Recently, I have been asked by an aspiring entrepreneur about "How to start a business with limited capital?" And here is my reply to him. i hope you will be able to gain some inspiration.

Dear Joshua,

Thank you for reaching out to us on our offline message. I am Andrew, co-Founder of E3Hubs. You have posted a question recently about “How to start a business with small capital”. Let me proceed to answer your question.

1. Starting a business with small capital is very common among entrepreneurs. The reason is simple, we are not born with silver spoons. Hence, we will have to make do with what we have. The big question is, what kind of business do we want to do? Is it capital intensive? Obviously, if a business is capital intensive, you might not be able to start it with your small capital. However, what if you partner with a few people to pool the capital together to start that capital intensive business? So it is still possible. What you need is a good business plan.
    
2. There are many opportunities to start a business with small capital. This is so with services-based businesses. A point to note is that I have started my businesses with no capital! How do I do that? I get my customers in first before I started my business. What we need is an enterprise registration or a business license from your local authority. A name card. A business address (mine was a home address), an email address (usually a Gmail) and I went around selling my services. My services were coaching entrepreneurs to startup and grow. So they pay me first. My customers were the initial contributors to my business. In other words, they gave me the capital.
    
3. Another way to look into starting a business with little capital is to ask ourselves 3 important questions – who and I, what I know and who I know. Doing business is about finding out what are the resources we can control. Usually, who am I, what I know and who I know are resources which you can control. With an inventory of controllable resources, ask yourself, what can I do with them? The who I know part is also very important because you are also able to tap into their resources and combine them with ours. That’s how you expand the body of resources and expand your capabilities of doing things. Once you took an inventory of resources that you have, ask yourself what kind of business ideas you could carry out.
    
4. Once you have identified the various business ideas that you can carry out, then move on to determine which is the best idea to carry out first. To achieve that, you will have 4 decision criteria – 1) Is it feasible to do? 2) Does it makes money? 3) Do I have to resources to do it? 4) Do I want to do it? Does it fuel my passion? If you tick all 4 boxes for your ideas, then think about attempting them first.

 

Remember, entrepreneurs are creators. They create something out of nothing. An entrepreneur harnesses resources from everywhere – people, capital, ideas, partners etc – to create business opportunities. Hence with creativity and innovativeness, you should be able to find a business idea that you can carry out based on the limited capital that you have. Capital is just a subset of doing a business. There are other elements that are more important than just capital. To access capital, there are a few ways to look – 1) Own money,  2) Other People’s Money (family, friends and fools), 3) Investors, 4) Government Grants, 5) Banks and Credit Cooperatives and 6) Customers. 

 

I like No. 6. I have always started my business with little or no capital. Most times, I leverage on partners or barter trade with others to get a job done. Think about what I have mentioned above and do let me know what your next course of action will be.

 

At E3Hubs, we take pride in helping our entrepreneurs to start and grow together. As a person who has started with zero capital, I usually encourage my entrepreneurs to start with limited capital, bootstrap the business, get the customers in, get traction and then only get the investors in. The goal is to make the startup investable and usually, it will take about 12 to 18 months for a startup to be investable. Don't get me wrong. You can still get investors into your startup but you will not have the bargaining power to demand what you want. More often, you will sell out more shares in exchange for their investment. That is why I always tell my entrepreneurs that if they cannot get customers to pay, it will be difficult to stay in the game. Customers paying for products or services is a good form of market validation.

 

We run programs that will take our entrepreneurs 0 to 1. Our flagship program, Chaos Leadership Program helps our startups to examine their business fundamentals, growth fundamentals, clarity in their business pathways and finally, focused execution.to reach their intended milestones. If you want to know more about Chaos Leadership Program, please contact me at andwtf@e3hubs.com

 

If you want to be part of a big family of entrepreneurs, do sign up for our free membership in the Global Entrepreneurs Acceleration Network (GEA-N) on www.gea-n.com.

 

tt>I hope I have answered your question well. Do connect with me if you want to know more on how to get started with limited capital.

Regards,
Andrew