I recently did an interview about how to build a business up from scratch with little or no money and I used my own story as an example.
Here are the steps that I took.
This process helped me build my business with $0 in startup capital.
Hopefully you can learn from my experience and make it even better.
Step 1: Moonlight Until You Find Something That Works
I’m a big believer in not spending until I’m earning so I started my company while working at a venture capital firm in Toronto. I used my site to drive traffic, expose myself as an expert, and drive leads for the venture capital firm. I was driving thousands of people to my website and began to wonder if there was a way to monetize that traffic beyond lead generation for the venture capital company.
I found out about Google AdSense and put it up on the site as an additional revenue generator. In my first month (January 2005), I made $8.38 – not much to write home about.
Step 2: Tweak, Tweak, Tweak
Too many entrepreneurs jump full in with no plan and no proof that your idea will work. It’s always better to tweak the concept while you already have some sort of stability in your income. I wasn’t about to go full time making $8.38 a month.
My next step was to learn as much as I could about how to better optimize my ads and how to drive more traffic to my site. I read every ebook, blog, newspaper article, and website that I could get my hands on. There were a lot fewer resources than there are today. I learned as much as I could in the extra time I had and implemented the ideas I learned. Slowly I started making more and more money.
Step 3: Go Full Time
I looked at how much I was spending on my apartment, food, entertainment, etc and once I started to hit that revenue number with my website, I jumped ship and did my business full time. It wasn’t a lavish lifestyle by any stretch but I wouldn’t have to worry about paying my monthly bills. I knew that if I was able to build a site in my spare time that could support my entire lifestyle, then if I gave it a full go, I would be able to do much much more!
Step 4: Get Free Help
As your typical entrepreneur I wanted to grow very quickly and took on too many responsibilities. I was doing manual data entry when I should have been doing more value-add work. But that manual work still needed to get done. The solution? Get free interns. I started with foreign language interns. They were basically university students who came to Canada on a student visa for work experience but they couldn’t get paid for the work. I couldn’t give them too many communications projects because English was their second language but I was able to unload a lot of the work off of my plate.
The next free help I got was from high school students who were on a co-op term. I was able to give them more tasks where they were able to connect with partners and customers because they were fluent in English. They sounded very young on the phone so they usually stuck with email.
Step 5: Hire Part Time Help
At some point you’re going to need more skilled labor than the free interns. They were a stepping stone to help you grow and take some of the work off of your plate but you’ll eventually get to the stage where you need people who don’t need as much hand-holding. But you don’t have enough money coming in to support both you and them. The solution? Hire part time workers. The first guy I hired was for one hour per day to update my database. He worked for me for five hours per week which was much more easy to manage. I wasn’t going broke and I got a skilled worker to help me grow my business. It wasn’t as fast as I would have liked, but it was growing nonetheless.
I hired people to create code for my website, write articles, do marketing projects, edit content, sell advertising… almost anything you can think of. But they were all part time to start. I had an entire organization running with people working only a couple of hours per day. The good thing was that they worked every day… so every day we made progress forward. I found people using elance as well as hired friends and family who wanted to help as well as make an extra pay check. At one point I had eight part time people working for me.
Step 6: Hire Full Time Help
Just like you eventually outgrow your interns, you will also eventually outgrow your part time help. At some point you’ll realize that it’s too much work to co-ordinate all the various part time staff and you need more from them. Some may be able to step into full time roles while others will not be able to commit to more hours because of the other jobs they have. You’ll likely end up having less workers but will get more work done. For example, when I hired my marketing manager, he was originally one of the guys working for me on a part time basis. By hiring him I ended up not needing four other people who were working with me in marketing related positions part time.
Step 7: Figure Out Your Job Description
This is where I’m at now. What is it that I love to do and who do I need to hire to take over the jobs that I don’t want to do anymore? In January I brought on two new full time people to free up more of my time. When you’re first starting a business you end up wearing all the hats but as you grow I believe the whole point of entrepreneurship is to do something you love doing. If you have the opportunity to design the perfect job, why not go for it?
I would love to hear your thoughts on how you’ve built your business up or how you plan to do it if you had a $0 budget.
Matthew Toren is an Award Winning Author, Serial Entrepreneur, and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Adam. Matthew is co-author of the newly released book:Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs.
Thanks for the great article. The internet provides a lot of opportunity, especially in these economically trying times. I’m looking forward to putting this advice to use in my own online projects.
This is a great article. It should help, since I just sent in my “article of organization” form + fee for an LLC in web development.
Everything in this post is true. I knew from day 1 that I wanted to start a website design company, but it took me a good two years up to now to discover exactly what works and how to go about it. And during the last year or so I have tweaked so much of my business and working prospective that I feel like it has finally taken the correct shape.
I will refer to these tips for the rest of my progress. Thank you for everything!
The value of free services on the web is amazing. I have no budget right now but have managed to piece together a business with all the free services and apps on the web. It’s not my perfect model but it has worked great for testing and experimenting.
Now I have a clearer view of my goals and where I can take my business. Still no budget but my confidence has soared that when I do want to make a move and invest money I have a solid plan behind it. Not to mention a tribe of people (small for now) but supporters nonetheless.
Wow step 4 is great. I never realized this opportunity with co-op students and foreign students.
This is a great win win situation for both parties.
Thank you for this post, it had some stuff I hadn’t even thought of, we will definitely be integrating some of this info into our growth plans.
I can’t tell you how we have built our business from $0 because it isn’t built yet, but I can tell you how we are currently building it with $0. That’s exactly what we’re doing on our blog right now is documenting how we are building our business from the ground up with no VC money.
I have no thoughts for you to hear from me, you have just contributed to my thoughts, WOW! this is a great post. Thanks.
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Hi, great list. Thanks for compiling.
I’ve worked with startups for years, normally being one of the semi-free, semi-full time people that join early and work my butt off to get it off the ground.
This time last year, I joined forces with PhilMorle, my old tech colleague at Kazaa, to start a company that could help multiple startups by working part-time with them. We’re intentionally not making it like a consulting firm. More like a team of people who join a number of teams at once to help the founders get the job done.
Last year the six of us worked with more than 30 startups part time and loved it. One of the big benefits was the ‘cross-pollenation’ that we hoped would happen. All the startups shared and learned from each other.
Anyway, looking forward to another big year, since I think it’s a great time to start a new business. It’s not an easy space, with a lot of work and low chance of success, but I assume that many people, like me, enjoy the work so much that we wouldn’t have it any other way.
Cheers.
Nice post, thanks for the advice!
Thanks for the article Evan.
I’m guessing when you observed a total monthly adsense revenue of $8.38 you were not particularly thrilled. Who could blame you? Was adsense the only form of monetisation option that you used?
I’m also interested, what was the next month’s adsense revenue like?
Re: step 7, I think you have really stumbled upon something here. Creating your own job description is a compelling concept. I guess you just have to be patient enough to be generating enough revenue to be able to outsource your less desirable jobs.
The concept is genius though.
Dave,
thrillofenterprise.blogspot.com
[...] This young caterer realized early on that it doesn’t take money to make money. And in his article, 7 Steps to Build a Startup from Scratch with No Money, Evan Carmichael proves it. He walks step by step through his process of starting his business while working for a venture capital firm to hiring full time employees. [...]
Great article. Making smart business decisions one step at a time. I think I might try it out.
[...] 7 Steps To Build A Startup From Scratch With No Money | YoungEntrepreneur.com Blog: What it says. [...]
Nice read. I’m actually dealing with that stage where you “waer all the hats” and trying to figure out which ones I should let go, to who, and how much to spend on it? My site makes no revenue yet (or very little). Is time to do some serious SEO and linking. I hope it works out and come back with some own suggestions by the end of 2009!
Fantastic article. The part I find hardest is jumping ship. I break into cold sweats just thinking about giving up a six figure salary. Whenever I start thinking of just doing it I look at the family and all of the things they need, and I just chicken out.
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[...] Last week I wrote about the startup of my most recent business (7 Steps To Build A Startup From Scratch With No Money) and it received a number of comments so I thought I would expand on Step 1 from the post and talk about 5 sure-fire ways to know if your business will work. [...]
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Nice article, i agree that AdSense is not enough for a living
Great article and very useful tools.
I’m starting from scratch, and like you I have faith in myself, entepreneurship is absolutely the best when you want t be your own boss, keep up the good work!!!
This is a good inspiration for anyone trying to start out online. It is not easy but it can be done!
Fantastic article! Where were you a year ago? I wasn’t careful like you. And I have not been careful many many times be-bopping between jobs and failed business ventures. I left an amazing paying job to go back into self-employment last jan. This time and for the first time online. I picked the wrong template website company and found out after how limited it was and ugly which is bad for conversion. Just got it redesigned and making some major changes again in next few weeks. Spent the last year ‘figuring things out’. What I didn’t spend getting a formal education has been spent on my entrepreneurial seizures (as coined in Michael Gerber’s E-Myth Revisited). Should have stayed at the job for another year and tweak everything in cracks of time. Wanted too much, too fast and now constantly playing catch up in different areas of my life. They should teach this stuff in highschool.
Some fine advice here. My partner and I took a similar strategy. Still not live but we took it as far as we could while doing the day jobs. All of our business arrangements are in place and the business model has been honed through a year (plus) of back-and-forth, listening to everyone who’ll talk to us, even a survey. Now to complete the build.
And maybe pick up some interns. Thanks for the tips.
Interesting concept…and presented well. I’m also in the process of doing the same but no luck yet…Could you guide me in getting the goal soon? I liked the idea of picking the interns…
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Thanks for great article. Very helpful. You definitely can find free information on how to start a business from scratch. I can across a great web site that has been endorsed by a number of government agencies, including Secretaries of States. The web site has a free 60 some page entrepreneur guide that I downloaded. Filled with awesome information as well, include free intel. I also found a legitimate grant product offered by a grant attorney which is also recommended by government agencies. Check it out.
Thanks again for the above article. Very helpful.
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Much of the success in business is the intangible element of education and experience. One source of free help is S.C.O.R.E (Senior Core of Retired Executives), a service of the SBA. See http://www.captureprofits.com/blog for more free education.
If you ever want to hear a reader’s feedback
, I rate this article for 4/5. Decent info, but I have to go to that damn google to find the missed pieces. Thanks, anyway!
What a good read! I started a media technology blog at startupsnigeria.com about a year now and I’m in between Step 3 and 5 now.
Great read thanks! I have been given the advice not to use Google Ad Sense and instead have 100% sponsored advertising. Given the $8.38 profit would you recommend this as well or do you continue to utilize Google Ads?
I had been thinkin abt starting something from scratch but what isn’t possible at this point is the go full time bit… soon I am sure this can be addressed too.
Nice article. thanks!!
Nice tips, really gets one thinking
To say this post is excellent would be an understatement. I actually started my business from the scratch in 2007 with virtually nothing in my pocket, but step 1 in my case came as a result of some freelance work I had done in the previous year.
When I decided to go full-time, the bulk of my client-base was formed by the very same people whom I rendered these services to, the same people who helped “spread the word” in the end.
For step 4, instead of getting free help, I setup a sort of affiliate system, where interested parties would help secure deals for a % commission (which is actually what has sustained the business so far I must add)
I also feel it is extremely important to have someone “on-board” in a managerial position, who shares your overall vision/philosophy.
I saw this post on Adii’s site some time ago, and I share the opinion that it is of extreme importance that you surround yourself with the “right” people.
Excellent post once again. Just gave me a new url for my bookmarks.
Nice Article, Makes You want to start straight away.
Great advise. I started business before. It’s best to have a mentor
Great post! I found it really helpful. I’m in the process of starting my own marketing company. I’m definitely going to institute some of you steps into the way I structure growth at my company.
Thanks!
Ryan
great article
I am currently going through the same phase as you. I am doing the research work right now.
You have presented the article really well. It is very obvious that you have been writing content because the article has a very good flow.
I have planned the same thing that once I start to generate a revenue from advertising I would go on to give away some of the tedious responsibilities as either parttime or full time jobs.
Thank you, the article was very encouraging!
Great advise. I started business before. It’s best to have a mentor
No Luck for me on ad sense via my blog http://www.asimkh.blogspot.com
Have you considered mentoring…or doing an e-zine or newsletter to help other aspiring entrepreneurs. I have my product, business plan, ad copy, some start up capital and I am ready to go, but really do not know exactly where to start. Fear keeps many of us from progressing and I think you have the credibility to get us through our fears.
thanks for an insight into setting up a business. Just wanted to know what kind of revenues and margins should you hit before you break away from your day job and take on this full time ….
thanks
A very to-the-point post. I am about to finish my on-line MBA Entrepreneurial class and liked the way you outlined your progress. Thank you for your insights and I wish you well.
Gary
One thing we found that worked when our company started is find people like attorneys, accountants, pc repair companies, people that own office space, etc.. and start bartering services. As long as you have a product or service they can use it will benefit both of you.
That’s an awesome post!….I didn’t start my business off with $0 but I built it with very little money. I took $510 out of my credit card to start a custom t-shirt printing service out of my garage and now its making me over 4 to 5 grand a month, its not much but at least its a start. I am just happy I was able to start my OWN business with such little money. Awesome post!
Great and helpful post!
I have written an article which is related to this one. It’s a bit more focused on qualification and success criteria for startup entrepreneurs: ’11 Ingredients for Successful Entrepreneurs’. Please see: http://tinyurl.com/3a3hb66
Warm regards from Sydney,
Patrick
I am in a similar situation so it is great to hear from someone who has been there.
Learning is a every important tool for an Entrepreneur because I believe they transform their learning into actual implementation which make them better and better.
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