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How to Start a Startup With Zero Capital

How to Start a Startup With Zero Capital

Startups do not need capital. I repeat, startups do NOT need capital. They DO, however, need leadership, people and processes.

Making a successful startup with zero capital can be broken down into five steps:

    1. Prove your Model
    2. Gain Traction
    3. Build Your Team
    4. Create Processes
    5. Test and Refine

Proving Your Model

If you are going into a startup business. It will be essential that you have a workable model. Whether you are in a service or product based industry it is pertinent that you have a workable model that is selling something which people are willing to pay for.  It will also be important that you are able to clearly portray the value of this model and how it differentiates itself from the other models that already exist.

You do not need a large team to prove your model. Instead, you can start on a small-scale and prove it yourself. For example, if you want to start a coffee shop you do not need to find a rental space and sign up for a 3 year lease. Instead, you can buy a cart (get your licensing) and sell coffee at the local farmers market. The power of proving your model on a small-scale is that you are able to do a few essential things right away:

  • Gain customer feedback
  • Improve processes faster
  • Make a profit since day 1

Gaining Traction

Gaining traction is difficult…very difficult. Often times, it can take months before you start gaining traction. While you are in the process of gaining traction your number one goal should be acquiring customer feedback. The faster you understand what your customer wants the quicker you can service them.

Be ready to pivot. Good ideas are easy. Unfortunately, they come and go like the wind. The key is finding an idea someone is willing to pay for. More importantly, you must over-deliver. Traction can be that simple. If you can over-deliver someone’s need you have proven your model and have a working idea. But, how do your create the profit…

*tip: Leverage your Personal Network

Creating Processes

Processes generate profit. Your most valuable asset when you are in bootstrap mode is your time.  It is essential that you create processes that not only maximize your efficiency, but also minimize the time you have to spend in non-essential categories. It comes down to opportunity cost and expertise. If you are not a writer creating all the content for your website might not be the best usage of your time. Instead, hire a writer at the local university. Pay them by the word and watch your processes begin to form. Simply create a google doc, create a content calendar.  Let writers write. You have better things to do. This principle applies in a variety of other areas: data entry, sales, account management, etc. It can all be optimized through processes.

Refine and Test

Your business is never good enough. Our business is barely past the point of being presentable. This does not mean we aren’t turning a profit or that your business is not profitable. But if you are only judging your business based off of profit you are missing essential metrics for growth. Are you testing what is driving your profit? If you do not understand what is driving your profit how could you even think about maximizing it? Because of this, we constantly test everything. Create a baseline. Introduce something new to your growth model and see how it affects your profit.

For example, if you have a sales team have them track their hours for a whole week. Anything and everything. Have them record it. Then, look at where the time is being spent and what they did. In the next weeks have them spend their time in a different area or leverage a different technique and test the result. By creating different models where you hold one constant, you can test any and everything. With a test everything mentality, you can create a startup with zero capital that is profitable from the start.

With an organic, profitable growth model, raising capital will be the least of your worries 🙂