zero down payment
Nothing down
In business, the “we need money to make money” statement holds true to most of us. But for us bootstrapper, zero down is THE strategy for business funding.

Finding investors for your business start-up is challenging. To make matter worse, today’s economic turmoil limits our access to business funding. Some lucky start-ups could rake millions of dollar from investors. Some select few can even secure funding from angels. Unfortunately, for the rest of us, getting money to get your well-planned business start-up to set its foot is trivial.

Fortunately, entrepreneurs are well-known as those who are resourceful. For bootstrappers, “no down” is a lifestyle, if not a business strategy.

Do you really need money to make money?

I am blessed with family members who are generous enough to invest their money into my business. I am also blessed with an access to business loan from a bank. Unfortunately, things didn’t go so well.

When my business failed, I was pushed to go back to where I started. This time, with no money in my pocket, while investors are nowhere near. I was forced to be resourceful.

Entrepreneurs are becoming better if they are ‘forced’ to do things beyond the limit of the comfort zone. This was exactly what happened to me – I was enriched and fortified by my business failure, forcing me to get into another business venture – this time, online – with no money to invest with.

To cut long story short, I am a living proof that you don’t need money to make money. In fact, money has nothing to do with my online business start-up.

The power of nothing down: How to

With literally nothing to invest with, you have to rely on other people’s money (OPM.) And no, begging is not included in the nothing down strategy :)

I’m talking about taking bank loans and using credit cards.

I understand that this strategy of mine is not recommended, but that’s only if you don’t know what you are doing. In fact, don’t plunge yourself into using OPM for your business start-ups if you don’t know how money lending works and how interest rates are calculated.

Some entrepreneurs I know use unsecured (high interest) loans to fund their successful businesses’ initial stage. This is risky, but if you can ‘curb’ risks and control them well you can actually get funding from any sources available (not from loan sharks, though.)

So how I minimise my risks of not being able to return the money I lend (plus interests)?

Instead of getting money to get your business up and running, you should just go out and find business BEFORE you get any funding options. Even better, you should shoot for the stars – you should find business that will cost you nothing with no OPM, either.

One way to achieve this is by becoming a contractor (or a sub-contractor, if you will.)

Here’s an example from my case:

Firstly, I learn in forums (webmaster forums, that is) what people want and what kind of projects available. In forums, this usually presented with a “WTB” or want-to-buy in the forum threads’ titles. E.g. someone needs a website that looks and functions like a particular xyz.com.

Secondly, I then find services providers who can work on the projects – I seek for outsourcing partners in forums (such as Forums.DigitalPoint.com) and freelancer marketplaces (such as Freelancers.com.) I’ll start with posting something like, “[WTB] Someone to clone xyz.com”

Finally, I deal with the buyers and negotiate with the service providers.

Here’s the key (and the power) of nothing down: You should negotiate in a way that you will get at least 50% margin of the agreed project costs. E.g. if the agreed project cost is $1,000, you should seek service providers that are willing to work on the projects for less than $500.

I ask for 50% down payment to the buyers and will use the fund to pay service providers. This way, you will get at least $500 with no money coming out from your pocket. All you have to do right now is to ensure the service providers do their job well. Repeat and rinse :)

There you go – $500 with $0 investment. Interesting (and profitable) concept, isn’t it?

The projects don’t have to be related to site building. It can be anything. For larger projects, you might need OPM to ‘bridge’ the payment to work on the projects and/or to pay your service providers. This way, you can use your credit cards for the ‘bridging’ purposes. Again, you should fully understand how credit cards payment works (e.g. NEVER pay the minimums – pay the ‘borrowed’ amount in full before the due date.)

To sum – it’s a lie that start-ups need a huge capital to get going. You can bootstrap your way to entrepreneurial success with nothing down. The works involved is not much different – it’s all about the mindset, not how much money you have to start.

Ivan Widjaya
No money, no worries