If you’re like millions of budding entrepreneurs, you’ve thought about starting a business for a good chunk of your life. I thought about being an entrepreneur long before I was familiar with the trials and tribulations of business ownership.
It’s awesome, in theory, to be your own boss and set your own hours. If you’re passionate about the field you’re in, it probably won’t even feel like going to work. On top of that, there’s always a chance you’ll be massively successful, generating enough wealth to retire on (though you shouldn’t count on that).
So what stops people? Usually, it’s money. If you have millions lying around, you can fund your own business, no matter what’s required. But most of us don’t have access to that kind of capital. The median American household has only $11,700 in savings.
Don’t let that deter you. If you plan things well and choose the right type of business, it’s entirely possible to start a business with almost no money—sometimes, even less than $100.
What Do You Really Need to Start a Business?
Ultimately, what’s necessary to start a business depends on what kind of business you want to start. If you want to start a business that makes and sells its own line of products, you’ll need manufacturing equipment (or a manufacturing partner). You’ll also need to locate vendors for the individual parts you may need, as well as a distribution network.
If you’re providing a service like dog walking, tutoring, or babysitting, you don’t really “need” much of anything to start beyond some basic equipment. Higher-level services, such as consulting or bookkeeping and accounting, may also be low-cost, varying with the certifications and software needed to keep your company afloat.
It’s best to think of your business needs in categories:
Official documentation and paperwork: First, you’ll probably have to get some official paperwork in order. For example, if you’re starting an LLC, you’ll need to acquire a tax ID number and formally register your business. These items generally don’t cost much, but the more complex your business is, the more expensive it will be.
A central location: Leasing an office is ridiculously expensive, but you may not need to. You can set up business mail to go to your home; you may even conduct your business at home or other people’s homes—think of services like house cleaning or home health aide work. Thanks to the internet, a central location has become less essential.
Equipment and accessories: The cost of equipment varies wildly from business to business. Large-scale manufacturers can spend millions on production equipment, while you might be able to get by with your old laptop and an internet connection.
A website: A website is a must-have, no matter your industry. If you have money to spend, you can get one professionally designed, but if your budget is tight, you can always use a free website builder. The point is to have an online presence so prospects can find you and build trust before even contacting you.
Marketing and advertising: Ideally, you’ll have the support of a marketing and advertising strategy to attract new clients. But if you’re just starting out, you can save money by focusing on word-of-mouth marketing. Ask for referrals from your early happy clients to attract more.
Employees: Some businesses truly need employees from the start, but with many small businesses, you can get by on your own at the beginning. Employees are expensive, so only hire when you’re ready—and when you have enough growth to sustain additional positions.
If you’re light on available capital, you can approach this in a scaled manner; for example, you may avoid hiring employees or spending money on marketing and advertising initially, adding them once you start generating revenue. With a frugal approach, you should be able to make enough money to start funding other areas of your business.
The Importance of a Business Plan
Regardless of how much you’re investing in your business initially, I believe your biggest factor for success lies with your business plan. This document will guide you in researching your target demographics, your competition, your keys to success in marketing, and even your long-term finances. It’s your chance to evaluate how much everything will cost and then strategize to maximize your chances of beating your top competitors. If you don’t have much money to invest in your business, make up for it by investing more time into this research phase.
Even with a tight, frugal business model, your $100 may not be enough to get you started. If that’s the case, there are a few ways to close the gap. If your business is bigger and more complex, you might consider talking to an angel investor or venture capital (VC) firm. However, if you’re a first-time entrepreneur with a small-time business, it’s probably better to get a loan.
If you’re only taking out a few thousand dollars, the risk isn’t likely to be life-changing. If you’re feeling especially confident in your business, you might even finance it with credit cards (though this isn’t recommended).
The bottom line here is that yes, you can almost certainly start a business for $100. You’ll be limited to certain types of businesses, and you won’t have everything you want from the start. But you’ll have a strong enough foundation that you can eventually build the business of your dreams. And isn’t that enough?