How to Start a Business with Minimal Capital
How to Start a Business with Minimal Capital
Having been in the business world as a business owner for three decades, I have seen and heard a lot of different philosophies surrounding the proper and most effective way to start and sustain a business. By far, the most fallible notion surrounding business is that you cannot start one without a lot of money on hand. A barrage of adages underwrites this erroneous notion that contributes to this idea, including the most infamous of all — “it takes money to make money.” The truth is that it does not take money to make money; it takes capital to make money or start a new business, and money is only one form of capital.
Because of the way that most people view money, they limit their mobility and their willingness to pursue their passions. Capital can be any of a number of things, including money, real estate, an idea, intellectual property, and your mind — for starters. While every person does not have money readily available, we all have something of value through which we can negotiate our advancement. Edward C. Barnes showed up at the door of Thomas Edison with nothing but an idea and a desire to be in partnership with the great inventor. Edison saw the value in his passion and confidence and brought him on as an employee, but it would not be long before Barnes would realize his dream of being a partner with Edison, but he did not buy his way in, he “thought” his way in.
As Napoleon Hill wrote:
“Truly, “thoughts are things,” and powerful things at that, when they are mixed with definiteness of purpose, persistence, and a burning desire for their translation into riches, or other material objects.”
The Psychology of Success
Success in business, as in any other area in life, adheres to a certain type of psychology, and while I am going to provide tips as to how you can start a business with little to no capital, these tips will serve no purpose if you are not operating under the right psychological framework. Basically, if your thoughts and beliefs about yourself are not in alignment with your goals, you will still struggle. In fact, your thoughts are more important than your strategies.
In my book, Your Mind Is the Genesis of Your Destiny, I go into great detail in describing how your thoughts are literally seeds that will produce a harvest in the future in the form of real circumstances, situations, and realities. You control your destiny by controlling your thoughts. So, the success of your business depends on you having the right frame of mind as much as it does on the availability of capital.
My suggestion is that you work on developing the right mindset before you start your business; it will make all the difference in the world. Look, over the last 30 years, I have successfully launched and sustained 46 companies and counting, with all of them reaching profitability in under a year. I have authored and published 19 books, and I am currently writing book number 20. I have purchased my dream house (five different times), traveled around the world and done things I once could not even imagine. What I can tell you is that it all started inside my head.
It started by expanding the range of my beliefs about myself and what I could accomplish. I learned that the only limitations I had were those I excepted in my mind and that when I believed I could do something, and I acted, I got the results I was looking for. These results rarely came without challenges, but when you believe something you develop an inexorable desire to push through every challenge. At the end of the day, it is not what you know, your skill set, your resources, or your connections that will push you through the difficult moments to the point of success, it is your belief in yourself and the willingness to go the entire distance.
At The Visionetics Institute, a company I founded and run, I help people optimize their potential and achieve their wildest dreams by helping them shift paradigms in a manner that allows them to see themselves and the world through a lens that says, “I can.” If you are interested in learning how to create these paradigmatic shifts, you can work directly with me for optimal results or you can take the Power of Paradigms Course I created for the person on the go. This is for certain, if your personal psychology is not in alignment with your desires, having the right business strategies and mechanisms will not do you much good.
Know Your Why
Before offering some key tips that will help you with launching your business idea with minimal capital, there is one other point that is immensely important. You must know your “why” and your “why” must be big enough to push you through all the challenges that you are going to face as you push through life and take on challenges in a quest to satisfy your passions. Your “why” is your reason for doing what you do. Some people do it because they want to provide a certain type of lifestyle for their family and others do it to satisfy their competitive thirst, and still, others do it because they want to have the resources on hand to serve others through philanthropic interests.
Whatever your “why” is it must be big enough to get you through those intensively challenging moments. See, no matter how hard you attempt to circumvent struggle, disappointment, loss, and delay, they are a part of the process that is essential to living in the promise of your design. I tell my clients all the time that “process” precedes “promise.” There can be no obtainment of the promise (of your design and potential) without there first being an endurance of the process. When you attempt to circumvent the process, you neutralize the promise.
Ask yourself, why am I doing this? Make sure that your why is bigger than you. Your “why” should be so huge that it will be bigger than any challenging moment that you will face. It must be big enough to push you through delay, hurt, disappointment, and fear. When your “why’ is big enough, you will become an unstoppable force.
Building a business is like anything else; it is not only about the mechanics and business models, but about the holistic flow of the creator — you. Is your vision for your company crystal clear? The lack of lucidity in way of vision is one of the greatest inhibitors for long-term success. It is hard to manifest what you cannot clearly see. Therefore, I advocate the use of vision boards and priming sessions. Vision boards allow you to bring the image of your vision and goals into the physical realm so that they can be clearly seen and visualized. Priming is a technique I use every morning to ensure that I am in the right “state” of mind to optimize my day while staring down all challenges that emerge without becoming frenetic and unglued. Your “state” is of immense importance in ensuring your consistent and long-term success in business and every other area of your life.
Perfect Timing & Perfect Opportunities Do Not Exist
Now, say that you have your mind in the right “state” and you have effectively eliminated the limiting beliefs that would serve as major obstacles to you building a thriving business, what is next? Get started. There is no such thing as the perfect timing or the perfect opportunity. Opportunities do not fall out of the sky; they are either discovered through diligent research and effort or they are created through innovative and lateral thought — thinking outside of the box. Understand that “the box” that people are always attempting to force you to operate in is simply an illusion created by someone else’s limiting beliefs and then forced upon others who readily accepted them.
Over the course of my life, I have often been categorized as being contumacious. I even have a tattoo across my entire back that says, “RENEGADE.” I refuse to allow someone else’s beliefs and opinions to serve as the parameters for my performance in life. When the force of my belief in myself is infused into proper planning and execution, there is literally nothing that I cannot accomplish, and you are no different.
Reduce Your Entry Expenses & Lower Sustainability Costs
Now that your mind is properly calibrated to produce your desired reality, you must prepare to take action, and being prepared requires a plan. One of the major causes of failure for young entrepreneurs is the failure to plan. Not only does a business plan provide a clear projection of your business’s direction and performance goals, but it serves as the visual blueprint for your day-to-day execution. Going out without a clear idea of where you are going or how you are going to get there is a recipe for failure.
If I had to choose between having the right psychology or the right strategy or plan, I would choose psychology every time, because without it the right plan will mean absolutely nothing. However, I prefer to have both because the plan will bring about stability and a systematic way to pace myself and measure my progress. Part of having the right psychology is the demand of excellence you place on yourself, which in turn should demand that you create an effective and comprehensive business plan. Plus, a well thought out and a well-written business plan is actually a form of capital that can secure the funding you need to support your start-up.
There are some steps that you can take to minimize costs and expedite growth with your new business including:
- Choose a Business that Does Not Require a Lot of Equipment
Reducing your initial overhead is immensely important to creating a low entry point and low operating costs. The low overhead will alleviate some of the financial stress associated with high expenses and it will also allow you to reallocate your resources toward those areas that are essential for business growth, such as marketing and branding.
- Operate as a Sole Proprietor Initially
By starting your business as a sole proprietor, you will avoid the initial cost of filing to be recognized as a corporation or limited liability business entity. Basically, you can apply at the county clerk’s office to operate your business under a fictitious name known in most states as a DBA (doing business as) and this can normally be done for as little as $10 but not more than $20. However, you will want to file your articles of incorporation as soon as possible because there are multitudinous benefits associated with incorporating your business. Another business model you may want to eventually consider is operating as an unincorporated business trust (also known as a Massachusetts Trust), which can offer even greater tax protections that a traditional corporation cannot provide — but that is a little later down the line.
- Remain Employed on Your Current Job
Until you have created a business that has the capacity to sustain your current lifestyle, it might be in your best interest to hang on to your existing job. While it will limit your reserve energy and time, it will provide a sense of security and it can also be a source of funding during tough times.
- Hire Contractors or Outsource Instead of Hiring Employees
One of the largest expenses of any company is payroll, and you can significantly mitigate this expense by hiring contractors or outsourcing work that you are not capable of doing yourself to a third-party service provider. For instance, marketing and accounting responsibilities are commonly outsourced on an as-needed basis.
- Produce on Demand Instead of Maintaining Large Inventories
Another huge expense is investing in the purchase of inventory products and the storage of those products. Whenever possible you want to purchase products on demand. Another option is to use a drop-shipping model in which you take orders from your clients and then buy the product from the distributor or manufacturer and have it drop-shipped to the customer, which means the package will be shipped by the manufacturer directly to the customer with your business name on the package. Obviously, this is an approach for a product-driven business.
- Grow the Company in Phases
One strategy I use when scaling my businesses is I allow the consumer demand and consumer interests to dictate how rapidly I expand products and services. Basically, instead of creating something and then attempting to figure out how to get people to buy it, I monitor the existing demands and problems in the market that demand solutions and then I meet those needs. This type of growth model is demand-driven and never leaves you in a situation in which you have grown your company in a direction contrary to your target market.
As you become more astute in business, you will begin to read the market and predict trends before they occur — allowing you to get ahead of the curve and dominate the market, but that comes with experience and insight.
Generally speaking, starting a business requires capital, but that capital does not necessarily have to be money when you are able to think laterally and recognize the capital you have available in other areas. I have started more than one business with no out of pocket expenses (as far as currency). In fact, I have gotten my future clients to pay for the development of the product or service they would receive from me through a simple model known as a seed launch. Remember, you are only limited by your mind and when you open your mind to unlimited possibilities, anything becomes possible.
Personally, I don’t operate through the conventional wisdom of business ownership, it is too restrictive. I tend to dare to do the impossible. While it is much more challenging and risky, not many others are flying in this rare air, which means less competition and greater gains.
If I had to leave you with one thought it would be, do you and let the chips fall where they may! ~ Rick Wallace, Ph.D., Psy.D.
Note: The rapid advancement of technology and the massive expanse of the internet has completely unleashed a global marketplace where literally anyone is welcome to play. With the right mindset and a well-devised plan, you can enter the world of business and it will not require a massive amount of upfront capital.
Vist the Barnes and Noble website to view some additional books written by Dr. Wallace.