The key to a building a business without losing your life savings is to make sure you choose the right type of business to start.
Many people want to run their own business, but most never take the leap because they assume they need a lot of money to get started. That's a shame because you don't have to spend a lot of money to build a successful business. Here are three examples of how you can do just that.
1. Build an events-based business. Running any type of event–classes, clinics, conferences, seminars, races, and so on–is a great way to build a profitable business for cheap.
This is because everyone is used to paying for tickets to an event beforehand. This means you get paid upfront and you can use the money you make from ticket sales to pay for the event itself. If you don't make enough, then refund everyone's money and try again.
Here's a real example. Tough Mudder is a 10- to 12-mile race where contestants climb over obstacles, jump over fire pits, and splash through the mud and muck. It's an alternative to triathlons and marathons.
The founders, Will Dean and Guy Livingstone, decided to promote the first event using Facebook ads. The race sold out in 35 days. In total, 4,500 tickets were sold for $100 each before the event was ever held.
Two years later, Tough Mudder was a $70 million business.
Similar to Tough Mudder, you could use a platform like Facebook to get your message out to the world ... or you could pair up with local organizations, business, or clubs to spread the word.
2. Offer freelancing, coaching, or consulting services. Starting a freelancing, coaching, or consulting service is another way to build a successful business on the cheap. This strategy appeals to writers, designers, life coaches, business experts, and anyone else who can provide a useful service.
A frequent complaint of freelancers and consultants is that it's hard to find customers. But if you structure your business the right way, you can often avoid this issue.
For example, when Tom Reed decided to start his Lean and Six Sigma consulting business, Velocity Consulting, he didn't really know where to start when it came to getting new customers. Instead of trying to do it all on his own, he partnered with a larger, more established firm as a subcontractor.
This savvy move saved him the hassle of finding new clients and almost immediately turned his business into a six-figure consulting practice.
This approach of creating mutually beneficial partnerships where you bring a skill and the other side brings paying customers is what I call The Remora Method. This method seems to work for anyone who wants to offer a product or service and it makes it much easier to build a profitable business from scratch.
3. Become a self-published author. The prevailing wisdom about writing for a career is that it's not a good move because it's too hard to become a published author and too low-paying if you're self-published.
Once again, it doesn't have to be that way if you take the right approach.
For example, Sean Platt and David Wright wanted to be successful authors, but they also didn't want to go through the hassle of finding an agent, landing a book deal, and working for a few years before their book was printed.
Instead, they decided to self-publish their thrilling horror story Yesterday's Gone as an Amazon Kindle ebook series. The authors chose a series rather than a whole book because they knew that they could publish short episodes much faster than an entire book. Additionally, they figured that more people would buy individual episodes for $0.99 and then upgrade to the whole series if they enjoyed the first episode.
The strategy paid off. The writers spent a few months creating the first episodes and, as expected, more people decided to purchase the cheap episode before upgrading to the full season. Even better, once the series got rolling Amazon started promoting it as a recommended product to their millions of customers.
Six months after launching, the series had more than 100 5-star reviews on Amazon.
As these 3 examples clearly illustrate, it's possible to make money in both big and small amounts without spending much to get started. Building a successful business without breaking the bank is more about the type of business you choose than anything else.
James Clear is the founder of PassivePanda.com, a website that teaches you the skills you need to know to work for yourself. Join Passive Panda's free newsletter for fresh ideas on earning more money.