No Money Heads Up
We started with nothing, he had 4 jobs to keep me racing at one time and I slept on the couch. We dreamt of doing something, something so far out of reach, becoming an F1 driver. For a family with no money, we may have looked and sounded crazy. People would laugh at us, call us names, joke about us but we kept our heads. Heads Up Money introduces economic theories to everyday life for young adults. From the pennies in our pocket to the global financial boom, Heads Up Money puts theory into practice and explains the important issues surrounding all areas of economics including the market, supply and demand, currencies, spending and saving. Heads Up Money introduces economic theories to everyday life for young adults. From the pennies in our pocket to the global financial boom, Heads Up Money puts theory into practice and explains the important issues surrounding all areas of economics including the market, supply and demand, currencies, spending and saving. If you don't have enough money to pay for three employees, there still might be a way to make it work. Here are some creative ways to compensate your employees during the startup stage: Hire stay. Mp3 Link: No money heads up everyone is solid.
If you’re like millions of Americans, you dream of starting your own business. But of course, there are dozens of obstacles that may keep you from actually doing that. You might not have enough motivation, for example, or time to actually see the work through; or you might not even have a solid idea to begin with -- yet.
Related: The 10 Best New-Age Business Ideas You Haven't Heard About Yet
But where most people get stopped cold is their realization that it takes money to start a business -- money they don’t have.
Still, consider: There are loans, grants, and other fundraising options, like crowdfunding, available to get you what you need; so money is not a good excuse not to start a business. And, beyond that, there are certain types of businesses you can start with almost no cash.
What it takes to start a business
Your first step is to explore what it takes to formally “start” a business, and which of those items cost money.
- Planning. You’ll need to come up with a business plan and financial model, of course, but you can do this on your own, for free.
- Business license. If you’re planning on creating a partnership, LLC or corporation, you’ll need to file some paperwork -- but it probably won’t cost you more than a few hundred dollars, depending on what licensing you need. The Small Business Administration has plenty of resources to help you figure out what you need, how to obtain it and how much it will cost.
- A domain name. You’ll need to invest in your online brand early on; while I suggest going as professional as possible, you could also use a bare-bones approach to launch, if yours is a minimum viable product. Often, a catchy domain name is all you need to define your brand at the start, and one can be bought for as little as $10 (if you can find one that isn’t taken!). I use GoDaddy to buy domains.
- A website. Website builders these days are free and intuitive to use. You won't expend anything but time to build your first site. I recommend starting simple with a widely-used website platform, like Wordpress or Wix.
- Marketing. While marketing has a reputation for being very expensive, there are actually a ton of really effective tactics that can be performed with only an investment of your time. Social media marketing, SEO and content marketing all fit within this category -- and, honestly, those are really all you need. Entrepreneur has a great selection of how-to books and online courses that cover this subject.
- Equipment. Equipment, offices and other tangible assets are cash killers, but not all businesses need them. Some businesses don’t require any of these things, as I’ll explain shortly.
- Products. Finally, all businesses need to sell something, which usually means some up-front investing. However, many services can be performed with an investment of time rather than money.
Types of businesses to start
So, which types of businesses can be started without a heavy financial burden in any of the above areas? Read on to find out.
Business idea: Content provider
Sites like Fiverr offer a great opportunity for writers, editors, photographers, artists and videomakers to book gigs from businesses with an assortment of content needs. The amount of money one can generate will vary greatly on a person's drive and talent. Speaking with Entrepreneur, copywriter Alexandra Fasulo explained that she began by booking small projects for $5 a pop, and within two years, built a reputation and customer base that has her earning six figures a year.
Related: 9 Ways These People Make Money at Home With Nothing But Their Laptops
Business idea: Personal creations
First off, there are personal creations, like arts and crafts. For example, if you’re a painter, you could sell your works of art with an investment of nothing more than art supplies and your own time. Platforms like Etsy, eBay and Amazon cater to creators and make it easy to turn a profit from your work.
Related: 101 Businesses You Can Start With Less Than $100
Business idea: In-home services
Services don’t cost you any money up-front because they’re intangible goods. And if you’re working in people’s own homes or neighborhoods, you won’t need a physical headquarters for your business. For example, you could start a babysitting service, a dog-walking or pet-sitting service or something like landscaping or snow-plowing.
Business idea: Repair or skill-based services
If you have a specific skill, you could use your skilled labor as the main revenue driver for your business. For example, if you’re a handyman, you could cater to homeowners who don’t know much about home repairs.
Just like in-home services, these types of gigs don’t require you to have a physical establishment and don’t require you to invest in anything up-front, except the tools or equipment you’re going to need for the job, which will vary in cost.
Learn about opening a Handyman Connection franchise here.
Business idea: Resale
The idea behind resale is simple: You acquire products and sell them to other people. You can use dropshipping or wholesaling to acquire these goods. With dropshipping, you’ll ship directly from the manufacturer (and turn a lower profit), but you’ll need almost no startup cash. With wholesaling, you’ll need more money and space up-front, but you’ll end up with more control and more money.
Related: 6 Steps to Building a Successful Online Drop Shipping Business
Business idea: Consulting
Many workers think about becoming entrepreneurs only after getting several years of professional experience under their belt. Think about the industry you’re in, and how much you’ve been able to learn in that time. Up-and-coming professionals, or startup business owners will likely be glad to pay you for your expertise. Consulting is a service that costs only time to produce but can be highly valuable as a career opportunity.
Business idea: Micropreneurship
Of course, you could also piece together your own miniature business through micropreneurship and shared-economy opportunities. For example, you could drive for a service like Uber, or rent your home out through AirBnB or find similar services that make use of what you’ve already got.
After you get your business started and start earning revenue, your lack of startup capital will become less of a problem. You can reap the profits from your venture and reinvest them, or use them to start an even bigger business.
Related: 12 Low-Cost Business Ideas for Introverts
Hopefully, you now realize that you don’t need a lot of up-front money to start a business. In fact, you can start one for almost nothing. You just need to know what types of businesses work best in that model.
No Money Heads Up Emoji
Q: I need to hire three employees to help get my business started, but I don't have enough financing to pay the salaries for all three. Should I try to raise more money before hiring anyone or should I hire just one employee and hope that I can make it work with limited resources?
A: Every entrepreneur faces the question of how to pay employees during the startup stage when money is tight and the business has yet to prove itself.
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You'll be able to determine the right answer to your question by understanding the nature of your business and your appetite for risk. If your business growth is best executed in small steps, your staffing strategy should be very different than if your business needs financing in large portions. For example, if your business is a restaurant, it would be foolish to try to launch it without adequate staff and equipment. Alternatively, a one-man army could be the best way to start an import-export business or consulting practice.
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If you're convinced your business needs three employees to get off the ground, you shouldn't launch it until you can hire all three. This is a surefire way to increase the possibility that your business will fail due to poor execution. If you don't have enough money to pay for three employees, there still might be a way to make it work. Here are some creative ways to compensate your employees during the startup stage:
- Hire stay-at-home moms and dads. Part-time employees, particularly stay-at-home moms and dads, are a secret weapon for startups. When my company first launched, we advertised for 'flex time' employees in local papers and were surprised by the number of highly qualified applicants we received. For less than half the cost of full-time staff, it's possible to attract experienced employees to your company. If you plan to hire a stay-at-home mom or dad to work at your company, be wary of assigning them critical time-sensitive projects. Keep in mind that if you're not paying them enough to cover adequate child care, they'll be unable to prioritize business meetings over personal meetings if they have a sick child or family situation to deal with.
- Defer compensation. One of the most common ways that cash-strapped entrepreneurs hire employees is by convincing them to accept deferred or delayed compensation. There are different ways to do it: a deferred cash bonus until the business generates a certain amount of revenue; an increased salary when the employee hits performance milestones; or back-pay provided when the business becomes profitable. I recommend offering an increased salary rather than a cash bonus or back-pay because one-time lump sum payments tend to offer short-lived gratification and tend to give you less bang for the buck. In addition, employees feel more pride when their salary is permanently increased due to business progress or personal achievement.
If you choose to offer deferred compensation, it's very important to consult an attorney about how to write the offer letter for the employee. For example, even using the term 'deferred compensation' (as opposed to 'bonus payment' or 'performance incentive') can create a binding liability for your company. This is one of the areas where spending $200 for an attorney to provide you with a sample offer letter could save you thousands later.
- Use equity and stock options. Another alternative is to offer employees equity grants or stock options instead of cash. This is only a viable alternative for companies that have realistic prospects for liquidity; in other words, don't offer stock options if you don't think they'll be worth anything. Most companies are never sold and never have an IPO, so it's unlikely that stock options are a worthwhile compensation tool.
Nevertheless, stock options tend to motivate employees more than cash bonuses at the startup stage. The cocktail party crowd has romanticized stock options, and employees still find them appealing, even if they're unsure about their true value. My advice is to avoid stock options (and the legal costs of setting them up) unless you genuinely believe they'll be valuable one day.
- Employ interns and volunteers. Hiring unpaid staff is an obvious solution for startups but one that's often overlooked. Colleges and universities are teeming with bright young workers willing to work part time or full time during vacations to gain experience. Just posting an internship announcement at your local college will draw applicants.
It takes effort to set up a win-win situation for both intern and employer, however. It's important to remember that interns are not like part-time employees who are primarily interested in a paycheck: You can't expect to give them menial work for the duration of their internship. One way to motivate interns is to ask them to list their learning objectives for the internship. Have monthly meetings with them to track how well they're doing on reaching these objectives. Then even doing menial work becomes tolerable if it's put in context.
- Focus on revenue. As any entrepreneur will tell you, the best way to pay for three employees when you only have the financial resources to hire one is to generate more revenue. The first of the three employees you hire should be the one that will get you closest to generating sales so you can afford to hire the other two. It's never too early to start selling-or pre-selling-your product to get funds in the door.