How to Start an Online Business On a Shoestring

Want to start and grow a successful business with little or no money? It's easier than you might think. I've done it three times in total now. My most recent company, PetoVera.com, I started with absolutely $0.
The two easiest types of online businesses to start without any outside funding are a service-based business (such as web design, web development, or social media consulting) or a blog.
For the purpose of keeping this article concise, we will focus on how to startup an online services business.
Here are the 5 steps to do so:

1. First, what is something you already enjoy doing or might know a little bit about? For example, in my case, before I launched PetoVera I'd developed a few websites for a law firm and an oral surgery firm among other small freelance projects. I knew enough about the technical work and had a general idea of what clients would want. I also liked being creative so I enjoyed the work. It's important that whatever your idea is, try to make sure it's something you would enjoy doing everyday. Otherwise, if you're just chasing money, you're more likely to burnout before you hit it big.
2. Get Customers before anything else. This second step may seem counter intuitive but trust me, it's the best way to proceed and it lowers your risk substantially. You don't need a logo, you don't need a website, you don't need an office. The only thing you need to get a business going is a paying customer. In order to find your first customer (or client), I recommend putting together an email list of your close friends and acquaintances and send out an announcement that you're starting a business and what that business will be offering. Preferably, have something tangible to show people, such as past work samples, or if it's something more technical, maybe a process diagram showing how you produce value. In the email I sent out to launch PetoVera, I included a few visual examples of past websites I'd designed. People are better able to digest and remember ideas if they can be visualized. In the case that you don't have a list of email contacts, try posting or asking around on Facebook, LinkedIn, Twitter, and Craigslist. There are plenty of free ways to drum up the first lead which will turn into a sale.
3. Get Paid Upfront. This may also seem counter intuitive, but it's necessary to de-risk your business idea as you launch. From the first email blast that I sent out I received back several responses saying they were interested or that they knew someone who was interested. The one big client project that I landed as a result that allowed me to start the business began with a discussion with the client over email, and then over the phone. I sent them a prospective mock-up design, showing them a clear idea of what the new site might look like. Before I did this though I made sure to give them a price range and get them to tell me that range would be acceptable. Creating the mock-up design went a long way to instill trust and lower perceived risk for them. After that we signed and agreement and they give us a down payment. The business had officially launched!
4. Know Your Numbers from the Start. How much are you going to pay yourself, either in terms of a weekly salary or on an hourly basis? Don't be ridiculous with this either and just assume that whatever the business is paid is your money, because it's not! The business is a separate entity from you, so treat it that way and respect it. If you're going to hire help, know exactly what they are going to get paid, and put the agreement in writing. It doesn't have to be complicated and you don't need a lawyer. Keep it simple. Finally, compare these numbers to the revenue that you've just brought in and establish what your profit will be.
5. Reinvest, and Get All the Essentials Taken Care of. Last, take the profit that you earn and put it towards incorporating the business. Do this early on because it will do 2 things: (1) you'll be able to open up a bank account for the business and (2) you will have a legal shield to protect you from liability should something go wrong (e.g. someone sues you). Also, reinvest your profits towards finding a good accountant who can help you keep track of your numbers and making sure your tax filings are done correctly. Other than that, reinvest in making the business better: hire and train more help so you can focus on working ON rather than IN the business; get a website and a logo designed, as well as business cards...