Is it possible to start a business with an insignificant capital?

ShaneMurray

Very often I have a discussion with my friends about how much it takes to start a business. I'm inclined to the fact that it's quite possible to start with a small amount of money, but my friends assure me that all this is nothing more than fairy tales. What do you think, is it real to develop a startup, let's say, even with $200?

Ryan O'Bleness

With all of the free online tools available, and cheap domain hosting fees, I think it is definitely within the realm of possibility to start an online business with that amount of money. Though, it would be hard to do on a shoestring budget of that size, and would be a rare example.

You would need to implement a lot of grassroots marketing efforts that cost little to nothing to get the word out. With that said, you obviously will need a steady cash flow to grow, manage and maintain the business. To start, you would need to secure advertisers and affiliate marketers early, and somehow convince them to take a risk on your website even though you have no track record.  If your business has a physical workspace, there would be rent and overhead costs. Therefore I would say it's like easier to do online.

So, can you start a business with $200 in your pocket? Quite possibly. Could you maintain it? No, not likely. 

SPC

Indeed, I think you can, especially if you have a mainline job that pays the bills. Many service industries such as consulting do not require a lot of capital nor do online businesses.

Gregory101

If you think capital only means money then my answer would be definitely yes !!!

But in my opinion capital also comprises of your knowledge , time , idea and passion. You can start a business without money ( like : writing , agent,  teaching etc. ) but you can never successfully accomplish it if you don't know how to do it , or you fail to give it enough time with passion in your actions.

Helen Larsen

I agree with previous commentators, that everyone can start an online business almost for free. E.g. you can launch your own blog and make money from the affiliate links. Or provide some services or products, promoting yourself in social media channels.

PZagotti

I would say, depending on the kind of business you are starting, that access capital might be a bad thing.

Necessity is the mother of invention and when starting out, figuring out how to do more with less is part of the entrepreneurial experience.  I agree with Ryan that will all the free tools available online the barriers to starting most small businesses are nonexistent.

Now a lack of capital means that you will work harder to figure stuff out on your own and as a result doing things will take much longer.  But if this is a side business then taking a little more time at the beginning is not a bad thing.

When you have the privilege to run your business full time, then capital is extremely important. 

After all of this you might wonder why I said at the beginning that access to capital might be a bad thing.  If a new business owner takes a loan to start their business the entrepreneur will either be paying that loan back for years to come from their next job or filing bankruptcy if the business is not successful.  By bootstrapping the business, you limit you down side risk.

CurtisMLee

Your first option is to change your business model to demand fewer needs. For example, if you were planning on starting a company as a consultant or freelancer, you could reduce your “employee” expenses by being the sole employee at the start. Unless you need office space, you can work from home. You can even do your homework to find cheaper sources of supplies, or cut out entire product lines that are too expensive to produce at the outset.

There are a few expenses that you won’t be able to avoid, however. Licensing and legal fees will set you back even if you cut back on everything else. According to the SBA, many microbusinesses get started on less than $3,000, and home-based franchises can be started for as little as $1,000.

ShaneMurray

Guys, thanks for your answers. If I understand correctly, starting a business with a small capital is possible, but not preferable, and it's often difficult. Of course, the limited finance thwarts progress. This affects the volume of production, marketing budget, investment in innovation. Moreover, there is a threat from the side of large firms. Small businesses are more difficult to compete with large companies due to limited financial resources. And it's clear cause large corporations have the more popular brand, brand recognition and, in the end, the solid capital, which inspires more trust and respect among people.

Ryan O'Bleness

Here is a good piece from The Oracles team, detailing how to start a business with $100. 

https://goo.gl/CJrByU 

ShaneMurray

@"Ryan O'Bleness" That's great! Thank you so much. I just needed it. :)

JamesEChappell

> @ShaneMurray said:
> Guys, thanks for your answers. If I understand correctly, starting a business with a small capital is possible, but not preferable, and it's often difficult. Of course, the limited finance thwarts progress. This affects the volume of production, marketing budget, investment in innovation. Moreover, there is a threat from the side of large firms. Small businesses are more difficult to compete with large companies due to limited financial resources. And it's clear cause large corporations have the more popular brand, brand recognition and, in the end, the solid capital, which inspires more trust and respect among people.

That is not entirely true, you will surely have a great competition from large companies anyway. Some times you don't need a huge to capital to stand up to them, you just need a better innovative product. Just think every company started small (even Apple)
and all of them had great competitions.

Tom Adams

"Everything you can imagine is real" P.Picasso
So, why not? It all depends on your business. 

ShaneMurray

@JamesEChappell @Tom Adams
Sounds inspiring. Thanks a lot for your replies.

Tom Adams

@ShaneMurray you're welcome)

Sara Hughes

I know I'm a little late for this discussion, but I think it depends on the business you're starting, your skills and what you already know.  Also product vs. service can make a difference.

Jon Lee Writes

Of course you can... 

The question is really is your business idea good enough that you'll be able to start it with $200 and get enough sales or momentum to keep building. 

For $200 you're basically looking at a word press site accepting paypal, which could work if you have built a better mousetrap.

But rather than thinking about starting a business cheap, you might want to think about spending $200 to test if you even have a business people are interested in with a Facebook ad or something.