The biggest thing holding most people back from starting their own business is money. But the truth is, you don’t have to have a lot of money to start a business.
“If I get one more stinking, whining email about how impossible it is to start a business without any money, I am going to explode!” entrepreneur Mike Michalowicz wrote in his book, “The Toilet Paper Entrepreneur.”
In fact, Michalowicz argues that having the money could actually be bad when you’re starting a business.
“The lack of money is actually advantageous,” he said. “I’ve seen better businesses start off with no money than those with a lot of money. If you have no money, it forces you start asking better questions, which leads you to better answers.”
“If you have the ability to send me an email, you clearly have access to a computer or cell phone — more than enough tools to get started,” he wrote in the book.
In fact, there are many businesses you can start for under $5,000. Buying a franchise isn't one of them: Most fast-food franchises cost $100,000 or more to start and with some, you need at least half of that in cash.
Consider the story of Stewart Vernon of Macon, Georgia, who used a few thousand dollars he’d saved up in college to buy a truck and some chemicals , and opened a pool-cleaning business. Every year for the first four years he doubled his revenue; he became a millionaire by 25. He has now turned the business into a franchise.
Or, the story of Dave Petrillo and Dave Jackson, two twenty-something engineers who have been friends since childhood, who invented Coffee Joulies, stainless steel beans that instantly cool down your coffee and then keep it hot for up to five hours. They didn’t have a lot of money to start their business, so they bought some supplies and made prototypes in Petrillo’s parents’ basement and then put their product on Kickstarter.com, a grassroots-fundraising site. They set a goal of raising about $9,000 . The product was such a hit, they made over $300,000 and recently moved to Oneida, NY, where they’ve contracted an old silverware factory to crank out Coffee Joulies to meet the booming demand.
Michalowicz says you can start just about any business for under $5,000.
“I would even argue you could start your own airline for under $5,000! People might say, ‘A jet costs $50 million, no way!’ but maybe you start out teaching flying lessons or opening a business that caters to the airline industry, then build up your business until you have enough to buy that first plane.”
Whether you’re selling products or services, your biggest expenses will be space and salaries, said Michalowicz, who learned the hard way about blowing too much money too soon . He picked up a few tips for saving money along the way. For example, redirecting phone numbers. He thumbed through the phone book and called the number of every competitor. If any were disconnected, he would call the phone company and ask for that number.
“I had no money to advertise but I thought, ‘I need my phone ringing now!’” he said.
And, when he needed an attorney but had no money to hire one, he contacted a business-law professor and offered to allow the class to use his business as a case study , in exchange for the students drafting his legal work and having the professor look them over to make sure they were done properly.
Jill Bliss, who sells posters and stationery online and in stores, has her own money-saving strategy: Recycling. Whatever doesn’t sell, she recycles and turns into something else.
Feeling inspired? Here are 10 businesses you can start for under $5,000.
By Cindy Perman26 May 2011