ZERO capital … What does it mean?

How many businesses can you think off right now work round the clock generating income, have begun with ZERO capital? I can bet that there are a few names only. There are always a few names only because majority of the names required a substantial figure to start working. In a country like Pakistan, it is very difficult to start with zero capital for obvious reasons.

But then you meet people like Shahid*.

Shahid: But I started my web design business with zero capital. I had my laptop that my father gave me on my birthday, my wifi which my elder brother uses and I took projects off Upwork. It was that easy you know. I did not need any capital to begin with and generated income. I bought my first Apple laptop in a year with the project income. It was cool.

Well Shahid, I would really not like to burst your bubble, but your small business did have initial investment which your dad and brother made. It is hard to quantify the bandwidth you may be using but the laptop has a fixed value. In essence, if Shahid was to start from ZERO value in business, he would have nothing to start with.

Using the simple rule of finance:

 

assets, capital, liability

 

If we zero out the capital, all our assets are equal to our liabilities.

Assets = Liabilities

 

In short, everything Shahid would have had, would have been a loan from someone or the other. But it doesn’t seem to be so.

In his case it was either loaned to him (brother’s wifi) or someone else’s investment in him (father gave a laptop). So for him the original equation stands.

….

So what does Zero capital business actually look like?

Any business that requires personal input more than material input can be classified as Zero capital business. Career counselor, public speaker, personal nanny service, maid service, personal trainer service, research service and the likes can be classified as zero capital businesses where the amount of money required is little to none.

On a personal level these businesses work well with the materials that you already own. The previous ownership of materials either makes the quantification difficult or close to minimal, which is ideal for zero capital situation. As with any business that is human intensive, personal experience and quality of information is vital.

And if you need marketing material to promote yourself you could always ask a friend for a loan to build your assets!

 

 

*Shahid is a fictional character created to support the narrative.

 

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