured out how to monetize themselves yet. To me, the word monetize is redundant in business. If you don't have a business model, you aren't really in business--it's just a hobby. Sure, investors are dropping millions of dollars into companies with hopes of being acquired by Google, but without a solid business model behind it, you are just building "castles in the sky."

Seasoned investors and accomplished entrepreneurs can help mentor young people to overcome this hurdle. Show them your financials and focus on how to generate cash flow. There are thousands of people out there who want to see young people succeed--you just need to ask.

What advice do you have for aspiring entrepreneurs who hate their 9-to-5s?
Aspiring entrepreneurs need to surround themselves with others who want more out of life than the typical 9-to-5. There is a great group of motivated people eating peanut butter and jelly sandwiches every night in your city, scraping by to build their business. Surrounding yourself with these types of people gives you the confidence to know you aren't alone on the road to success. The minute you quit your job, naysayers will come out of the woodwork, but if you have that support group to fall back on, you'll be able to overcome the hard times.

Remember, entrepreneurship is a marathon, not a sprint.

How has Under30CEO.com helped young entrepreneurs avoid failure and launch successful businesses?
More than 100 young entrepreneurs from all over the globe have shared their successes and failures on Under30CEO.com. Hearing insights from young people overcoming the same problems they are experiencing in their businesses allows Gen Y to come together and learn from one another. The community has a culture of reaching out to one another and helping each other with the challenges they are facing.

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