One would think that opening a business without money is impossible. All entrepreneurial activities require a minimum expense.
Whether it's an innovative startup or a traditional commercial activity, the purchase of the necessary equipment or a training course, if you want to open a business there is little you can do: you need capital.
But who said that the capital must belong to the entrepreneur?
In this sense, opening a business without money becomes not only feasible but also one of the best solutions to validate your idea from the early stages and to limit potential personal losses in case of failure.
To open a business with no money, outside investors are needed, who can be found in the family or friend network, or through:
- announcements and contests or competitions;
- incubators and accelerators;
- crowdfunding;
- business angel;
- venture capital;
- financial loan (banks);
- franchising.
In this article we will see how to open a company, how to find lenders with the above methods and which business to open, with little or no money, in 2022.
Index
- How to open a company: the business idea and its validation
- Start with the business plan
- How to open a business with no money by finding investors
- Open a business: choice of legal form
- Which business to open in 2022
- Tips for starting a business
- How to open a business without money: conclusions
How to open a company: the business idea and its validation
At the basis of opening a business there is a business idea. If you have had an idea, the next step to making your business concrete is its validation.
Opening a business is not a trivial matter and before spending time, energy and money (whoever they are) on this project, you will have to make sure that your idea is actually a winner.
Also because no sensible investor will ever be willing to invest in your idea if you don't present him with at least a valid market analysis that confirms how interesting the idea is, and a structured business plan that suggests its economic potential.
Before getting to the heart of how to open a business without money by finding investors, therefore, it is advisable to say a few words to understand how to validate the project from the very foundations.
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But how can you be sure that your idea is good? By performing the following steps:
- analyze the market;
- find your niche;
- study potential competitors;
- validate your idea.
1. Analyze the market before opening a business
Whether you've already had an idea or are still looking for your spark, assessing market demand is the first step in setting up a business while reducing your risks.
In fact, this type of analysis allows you to:
- understand who your potential customers are through market segmentation and what their wants and needs are, to identify the right type of product or service to provide;
- understand what kind of competition you might have, discover the weaknesses and strengths of your competitors, learn from their mistakes trying to do better;
- develop strategies to improve or make your product or service unique to beat the competition.
2. Find your niche to open a business and reduce your risks
A niche market is a segment within a larger market.
If you have decided to sell t-shirts online with funny slogans, you may find some stiff competition. However, by orienting yourself on a smaller market, you will be able to obtain your market niche in the wider one of on-demand printing on T-Shirts. An example? Choose a specific target: lovers of a particular sport, vegans, travel lovers, etc.
3. Study potential competitors
Once you have chosen the niche market in which you want to establish yourself, all you have to do is study your competitors by learning from them.
Don't hesitate to study their strategies, observe how they handle critical issues, follow their marketing. All this will allow you to learn more and improve your strategies by learning from those who are more experienced and have already traveled that road.
4. Open a business by validating your idea
Being sure that your idea is valid is impossible until you have put it into practice.
There are strategies, however, that allow you to reduce the risk of a flop. In addition to choosing the right niche and making an accurate market and customer analysis, you can request the support of those who are more experienced than you.
Describe your idea to those who have already opened a business, who had an idea and made it concrete. In short, to those who have already traveled your path.
If you are afraid to talk about your project with someone, choose the right person carefully. Entrepreneurs are often open to discussing new ideas and you might even find an investor.
Let's take a practical example and go back to the hypothesis of selling T-shirts with print on demand, for example using dropshipping.
Analyze the market to understand if your idea may appeal to your target, let's assume the travel sector. Who are your customers? What age are they? What are their interests other than travel? So what would be the fun prints you could make for them?
Now study the competition. Are there other companies in this sector? What do they produce in particular? How are their shirts and their prints? What is the marketing strategy they have chosen? How do they optimize the conversion funnel?
Finally, validate your idea by consulting those who have already built a business in this sector or in a similar sector. Choose an expert person who inspires you with confidence, offer him the idea of your shirts and let him advise you, but always think for yourself.
To learn more: What is dropshipping in Italy and how does it work? Everything you need to get started
Part of the Business Plan
If you really want to understand how to open a business without money, you need to start by creating a business plan that allows you to plan your business.
When starting a business, there are countless aspects to consider. Creating a business plan will help you:
- outline your business strategy;
- verify the feasibility of a business idea;
- verify its feasibility in economic terms;
- ultimately, present yourself in front of entrepreneurs with a concrete and well-defined project.
The business plan is a document that describes the company in every aspect, starting from the product up to the profits to be made. It allows you to carry out a feasibility study of your business in a concrete way, but above all it is a document that is drawn up to allow investors to evaluate the validity of a business idea.
If you are new to this topic and do not know how to write a business plan, here is a summary of what it should contain:
- Executive summary;
- Company information;
- Market analysis;
- Products and services;
- Marketing strategy;
- Logistic and management plan;
- Financial plan.
So let's see how to open a company by seeking the support of lenders.
How to open a business without money: 8 ways
Once you also have your business plan, you are closer than ever to starting the business.
But how to open a business without money? Simple, by finding lenders. In fact, one of the most common means is to ask for external economic support that allows you to start any business, even those that require a massive initial investment.
To obtain funding, you can take different paths that you can evaluate based on the amount you need or the type of business you want to set up:
- family and friends;
- announcements and contests or competitions;
- incubators and accelerators;
- crowdfunding;
- business angel;
- venture capital;
- financial loan (banks);
- franchising.
1. Ask family and friends for funding
If you have a family and friendship network that trusts you and your abilities, you can reach out to family and friends. In these cases we speak of the 3F: Family, Friends and Fools, or family, friends and fools.
- reduced times;
- flexibility;
- no collateral needed.
In this case you will not have to submit elaborate plans because the loan is all about trust. But always remember that it is important to be clear from the outset on the actual success of the project to avoid quarrels and therefore the breakup of relations.
2. Open a business with announcements and competitions
Government bodies such as the State, the Regions, the European Union, etc. often launch tenders and competitions to finance new projects and startups through non-repayable loans, or with cash prizes in the case of competitions.
To take part, it is necessary to meet the selection requirements within the set deadlines and follow the instructions in the announcement, for example by submitting a project.
- cash prizes or funding in case of winning;
- training opportunities;
- possible emergence of collaboration agreements;
- promotion of your project or idea regardless of classification;
- meeting with other entrepreneurs to network with (useful both for promotion and for sharing ideas and advice) and the possibility of meeting investors;
- get references and increase the value of your idea.
But how to find announcements and competitions to participate in? Keep an eye on the sites of the regions, of the MISE (Ministry of Economic Development), the official site of the European Union or in general sites such as Invitalia, the national agency for business development.
3. Look for incubators and accelerators
Business incubators and accelerators intervene at different times in the business process. The former when the idea is still in its infancy, and they are committed to supporting and developing it through training and technical support up to shaping the business model and making it scalable.
Accelerators, on the other hand, intervene for a short period in the following phase, the one that precedes the start-up of the business, and through financial and technical support they ensure that the startup becomes a real company.
These means represent, if not always a valid economic support, certainly a good springboard when you want to open a business with few resources. To access them, simply search for incubators and accelerators in your region or city. An example for all is Italiacamp in Rome or H-Farm in Treviso.
4. Become an entrepreneur with no money thanks to crowdfunding
Also in this case there is a need to beat the competition: why should investors choose your project?
To learn more: Crowdfunding in 2022: what it is, how it works and the 9 best platforms
5. Find a Business Angel
A Business Angel is generally an entrepreneur who owns personal capital and who, in exchange for an economic return in the medium-long term, invests in a company or a startup.
He is also referred to as an informal investor because he becomes a sort of "guardian angel" of the business he finds interesting.
Not only does it provide capital but it supports the company by inserting it into a network, and entrepreneurs with advice in the most difficult phases. Obviously this can also be a negative aspect if you do not want interference in your business.
Here are some investor sites that could help you: Investor Club, Italian Angels for Growth, Italian Business Angel Network.
6. Look for venture capitalists
Venture Capitalists are financial companies specializing in even very risky investments. When a venture capitalist decides to invest in a startup, he thinks it's a very promising company.
So to get their attention you must have a winning idea and present it with a very captivating and complete business plan. Venture capitals are also entrepreneurs who own large capital and are looking for future companies in which to invest, even if the risk is high.
The other side of the coin is that the interference is even stronger than in the collaboration with the Business Angel.
7. Apply for a financial loan from a credit institution
Banks and lenders are the most traditional lenders, but while obtaining capital in this way is certainly easier, it is also one of the riskiest.
First of all, a series of guarantees are necessary, among which there could also be a mortgage. Furthermore, it is necessary to pay particular attention to the conditions, interest rates, the times for the repayment of the debt or the consequences for any delays in the payment of the installment.
For their part, the lenders will carry out an accurate analysis of the company and in this phase the business plan remains fundamental.
Companies with a strong balance sheet are typically considered, and the following aspects of the business are also reviewed:
- the use made of the company's capital;
- the presence of other loans or overdrafts;
- financial planning;
- the cash flow to verify that there is actually liquidity in the company to guarantee the payment of the installments.
Therefore, obtaining a loan from the bank is not easy. In some cases, the hypothesis of a personal loan can be evaluated.
8. Open a business with no money with franchising
Franchising is a good solution for those who want to open a business with no money because it allows you to open a business at no cost or with very low figures, relying on an already established brand.
It is a collaboration between an entrepreneur who wants to distribute the products/services of his own brand, and another entrepreneur who wants to open a business with no money or with reduced capital and risk, and takes charge of doing so for a specific geographical area or area of activity.
Examples of franchising are dropshipping ecommerce, traditional stores with goods on consignment, home delivery businesses, etc.
The franchise enjoys excellent discounts. Often, in fact, it is the parent company that provides a loan, generally without interest and with payment in installments. Furthermore, credit institutions are also more inclined to finance this type of activity due to the greater guarantees they are able to obtain from a more reliable business project.
Open a business: choice of legal form
Now that we have seen how to open a business without money, let's see from a bureaucratic point of view which are the most common legal forms and which one is more suited to your business.
We divide the legal forms of enterprise into two macro categories: the sole proprietorship and the companies. The latter can be classified into corporations and partnerships.
Open a business: sole proprietorship, the simplest form
The sole proprietorship is the most common and simplest form, because it requires an administrative procedure that is not too complicated and cheaper. For this reason it is chosen by the majority of small businesses.
Obviously, sole proprietorships do not have shareholders: the company is led by a single person but it is possible to have employees or collaborators. Therefore, evaluate this hypothesis well if you intend to open a business in collaboration with other people.
If, on the other hand, you intend to open a company in partnership, then you could choose to set up a partnership.
Partnership: a legal form to open a business of intermediate complexity
As per definition, in partnerships, the shareholders assume a prevailing value over the capital.
Compared to corporations, opening and managing partnerships is simpler and less expensive. The partners never assume legal personality even if there is a separation between the assets of the company and that of the partner.
Although, from a bureaucratic point of view, they are simpler than joint-stock companies, partnerships are quite demanding to open and manage.
Capital company for those who want to open a medium or large company
This legal form is generally the most advanced and structured, and requires substantial initial capital (except in rare cases).
Unlike partnerships, the responsibilities and legal significance of the shareholder are commensurate with the invested capital.
This is the most complex legal form at a bureaucratic level.
Both partnerships and corporations have different types.
Partnership:
- simple companies;
- in collective name;
- in limited partnership.
Capital company:
- joint stock companies;
- limited partnerships by shares;
- simplified limited liability companies;
- limited liability companies.
As you can see there are different types of companies in Italy, which one to choose to open your business?
Our advice is not to act in complete autonomy but to make use of the advice of a professional who will be able to advise you in the best possible way.
The choice of the legal form is of fundamental importance and must be considered according to the activity that is being opened, to avoid excessive tax burdens that are not proportionate to one's activity.
What business to open in 2022, with or without money
As we have seen so far, today it is possible to open any type of business, even without financial resources, as long as investors are found.
But which businesses should open in 2022? Here are 14 good and interesting business ideas:
To learn more, we recommend reading this article on how to open an online store.
Tips for starting a business
Before concluding this guide on how to open a business without money, let's see some more advice.
1. Open a business in your spare time
When starting up your new business, at least initially, don't leave your current job. A business idea, the launch of a product or a service, require time, money and perseverance and it doesn't always come out a winner.
Our advice, therefore, is to stick with your job and devote yourself to entrepreneurial activity in your spare time. It is certainly a sacrifice but the counterpart is to keep one's own resources unchanged.
Staying firmly planted with your feet on the ground is the only solution to avoid nasty surprises. Later you might consider reducing your working hours from full to part time, eventually leaving it permanently if your business produces excellent profits.
2. Find a reliable partner
How to open a business without money? The most common solution is to look for a partner. Our advice is to carefully evaluate the person with whom you want to share a company, the problems, difficulties, capital and earnings.
Then establish, even with a private agreement, what are the rights and duties of each, to avoid litigation in the event of discussions or quarrels.
3. Not just technical skills
Becoming an entrepreneur without money is not easy, in addition to being able to apply all the advice and indications you have found in this guide, you will have to bring out your creativity.
Put all your personal qualities and skills into play to manage the business economically. Prepare yourself for difficult moments to face with serenity, appealing to your energies and your problem solving.
Leverage your soft skills, personal skills related to so-called emotional intelligence and you will see that you will be able to face any situation.
4. Network.
Don't throw yourself into this activity completely alone. Networking does not necessarily mean that you will have to have partners or collaborators but simply knowledge that could help you grow with your business.
Subscribe to sites, social networks, forums, participate in trade fairs, attend workshops and courses. You will need all this to promote, to ask for advice, to have a discussion with those who work in the same sector and why not, also find partners, collaborators or lenders.
Register now!
How to open a business without money: conclusions
In this article we have seen what are the steps to open a company starting from the business idea and its validation. We have seen how to open a business without money by finding lenders, which legal form to consider for your company and finally which businesses to open in 2022.
Becoming an entrepreneur without money is a difficult path to take, but the history of the market is full of entrepreneurs who started from scratch. Take the advice in this guide into consideration, study and compare yourself with those who have already embarked on this path and you will see that you will be able to open a profitable business and make your dream come true.
Frequently Asked Questions on how to start a business with no money
How to open your own business without money?
To open a business without money, external investors are needed who can be found in the family or friend network, or through:
1. announcements and contests or competitions;
2. incubators and accelerators;
3. crowdfunding;
4. business angel;
5. venture capital;
6. financial loan (banks);
7. franchising.
What can be opened with little money?
In general it is possible to open any business even at no cost, or almost, if you can find investors. If you have limited financial resources, an activity that can become really profitable is to open a dropshipping ecommerce that requires a minimum investment by selling products online without physically owning them. Thus avoiding all expenses related to the management of a warehouse.
What activities to open in 2022?
Here are 14 very interesting business ideas:
- Vendere in dropshipping
- Selling T-Shirts Online
- To publish a book
- Sell digital products
- Sell prints on demand
- Selling a service
- Selling DIY products
- Publish a podcast
- Open a farm
- Invest in real estate
- Launch a subscription box
- Open a franchise business
- Start a 3D printing service
- Open a drone aerial photography business
to know more
- The news of resources4gaming in Italy in June
- 11 resources4gaming apps to find products to sell online
- Selling abroad online - practical guide to start in 2023
- How to make money online - 18 ideas (and some advice) for 2023
- Ecommerce - what it is, how to open and manage an online store (with practical advice)
- Complete guide to search engine positioning for a website (SEO)
- The brand exhaustion principle and its limits
- Psychological price - how it works and 6 useful strategies for 2023
- Ecommerce KPIs - 67 key performance indicators for your online store
- What is the toughest business challenge you have faced?
Notes on the author
Ilaria Cazziol
Curious and hyperactive by nature, she found the perfect challenge in the continuous changes of digital marketing. She is passionate about travel, writing and new technologies, which is probably why she has become a freelance content writer and a digital nomad.
