How to Start a Business With No Money: Your 2024 Guide

Figuring out how to start a business with no money is possible, and having the right plan for it goes a long way.

A woman opening a small business
Updated May 13, 2024
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Becoming an entrepreneur is a dream to many, but opening your own business may feel difficult without enough cash. The reality is that it’s doable if you take the right steps — including choosing the right kind of business and exploring different financing options.

This guide will explain everything you need to know to start a business with no money and get results for the effort you put into it.

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In this guide to starting a business with no money

Key Takeaways

  • Starting a new business as a side hustle can help you keep a stable income from your current job while you develop your business.
  • Starting with a business plan is essential, whether you're starting a company with or without money.
  • There are various funding sources you can use if you don’t have the capital needed for your business, including business loans and lines of credit.
  • You can bootstrap your business by starting with limited capital and reinvesting your revenue into the business as you begin to make sales.

5 steps to starting a business with no money

The process of starting any business typically looks similar regardless of the type of business you’re starting and the amount of money you have to get it off the ground.

You need to define what you plan to offer through your business; think about how the service, solution, or product you offer can be profitable; and make sure you're being realistic about your expectations.

If you don't have the capital needed, you also need to consider how to fund your business by using one of the various options you may have available.

Let’s go over the five key steps you should take to start a new business.

1. Identify your skills and talents

When you’re considering how to start a business, your first step can often be identifying what your strengths are.

Think about what you enjoy doing and what motivates you, and then make a list of what you can offer that would provide value to your potential customers. What can you offer that people would pay you for?

You should also consider what you've been successful at in the past, what sets you apart from others, and what your education and interests are. This will guide you towards deciding what type of business it makes sense for you to start.

2. Research your market and competition

Your business needs customers in order to be successful.

After you decide on a business idea based on your skills and talents, you should identify what the market is for your business. To do this, research how much demand there is for the product or service you plan to offer and who your potential customer base is.

It's also a good idea to look into other competitors while doing your market research. The more competition there is, the harder it can be to break in — unless you have a unique approach others haven't yet thought of.

You can also look into what your competitors seem to get right and learn from the things they got wrong.

3. Develop a business plan

The next crucial step to starting a successful business is to write a business plan. Your business plan should lay out your business's future path.

You can make a detailed plan addressing everything needed to get your business up and running. This could include the following:

  • A description of your business
  • A market analysis showing your target market and competition
  • Information about your chosen business structure and your leadership team
  • Details about the services and products you will offer
  • A marketing strategy to drive sales
  • Funding requests if you want to borrow money
  • Projections for your potential business expenses and profits

Depending on your business idea, you may not have to go into detail on each of these aspects. Ultimately, a business plan should help you clarify your vision, test your assumptions, communicate your value proposition, and secure funding or partners for your business.

4. Use available resources and tools

If you're trying to figure out how to start a business, you should use a creative approach when it comes to finding the help and support you need. Fortunately, plenty of tools and resources can help you open a business. These resources include the following:

  • The Small Business Administration: The SBA is a U.S. federal agency that supports small businesses. It can help you learn about writing a business plan, registering your company with appropriate authorities, and even expanding once operations are underway.
  • Companies that help you start: Some companies, such as ZenBusiness, specialize in providing online services and tools for starting and growing a business. ZenBusiness can help you form a limited liability company (LLC), build a business website, stay compliant with state and federal regulations, and more. Learn more in our ZenBusiness review.

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  • E-commerce platforms: Depending on what you offer through your business, you may need an online store where you can list your services and products. Platforms like Shopify provide the tools needed to set up and operate an online store that supports receiving payments from your customers.

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  • Social media: Using social media can help you market your business, products, or services with little to no cost. Platforms like Instagram or TikTok allow you to set up a profile for your business and may help you put what you offer in the spotlight. You can also tap into your existing social network to connect with people in your industry and find customers or employees.

5. Hustle and be creative

Starting a business is going to take ingenuity — especially if you start with little or no money. Hustling and being creative are two important mindsets that can help you move forward, even when things get tough.

Hustling means working hard, smart, and fast to achieve your goals. You can do this by leveraging your existing skills, building the networks you need, promoting your business through low-cost means, and remaining flexible and adaptable.

Being creative, on the other hand, involves thinking outside the box, finding innovative solutions to problems, and differentiating yourself from the competition. You can use your creativity to find a niche for your business and develop a minimum viable product that can achieve sales in this niche.

How to fund a new business

Although it’s possible to bring a business idea to life without a lot of money in your bank account, your business will typically need some capital for startup costs, even if it’s an online business that doesn’t have a physical location.

Fortunately, there are a number of options that can help you get the amount of money necessary to get up and running.

1. Seek out a small business loan

Chances are you’ll need at least a little bit of cash to buy equipment and materials, open a storefront, or get an online e-commerce store up and running.

A small business loan is a type of loan many banks and credit unions offer to startup companies and new or small businesses. To get this type of loan, you typically need a good personal credit score and to be willing to personally guarantee the loan by agreeing to pay off the loan even if your business fails.

Small business owners may also qualify for a small business administration loan. These SBA loans are guaranteed by the Small Business Administration although they are offered through private lenders. Because of the government backing, lenders have more relaxed criteria when considering whether a business owner qualifies.

You can find an SBA lender using the Find Lenders tool offered by the Small Business Administration.

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2. Access a line of credit or a business credit card

Lines of credit and business credit cards are two forms of revolving credit, meaning you can borrow and repay money up to certain limits and then borrow again. This is where they differ from business loans since you can use them to borrow over and over again.

You’re typically required to make at least minimum payments and not exceed your credit limit when you open up and begin using a line of credit or a business credit card.

Here is how these two options work:

  • A business line of credit: Allows you to borrow up to a certain amount of money. As you repay what you've already borrowed, you can draw from your line of credit again. Keep in mind that you’re also required to pay interest charges accrued on the amount borrowed. You may also have to pay some fees, such as origination fees, annual fees, or draw fees.
  • A business credit card: Allows you to access credit up to a certain limit. You can use your business credit card for business expenses and purchases, as long as you don’t exceed your credit limit and pay back what you borrow plus interest if you carry over a balance from one billing cycle to another. You may also have to pay some fees, such as annual fees, transaction fees, or late fees.

Learn more about the differences between a business line of credit versus a credit card and explore the best small business credit cards.

3. Reinvest your profits

Regardless of your business model, you won't just need money to start — you’ll also need money to continue operating and growing. The good news is, customers can start to fund you. As you begin earning money from selling products or services, you can reinvest the money you make into keeping the doors open and/or expanding.

The process of starting with a lean budget and then using customer funding is often referred to as bootstrapping, and it's become a popular way for companies to get started without a huge upfront investment.

4. Utilize crowdfunding

If you can get other people to believe in your business, crowdfunding could be a great way to get started without borrowing.

To begin, you could put your idea on crowdfunding platforms like Kickstarter or Indiegogo. You'd need to describe your idea, come up with a product or a service, and ask people to contribute money to bring this product or service to life. You could offer the product or service in exchange for their contributions.

Crowdfunding may work well if you can entice people to invest their money in exchange for the product or service you plan to build.

5. Apply for business grants

As you explore funding methods, you can consider grants that encourage or support entrepreneurship.

Government agencies, as well as private individuals and entities, provide small business grants that can help new businesses find the cash flow they need. Grants don’t have to be paid back but are instead designed to provide deserving individuals or new business ventures with startup capital.

You can use resources like the Small Business Administration to help find and apply for grants. Make sure to research the available grants, check your eligibility, register on the online platform if there is one, and submit your application before the application deadline for each grant.

Remember to stay vigilant when you’re considering small business grants, as some scammers target would-be business owners. Avoid paying a large fee for the promise of help securing grant money, too, as legitimate grants will offer applications you can complete on your own without paying for a third-party service to help.

Even if you’re operating a business on your own, you still need to establish a legal entity for it. This doesn’t always mean registering it with the state or federal government because you can operate as a sole proprietor.

However, figuring out the business structure you plan to use is essential for determining how you will be taxed, protected from liability, managed, and funded. Let’s explore how to start.

1. Choose a business structure

You can choose your legal connection with your business by understanding the different types of businesses. Some of the most common business structures are the following:

  • Sole proprietorship: With this option, you and your company are one entity in the eyes of the law. You don't file separate business taxes but simply declare profits and losses on your personal returns. You're 100% liable for your business.
  • Partnership: This is a simple business structure used when two or more people start a business together. You could start a general partnership where both partners are liable for the business or a limited partnership where only one partner is 100% liable for the business while the others have less control but also less legal responsibility. Profits and losses are passed through to individual partners.
  • Limited liability company (LLC): When you form an LLC, your business becomes its own separate entity, giving you more protection from personal liability if something goes wrong. An LLC usually dissolves if a member leaves or a new member joins, so these are best for smaller companies that won't change hands much. LLCs pass profits and losses to owners.
  • C corporation: C corps are separate legal entities that file their own taxes and pay taxes on their own profits and losses. While this provides a lot of liability protection for the owners, it also means that the income can be double-taxed. That's because taxes are paid on profits by the corporation and are then paid by owners when they receive a share of the profits.

There are some other business structure options, such as S corps and non-profit organizations. Make sure you research and understand the tax treatment and liability protections that come with the structure you choose.

2. Register your business

Your business may or may not need to be registered, depending on where you live and what kind of company you are starting. For example, you might be able to operate as a sole proprietor without registering your business. However, LLCs typically must be registered.

If your business needs to register, you should contact the appropriate authorities in your state and local government to fill out the forms needed to register your business name. Business services such as ZenBusiness and LegalZoom can also help you register your business for a fee.

Learn more about the differences between ZenBusiness versus LegalZoom.

3. Acquire tax IDs for your business

Your business may need a separate tax ID if you are creating a separate entity such as a corporation. You will also need a tax ID for your company to hire employees.

You can apply with the Internal Revenue Service (IRS) to acquire an employer identification number (EIN). You will have to specify what type of business entity you’re running. You'll need to add information such as the company's legal name and the type of activity it is engaged in, as well as who the managing members are.

The IRS will then review the information you submit and provide you with the EIN if you’re approved.

4. Apply for required licenses and permits

Make sure to research whether your state or local governments require any type of license or permit for the type of business you plan to start. For example, restaurants that serve alcohol would need to apply for a liquor license.

Once you have identified the licenses and permits you need, you can apply for them online or by mail, depending on the agency and the process. You may need to provide information such as your business name, address, contact details, tax ID number, legal structure, business activities, and other relevant documents.

You may also need to pay some fees for applying and processing the licenses and permits.

FAQ about starting a business

Starting a business with no money: bottom line

Learning how to make money by starting a business with no or little money can be challenging, but the potential reward may make your effort more than worth it. Remember that getting a company off the ground when you have no money is possible, especially when you have a plan and use funding methods that can help you start.

You may begin your business as a side hustle while maintaining your day job or full-time job. Use free resources or low-cost options to maintain your expenses at a level you can manage. Keep in mind that the first year can often be the most challenging when starting a business, but hard work may pay off in the long run.

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Author Details

Christy Rakoczy

Christy Rakoczy has a Juris Doctorate from UCLA Law School with a focus in Business Law, and a Certificate in Business Marketing with an English Degree from The University of Rochester. As a full-time personal finance writer, she writes about all things money-related but her special areas of focus are credit cards, personal loans, student loans, mortgages, smart debt payoff strategies, and retirement and Social Security. Her work has been featured by USA Today, MSN Money, CNN Money and more, and you can learn more at her LinkedIn profile.