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How to start a business with very little money!

Scary But Possible

Are you dreaming of an exodus from your cubicle? With a strong idea, solid business plan and some courage, you can launch an enterprise. You can express your love for your vocation. You can actually look forward to working each day. Don't let a lack of money hold you back. Most businesses are launched with as little as $5,000, says Andrew Zacharakis, assistant professor of entrepreneurship at Babson College.

"There's a general misconception that it takes a tremendous amount of money to launch a new business," says Mr. Zacharakis. "The Internet boom fed this myth with ventures like Webvan burning though $800 million plus." Even dreamers who think $5,000 is as inaccessible as $800 million can do it. When you're drawing a salary every two weeks, it's difficult to get your brain (and perhaps your spouse) to adjust to the idea of giving up the known, the secure, the same old grind. But if you truly want to abandon the sedate, pay attention to these tips from those who built businesses with little or no cash.

The Personality Factor

Start by assessing yourself and your entrepreneurial characteristics. Since we're not all cut out to be entrepreneurs, you'll need more than a head for business to make it. The formula for success includes determination, self-motivation, intestinal fortitude (guts), stamina and attitude. Add the ability to be your own pep squad -- no boss will be around to stroke your ego and grant you a yearly cost-of-living increase. You'll also need tough skin. Customers will fire you, lie to you and refuse to pay, so you must be able to rebound from setbacks.

Confidence in your talents and the value you offer clients is essential for successful entrepreneurs, says Lisa Muller-Jones, founder and art director of mojo graphic design. Ms. Muller-Jones jumped ship from the graphics department of an international consulting firm in Chicago in 1995 with $50 and attitude.

"My friends and family thought I was insane for leaving a good job to pursue a free-lance career," says Ms. Muller-Jones, now a Portland, Maine, resident whose clients include Time Warner Cable of Maine and The University of Southern Maine.

Fearlessness also is a plus. Ms. Muller-Jones quit her full-time gig without any customers. "My job was taking up 90% of my brain power, so I needed to jump in the deep end of the pool," she says.

Trudi Bresner, who started her New York City branding and communications training firm out of her home with no funding, believes organizational and communications skills are a must. "It takes creativity, flexibility and discipline," says Ms. Bresner, CEO of T. Bresner & Associates, which employs 11 and bills more than $2 million a year.

Her motivation for starting a business was to gain career independence and flexibility to raise four children. She started in 1979 with one client referred by her former boss. Now her customers include American Express Co., Barnes & Noble Inc. and People magazine.

It's the Money, Honey

So you're rife with fortitude and ready to say "vaya con dios" to your boss. (Tip: Most folks are ready for the adios speech long before they've worked out the other trivial details of making a business work. Savor this speech and recall it often when you have no money. If your boss is a jerk, all the more savoring is indicated.) Alas, you weren't blessed with wealthy relatives, and your bank-account balance is so trim you don't qualify for free checking. How do you get started?

Cobble together cash and assess opportunities for credit. Determine how long you can live without income, your available liquid reserves and how much you can finance on credit at favorable interest rates.

It's tough to get a bank loan without a track record, so you may be better served by creating your own line of credit. Credit cards with favorable rates and home-equity loans may be options when you need to be liquid at launch. "Cash is like blood to the body," says Bruce Strzelczyk, partner in Richard A. Eisner & Co., a technology-focused accounting and consulting firm in New York. "Without blood, the body dies, and without cash, the business dies," he says. Though Mr. Strzelczyk encourages founders to find financial sources, he says a firm that offers services can start on no money and succeed. "If the entrepreneur can pay bills after collecting revenue, there's little need for [start-up] capital," says Mr. Strzelczyk.

Damian Bazadona started Situation Marketing, a New York City-based marketing firm, in early 2001 with a home phone and computer. Mr. Bazadona, president of the company, deferred school loans and paid the minimum on his credit cards to keep expenses under control. "Any money that came in went toward items that provide a quick return on investment like sales and marketing activities, rather than extra computers or software," he says.

Be realistic.

You can't afford luxuries when you're on a shoestring budget. Instead of renting office space to impress, work from home, rent cheap space or share space. If you don't have an office (or an office you'd want clients to see), check whether any trade groups you've joined will allow you to use conference space for meetings with important clients. When money was tight, Ms. Bresner and her staff built and painted her desks and cabinets. "I made it a fun activity, and it built teamwork and saved us a lot of money," she says.

Work with what you have.

With the addition of a few hundred dollars worth of extra memory, your current computer system may be adequate. If you need a new system, think about leasing. A new computer might cost $1,500 or more, which is a big chunk to spend at launch, so you'll be better off spreading out payments for equipment. "See what you have to work with," says Mr. Bazadona. "A couple thousand dollars can go a long way toward a Web site or shared office space." Ms. Bresner's team found working from home or clients' offices to be a big cost saver during the first four months of operation.

Be creative.

Accustomed to working for large corporations with generous supply closets, Ms. Muller-Jones began valuing items such as tape and ink cartridges. She started her business out of the apartment she shares with two black Labrador retrievers and began noticing black dog hairs stuck under tape in her presentations. "I would 'precision cut' the hairs out of the taped areas using my trusty Exacto-knife," she says. She also admits to shaking out an ink cartridge to extend its life by a few prints.

Starting an enterprise and keeping it solvent requires a mix of business skills, talent for your product or service and tenacity. Ms. Muller-Jones sums up what it takes based on her six years' experience with this motto: "Don't sleep late. Shower once a day. Have a sensible pair of shoes, broad smile and faith in yourself."

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