Becoming an entrepreneur is no easy feat. It takes time, commitment and capital investment to transform a business from an idea into a money making machine. However, most aspiring entrepreneurs get stuck at the “how do I find funding for my idea?” stage.
While securing capital may be a very important part of starting a business, it’s not the determining factor of entrepreneurship. Below, I will share five strategies to consider when you want to start a business but don’t have initial capital.
“Entrepreneurship is the pursuit of opportunity beyond the resources you currently control.”
-Professor Howard Stevenson, Harvard Business School
Last September, I attended a youth workshop on the topic “LIBERIA: Entrepreneurs with zero capital“. The training was organised by Ministry of Youth and Sports in partnership with the African Development Bank and covered several ways an entrepreneur could start a business without capital using examples of real entrepreneurs who had done it. It was conducted by AFFEED : African Foundation for Entrepreneurship and Economic Development an African Non Governmental Organization that promotes entrepreneurship development, provides human, technical and financial support for entrepreneurs, promotes good governance in African businesses, and work towards sustainable economic and social development in Africa. You can read more about them here: AFFEED : African Foundation for Entrepreneurship and Economic Development.
Also see pictures and testimonial from the workshop here: LIBERIA ZERO CAPITAL TRAINING IN PICS (3)
Since then, I’ve been very fascinated about this topic. I’ve spent a lot of time reading countless articles and studies to compile a list of easiest and most common ways that an entrepreneur could start a business without huge capital investment. I will share this list below.
In addition to researching the topic, I interviewed top Liberian Business Development Specialist, William R. Dennis on his experience working with Liberian entrepreneurs and to sort of validate the points on my list since he has vast experience with business development.
Before we get into that, here’s a brief introduction of Mr. William Reide Dennis, II (Mayfred)
William Dennis has over eight years of extensive experience in entrepreneurship and business development. He is a certified Ready4 Finance and Business Edge SME trainer from Foundation BiD and the International Finance Corporation (IFC) a World Bank Group. He also trained at the University of Twente in Entrepreneurship and Business Development and at the University of Tilburg in International Entrepreneurship. He has participated in several capacity development programs organised by MDF, Triodos Facet, ADB, EDN, WAIFEM, GTZ, IMF etc. around Africa.
He currently serves as the Director and National Coordinator of the Business Start-up Center (BSC) Monrovia, a certified business development service provider established as collaboration between the BiD Network, Association of Liberian Universities (ALU) and SPARK in 2009.
The BSC Monrovia organizes activities, and provides services to support job creation and poverty alleviation in Liberia. The activities organised to achieve these objectives are: Business Plan Competitions, Employ-ability Training, Business Skills Training, Business Development Services, and Matchmaking with investors, as well as Coaching, Mentoring, and Business Advocacy.
Over the course of his career he has both directly and indirectly trained, coached, mentored and supported over 2000 Liberian entrepreneurs across the 15 counties positioning his business as industry leader in the Business Development sector.
During our 30 minutes conversation I asked him three specific questions about starting and maintain a business in Liberia. Here’s what he had to say:
1. What has been some of the major challenges that you have experienced when providing business development services to entrepreneurs (start-ups and existing businesses) in Liberia?
“In my experience, access to finance is a key challenge for business development. There are some other external factors that Liberian entrepreneurs deal with. For instance access to markets, electricity, roads, and these are no different from the challenges entrepreneurs in other countries deal with. Just that Liberian entrepreneurs deal with it to a greater extent. Access to capacity development is another huge challenge Liberian business face. Most of them can’t afford to pay for business development services so they try to go through donor sponsored projects or programs. These programs cannot provide service to everyone so they select the best and then the rest are left behind and we cannot reach them”.
2. Let’s talk about finance: Is it possible to start a business without money?
I wouldn’t say without money. I would say you can start without a huge upfront capital investment. It’s possible to start a business with an amount under $500 USD. It’s a gradual process. Once An entrepreneur identifies a challenge he wants to solve, he must go ahead and identify the market. He has to do a lot of research about the product and how it can be sold. He can start by making and selling one product and then slowly building up his business from there. It all takes time and a commitment to the process.
3. What are some emerging sectors for new business creation?
The opportunities in Liberia are endless. But, I will limit it to two;1. Online selling – marketing, branding, retailing – are great business opportunities. A lot of businesses lack the capacity to create an online presence and reach more customers. Using that platform to sell has the potential to generate huge returns on investments. 2. Transportation – domestic and commercial. Domestic for picking and dropping passengers and commercial for transporting produce from the farms to the market. There is a huge transportation gap in the agriculture value chain that leads to inefficiency along the value chain. Having a business positioned to absorb that excess will improve the delivery time for the farmers and reduce the amount of produce that goes to waste every year because farmers can’t get their products to the market on time
Five strategies to consider when you want to start a business but have ZERO capital
As promised, here are the top five strategies to consider if you have ZERO capital but still want to start your business.
1. Identify the “big idea”
To start a business, you need the idea. What is the challenge you have identified? How do you intend to solve it?
Are you going to create a unique product or resell something someone else has made? Are you going to copy another business but do it in a way that adds more value to the customer?
It doesn’t matter what you are going to do as long as you decide what you are going to do. Chances are, your idea won’t be original. In fact, a lot of the world’s leading companies did not create a unique product or idea, they just figured out a way to beat their competition. So decide what the idea will be and focus on developing it.
2. Don’t quit your job
Business development takes time and money. If you are still toying with the idea of starting a business and you don’t have a fat saving, keep your job and develop the idea. Once you have a clear picture of what you want to do and how much it will cost to do it, you can save up or take a loan and slowly transition into the role of business owner.
Entrepreneurship is about taking calculated risks. Don’t just leap without looking.
3. Leverage your networks
The third thing that you could consider is leveraging your network. Find the cheapest way to market your product or service. Use word of mouth, Facebook, Instagram and any other cheap means to get the word out within your network. Let people know what you are selling and try to get them to share the information within their networks.
Your network can also be a good place to secure funding. I’ve tried this technique and it works. Once you are passionate about your idea and you develop it well, you will find someone willing to invest and support you. But you need to have a plan developed first.
4. Start as small as possible
Have you heard of the lean startup principle? This is when you start your business in the simplest way possible and with as little resources as possible. This is a scientific process of consistent feedback from prospective customers. Most times, we spend all our time planning and developing our ideas and never test it with the market. “Using the Lean Startup approach, companies can create order not chaos by providing tools to test a vision continuously.”
Once you have developed the idea and made a plan, consider creating a “Minimum Viable Product” for testing before making a huge investment.
So, the minimum viable product (MVP) is like the simplest version of the product you want to sell. The purpose of creating this product is to use it to generate feedback to guide your final product development. This is also like a pilot project. You use this time to do a detail market research to validate your idea and sort of come up with a conclusion on what should be done next. You might also identify challenges you initially overlooked.
5. Reinvest your profits
Reinvesting your profit is the easiest debt free way to build a revenue base. In the initial stages of the business, instead of investing in things the business can’t really afford or don’t necessarily need, try reinvesting every profit you make into the business. You can also decide not to pay yourself in the first year until the business can afford to pay you.
When you reinvest your profit, you avoid diluting the ownership of your business and you avoid getting in debt.
Starting a business is not easy, but if it’s what you really want to do then you should keep an open mind, find creative ways to secure funding and get your product or service out there. Don’t opt to do the easiest things, like registering the company name, instead spend time refining your production process.
Let me know what you think in the comment section below.