How to Start a Business With No Money and Bad Credit?

” I want to start a business, but I have no money and my credit is bad.”  I hear you, and you’re not alone. It’s not easy to find money to start a business if your personal credit history isn’t pristine. However, bank loans and venture capital aren’t the only ways to get a new business up and running. Countless entrepreneurs have started successful businesses without borrowing a dime. Known as bootstrapping or starting a business without outside capital, small business owners who’ve gone this route have had to rely on their resourcefulness, drive and creativity instead of cash to build successful enterprises.

I faced a similar dilemma when I started my recording studio business 17 years ago. I didn’t have any cash saved up before I quit my 9 to 5 job, and my credit was not terrible, but I definitely wouldn’t qualify for a conventional bank loan. So, instead of having the luxury of throwing cash at every problem that surfaced, I had to create processes and procedures that stood up on their own merits.  As a result my company learned in the early days how to operate lean and to survive on a shoestring budget.

As a completely self-funded business, I had to incorporate a pay as you go mentality. Meaning, I didn’t spend out any more than I brought in. Needless to say, my growth was a slow process, but just like the tortoise in that famous fable, my slow and steady pace is perhaps a primary reason why I’ve had such longevity in business.

Now, I know most people don’t have the time, patience, or convenience to use my technique, so here are five tried and tested ways to grow a start-up fast with little cash.

No. 1: Start in the garage

Did you know that Bill Gates started Microsoft in his garage? According to experts, a great way to save money is to run your business in a location that won’t require you to pay extra rent — whether it’s your garage, bedroom, basement or attic.

I started my business in the basement of my home. It wasn’t glamorous, but it allowed me to learn as I grew without spending a bunch of money on overhead costs.

No. 2: Get paid upfront

Whether you are manufacturing a product or providing a service, the sooner you can get paid the quicker you can grow your business, which is why experts say it’s a good idea to try and get paid, even partially, up front.

Let’s say for instance you get paid on a retainer basis. You could have your clients make a down payment when they sign on. Not only does it mean money is coming in from the get-go, but it bolsters your relationship with your clients. The new client will feel they have skin in the game if they paid.

If you’re selling a product, a win-win strategy is to offer retailers a discount if they pay cash for the product or buy a large quantity. By doing that you can be ahead of your bills and the retailer wins because it is saving money.

No. 3: Barter for what you need

Bartering hasn’t gone the way of the dinosaurs, in fact it is alive and thriving and is a great way to get the goods and services you need without spending a dime.

Find other start-ups that have what you need and need what you have. A good place to start might be any suppliers that are also start-ups. They are cash-strapped like you and probably need to spend money they don’t have. You can also use a barter company that specializes in handling business trades.

No. 4: Commit to keeping costs low

In order to build a business with little cash you need to first commit to keeping costs as low as possible. Once you make a conscious decision to do that, it’s easier to implement strategies to make that work. For me it meant working out of my home for the first five years — keeping costs to a minimum by printing my on marketing materials, and only outsourcing if absolutely necessary.

While I found outsourcing to be more costly than doing it myself, most businesses will find it to be a way to save money. The rule of thumb is to stick to what you know, and pay someone to do the rest.

No. 5: Get free advertising through non-profits

Let’s face it, you are going to have to advertise or market in order to build awareness and thus sales. But for many start-ups the funds simply aren’t there. To get around the costs of advertising, consider partnering with non-profits that you care about. Sure you’ll be giving your product or service away for free, but you’ll also reach potential customers that share the same beliefs and concerns that you do.

By reaching out to small, local non-profits and charities, whose causes you believed in, you’ll gain access to potential customers whose share your beliefs and would therefore choose to do business with you over your competitors.

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These a just a handful of ways that you can start a business with no money and bad credit. I will be sharing other methods that I’ve learned along the way of successfully operating my business for more than 17 years. If there’s a will, there’s a way. Don’t be discouraged by where you are today, because if your dream is big enough, the facts don’t count.

Do you have concerns about starting a business with no more or bad credit? If so, leave me a comment below, and I’ll do my best to help you get past your hurtles and start living out your dreams.