Startup Mzansi Guide: How to build a business with no money

Record numbers of people in South Africa continue to start their own business. According to the CIPC's Bizportal, SA business formations were just over 120,000.

People who start their own business come from all manner of backgrounds. And while some can use their own savings to start and get their new business off the ground, others have little or no money of their own. That need not be a big issue.

Can I start a business with no startup capital?

It is possible, but much will depend on what you plan to sell and how. If you need to buy materials, stock, machinery, tools, equipment or a vehicle, obviously, you’ll need some start-up cash. But if you’re a plumber, mechanic, chef, drain surgeon or hairdresser and already own the tools of your trade, starting your own business need not cost a lot.

Similarly, if you already own a laptop, even with very limited funds, it may be possible to start your own home-based content, marketing or PR agency or HR consultancy, accountancy firm or virtual PA business.

Which businesses can I start for little money?

Starting an online business can be quick, easy and cheap, especially if you sell via a marketplace website such as Takealot, Startup Mzansi Business, etc, in which case you won’t need to pay for your own website. You may be able to create your own e-commerce website for relatively little cost.

You could become a “dropshipping” business. Basically, you offer products online made or supplied by a third-party supplier. Once a customer makes a purchase from you, the third party supplier ships it to them directly, so you never have to buy stock or pay for storage space.

There are many service-based business that can be set up and operated at no or low cost. Examples include a dog-walking business, domestic cleaners, personal trainer, yoga instructor, guitar teacher, photographer, translator – the list goes on. You could sell cakes or other food items you make at home without having to fork out for anything other than ingredients.  

Save costs – start your business from home

Premises and associated costs can be significant. Having to pay such overheads can place you and your new business under much pressure. If you can set up and run your new business from your home, you’ll save lots of money and your business will be more likely to survive and become profitable. You may or may not decide to take on premises when you’re more established.

The key to successfully making money from home is to make sure you have dedicated space, which could be a spare room, garage or even garden shed. That may not be an option, of course. You may need to make do with a kitchen table, which is where many successful businesses have started. If you need to meet suppliers or customers, their premises or a local coffee shop will be fine.

How to not buy anything

If you don’t have any money, you literally cannot afford to buy anything for your new business. Get into that mindset. Buying things on your credit card when setting up your business can lead to serious debt issues later on, so don’t do it. Set yourself the challenge of finding alternatives to buying.

Firstly, make do with what you have. You don’t have to rush out and buy a new computer if you have one that works well enough. The idea of a swanky new office desk or latest smart phone might be appealing, but work with whatever you have.

Another good way to save money is to become a borrower – but there are risks.

What if the lender suddenly asks for the borrowed item back at an inconvenient time?

What if a borrowed item breaks or gets lost?

Can you afford to buy a replacement?

If you’re careful, borrowing can dramatically reduce your start-up costs.

Much depends on your skills, but you may be able to swap goods and services with others. For example, “I’ll build your wall if you make my website” or “I’ll give you some of the beer I make if you’ll take some product photographs for me”. With the right contacts, you could even negotiate some free space in someone else’s premises.

What if I really need to buy?

Don’t buy anything unless you really need it to start and run your business. Even if something only costs you R50 a week, a seemingly small sum, that’s R2600 a year.

If you really do need something, explore second-hand options first. You may find what you need on eBay for a fraction of the cost, while visiting a local auctioneers or charity shop can provide bargains. Just asking on social media can lead to getting stuff for free or cheap. Never be afraid to ask. 

If you need to buy new, shop around. If quality isn’t important, find the cheapest price. Where quality will affect your sales, find suppliers that offer best value. Negotiate firmly, but don’t push your luck too much. Learn to recognise when you’ve got a good deal. Leasing equipment is another option to avoid large upfront costs.

What about setting up a website?

The best DIY website-builder options potentially offer a way to save lots of money. Popular choices include Wix, Weebly, Squarespace, WordPress, Webnode and GoDaddy (there are others). You’ll have to pay a relatively small monthly fee for your website, but if you can build it yourself, you’ll save hundreds of rand for a basic website. Startup Mzansi offers a free website builder where you can builder your own website based on our templates for free.

If you ignore or deviate too much away from the templates such DIY options provide, you can end up with an amateurish eye-sore of a website that’s puts off customers. Stay close to the template and keep it simple.

Also online, there are a multitude of apps that enable you to create your own free business logo. Usually, you simply have to apply your name, colour and font choice to a design you like. Again, this can provide a significant saving. If you really do have an eye for design, you could have a stab at creating your own posters, leaflets and stationery on your PC. 

A few final words of advice

Reach out to free sources of reliable online and offline advice. It could save you a lot of money on professional fees and enable you to make good cost-saving choices. Commit to growing your own knowledge and skills significantly, because the more tasks you can take care of the cheaper it will be to launch and run your business.

Don’t recklessly cut corners or do anything illegal to save money – it really isn’t worth it. Don’t burden yourself with debt you cannot afford when starting your business, because it could leave you drowning and unable to get out of trouble.

Realise that pinching pennies too much can hinder performance or put off customers. You certainly need to be a bit cheeky if you want to save money when starting a business. If you don’t ask, you won’t get. You also need to be creative, resourceful and fully prepared to make sacrifices and do without. Pretty soon, the rewards could make it all worthwhile.

Sandile Shabangu

149 Startup Blog posts