Photo cc: courtesy of TinyTall via Flickr

Everyone wants to be an entrepreneur these days, but the one thing holding them back is lack of money. The banks are reluctant to lend to start ups, a tough economic climate makes it hard to borrow from friends and family, and funding it on your credit card comes with big risks.

If you do need some cash, government-backed Start-up loans are for people who’ve been turned down by banks. But funding isn’t always necessary. The good news is that providing you follow a few basic rules, starting a business with almost no money is entirely possible. Here’s how to do it:

 1. Use the resources at your fingertips. Work from home or a local café or library which offers free wifi. Have a car? You could offer a local delivery service. Have a kitchen? You could start making cakes or providing catering for parties.

2. Build a business round the skills you already possess. What can you do that someone else might be prepared to pay for? Can you make clothes, paint and decorate, programme a computer, speak Italian? Do you have a hobby you could turn into a business? If you possess a skill that other people don’t, or would need to invest time and money learning for themselves, that immediately puts you at a big advantage.

3. Sell a product or service which people need rather than want, which they instantly understand, and which they feel comfortable buying without having to consult anyone else first. Umbrellas at £10 each are a better bet than hot tubs at £10,000 each.

4. Get customers to pay you upfront – or at worse, half upfront, half later, so that your costs are always covered.

5. Tap into free advice.  The British Chambers of Commerce runs free events for start-ups; Startup Britain has an enterprise calendar on its website listing events for entrepreneurs around the country, many of them free. The Business and IP centre at the British Library has a wealth of resources for start-ups.

6. Source any equipment you need for free through Freecycle, a community website where people can recycle unwanted items, or the freebie section of listings sites such as Gumtree and Craigslist.

7. Do virtually all the work yourself – and plough virtually all income straight back into the business. Thankless and austere, yes, but also the only way you will be able to build up enough cash reserves to invest in new equipment or premises, and so grow the business.

8. If you have a job, hold onto it. Start your business in your spare time and only give up your day job once your venture is able to pay you a wage. If the venture doesn’t work out, you still have your job. If it does, the transition to being your own boss will be a lot less risky.

9. Replace fixed costs with variable ones by linking your costs to your sales.Hire meeting rooms by the hour, staff by the day and services as you need them. Platforms like peopleperhour make hiring freelancers easier than ever.

10. Make the most of free technology to promote your business. Build a website for nothing using an online website builder such as moonfruit.com, wix.com or basekit.com. Then get social networking. It’s free, it’s easy, and it’s an amazing way of promoting your business without spending any money. Sign up to Twitter, create a Facebook page, and join Linkedin.

Kate Jenkins has effectively grown her chocolate brownie business for free using Twitter. She started out in 2007 making chocolate brownies in the kitchen of her home in Llanmabog, Wales. When a friend told her about Twitter she signed up and began running competitions to win brownies on Twitter. She quickly built up a supportive community of followers and more than 70,000 tweets later, her business, Gower Cottage Brownies, now has nearly 5000 followers. Turnover has risen to £120,000, a third of which Jenkins estimates has been directly due to Twitter.

She said: “It is not just that people are buying my brownies, they are also supporting me and doing PR for me because they are talking about my brownies. Twitter is like the biggest word of mouth.”

Success in business is not about starting out with lots of money. It is about adopting the right attitude, thinking your way around problems, and having the determination to put the effort in and give it your best shot. So what are you waiting for?