Is it possible to start a business without money or collateral?

Anything is possible and most companies were started from someone’s ideas written down on paper and financed by those who saw merit in the plan. Still, realism is important. This depends a lot on the specifics of the business. Some businesses are relatively easy to start without start-up funds, some virtually impossible.

What kind of business can you start without existing funding?

I think you need to match your ideas to reality. Millions of service businesses start without money or collateral. These tend to be consultants, graphic artists, accountants, and other professionals. You have a skill that other people need, you have potential customers, take a job, and get started. Twenty years ago I started my business plan consulting business without money or collateral, just a skill, contacts, and the will to do it. You probably know several people who have done the same.

On the other hand, some businesses just don’t happen without start-up money. For example, you may want to develop and produce some electronic item that the world needs, but for that business you’ll need money for designers, software engineers, hardware engineers, prototypes, testing, packaging, and lots of other start-up costs.

Even on a smaller scale, few restaurants or retail stores start up without money to pay in advance for the location, fixtures and furnishings, signage, and so on. In these cases, you don’t necessarily have to have the money and collateral yourself, because for a good business the idea is that you raise the money from other people who want to participate in the upside of the investment.

That’s what Bplans is about—developing the business plan and raising money.

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry.