5 Ways to Start Your Business Without Funding
If God has placed a passion in your heart to start your own business, then go for it! Even if you don’t have outside funding such as partners/shareholders or bank loans. In fact, try and avoid using these sources of funding to start your business!
Secondly, your goal should not be to make loads of money. Of course, you ultimately want to be financially independent, but it is more of a lifestyle goal between work, family, friends and being able to use your own ideas and making a difference by providing an excellent product or service. God will let you thrive in business so that you can be a blessing to your staff and the people you interact with daily.
“Commit your actions to the LORD, and your plans will succeed.” Proverbs 16:3 NLT.
To self-fund a business, however, requires business owners to be sharp at juggling debt, expenses, revenue and cashflow. It’s a delicate art, that can make-or-break a start-up.
Here are five ways you can take control of your destiny and launch your business without outside funding or investment:
1. Reduce your personal expenses
Like many entrepreneurs you will have to make sacrifices along the way to success. You should preferably not have credit card expenses or vehicle loans so that you can keep your living costs to the bare minimum. It is amazing how far you can stretch your budget if you really must!
Also keep in mind that many entrepreneurs tend to be overly optimistic in their revenue planning. This can result in over-spending because they assume they’ll have more money coming in than they do.
Make sure your money is going into your start-up, and not your lifestyle – lifestyle indulgences can come later.
2. Keep your fixed costs down
For most start-ups, revenue will be unpredictable in the first months (and sometimes years) of running a business. Even the best financial plans are little more than an educated guess.
So, what should you do? During this time of uncertainty, keep fixed costs as low as possible.
Don’t spend a cent on anything that isn’t critical to the business and try to avoid entering long-term contracts.
There are many ways to do this. For example, co-working spaces limit what you spend on office rentals. Virtual tools mean you and your team can work from anywhere, and that you can outsource all non-critical functions.
Don’t take any cost at face value — everything is negotiable. You can also offer your time and expertise in exchange for something you need. Think outside the box!
3. Don’t be afraid to fail, to adjust your business model, and to try again
The key is to get your business to market as quickly as possible so that you can start generating revenue and ensure you have the right product or service for the market.
The answer is simple: Don’t wait for your solution to be perfect. Get some version of it to market as quickly and cost-effectively as possible. Then get feedback. Are customers buying what you’re selling? Are you addressing a real need?
The quicker you can get to market to start testing your assumptions and product with potential customers, the faster you’ll be able to identify factors that do not work, and adjust them based on real-life market feedback
Most importantly, you need to know whether you have a solution people will pay you for, and the best way to figure that out is by getting into the market.
4. Let your customers and suppliers fund your business
To successfully self-fund a business, you need to be making more money than you’re spending. So, keep your costs low and make sales.
Here are a few ways you can do this:
First, get your solution to the market and figure out what your customers will pay you for.
Next, if you have more than one product or service, work out what makes you the most revenue and focus on that.
Analyse your cost of sale and focus on your high-profit items.
Make cash flow king. Don’t place revenue at the top, followed by profits and then cash flow. Cash flow is the number one thing you should be worried about, because cash ensures you can keep the lights on. It doesn’t matter how high your profits are on paper if you don’t have cash in the bank.
Most importantly, devise ways to obtain upfront payments from clients even if it is a 70/30 (70% upfront with 30% on completion) or a 60/40 split.
Negotiate favourable payment terms with your suppliers — 30 days or 60 days before you must pay them.
5. Make use of a business coach or mentor
By using a business coach, or mentor, to bounce ideas off and who can provide valuable financial management techniques is an excellent way to launch your business. This person is normally a seasoned businessman with years of management experience and will assist you greatly in finding ways and means of building a successful business with the minimum funding.
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