If you have poor credit, you may be wondering how you could possibly feasibly start a business.
Don’t you need to borrow large sums of money to start your own company?
How are you supposed to come up with the money you need for tools, equipment, inventory, merchandise, staff, etc. if you don’t have the ability to take out a loan?
If you don’t have the ability to take out a business loan or get a line of credit, this is a really good question.
And in this post, you’re going to learn about starting a business with very poor credit, or maybe even zero credit.
The great thing about the modern business world is that the internet levels the playing field when it comes to starting small companies.
This doesn’t mean that you’ll be able to start any kind of business you could possibly want with zero credit. But it does mean that you have the opportunity to leverage the Internet to start a company with basically zero overhead.
And in this post, you’re going to learn how to do it.
Let’s dive in and get started.
1. Start A ‘Company Of One’
The first obstacle you’re going to run into if you don’t have any credit is a lack of funding.
In fact, this is the number one reason for why most small businesses fail.
You may not have much money to start a business with.
Some people may have a few thousand in cash put up in a savings account.
But this isn’t necessarily going to fund a new restaurant or give you the ability to start your own construction company.
So instead of focusing on creating a large-scale company that’s going to need massive startup capital, consider starting with the bare bones basics.
A ‘company of one’—with yourself, a computer, and the Internet as your primary resources.
Paul Jarvis wrote about this concept extensively in his book Company of One: Why Staying Small Is the Next Big Thing for Business.
Many companies nowadays start out this way.
Of course, you may need some skills to get started utilizing this method.
You may launch a blog and a website to start a consulting business, to develop apps, to help other companies market their products, etc.
But with the advent of the internet, it’s completely possible to start a company of one with almost zero startup capital coming out of the gate.
Of course, the downside to this type of startup is that it doesn’t feel quite as glorious as a big startup.
You may have to continue working a day job in the meantime, for example—and then work nights and evenings to build your business.
But if you have poor or no credit, this is absolutely one of the best ways to get started.
2. Create An Easily Scalable Product Or Service
As you build your ‘company of one,’ it’s also essential to create a scalable product or service.
In other words, you need to create a product or service that you can replicate easily.
For example, maybe you provide a marketing service that you bill out to the client for a certain amount.
Then, you can build teams and hire them for a percentage of those earnings to market those businesses for you.
At that point, it becomes an arbitrage model.
And the more clients you acquire, the more money you make.
You could also sell information products, apps, software, etc. You won’t need to ship or store physical products, or pay for manufacturing.
And yet, these products can be every bit as valuable, and can still sell for a high profit margin.
Plus, you can replicate them virtually and without limits—literally with the push of a button.
3. Look For A Model That Doesn’t Require Up-Front Capital
Deciding on a business model when you have zero capital is sometimes a bit of a challenge.
You might need to settle for something a bit less glamorous than your end goal.
Maybe your dream is to own a prestigious margarita bar someday.
Well, that type of business requires quite a bit of capital to start.
So instead, you can start a margarita blog.
Then, you can use affiliate marketing to make commissions for online sales of bar/margarita products that you review in your blog posts.
Eventually, you can scale this into an income that can help you to fund your actual restaurant.
Plus, you’ll already have a bunch of margarita fans built into your mailing list!
It may not be the start you envisioned for yourself, but it’s still a legitimate start with a lot of potential.
When you’re starting out small, it pays to be creative and think about these things in an ‘out of the box’ fashion.
4. As You Scale, Look For Alternative Ways To Fund Your Business
Eventually, you may get to the point where you can use multiple different methods to come up with the capital you need to expand and grow your business.
You can look for investors, build your credit and get business loans, use invoice factoring, or even partner with other business people to help you fund your unique product or service.
You can always work toward this, even if you start small.
Set big goals and have big dreams for the future.
Then, work toward them to achieve your vision.
There you have it.
4 tips for starting a business when you have poor credit or zero credit.
To be honest, it’s a great time to be an entrepreneur.
With the internet, a computer, and your own creativity, there’s very little that can hold you back.
The defining factor, of course, is how much work you’re willing to put into it.
Where there’s a will, there’s a way.
Now get out there and start that business.
You’ve got this.