Passive Cash Flow Businesses With $0 Startup Fees

Passive cash flow businesses with zero startup fees are one of the few ways to get free money that is actually free. It certainly has the greatest potential of any other freebie strategy. When people think of free stuff, they don’t usually think of owning a business. Yet, there are multiple examples of marketing copy that have the same implications as the word “free”. Phrases like “make money while you sleep” and “automatic money machine” are both suggesting businesses that have passive cash flow.

A simple example of a cash flow business with $0 startup fees involves submitting designs to Cafe Press. Cafe Press is an online t-shirt printer. As a member of Cafe Press I submit designs and when my designs sell, I get a commission. I spend some time creating the designs, but once the design is created and submitted I don’t do anything else. Cafe Press does the work of selling the t-shirt, printing the t-shirt and delivering the t-shirt to the customer. My percentage is very small, but it’s still passive income. There were no startup fees since I used graphics from the public domain and free software to create the designs.

Could someone live off of Cafe Press commissions? Possibly, but probably not. That was just a simple example to explain passive cash flow. There are other, more profitable businesses that can support any lifestyle, or the combination of multiple streams of passive income can support any lifestyle.

Is Passive Cash Flow Actually Free?

Most people can grasp the concept of cash flow. It’s when you receive income for anything on a regular basis. Receiving wages for a job is one example of cash flow. But a job uses a fixed amount of hours in the week. You’re essentially selling a portion of your life for currency. This is active cash flow and it’s not free. You’re paying with your time. Also for every dollar you actively earn, you have to pay taxes.

Passive cash flow is when you make money without spending any of your time. It’s when money starts to work for itself, or for you, instead of you working for it. This is actually free, and it certainly exists. It’s how rich people become wealthy. The concept of passive cash flow is described in multiple business books. One that is very well-known is the Rich Dad Cash Flow Quadrant. The cash flow quadrant is a 2×2 matrix with E in the top left quadrant and S in the lower left quadrant. The E stands for Employee and the S stands for Self-Employed. Both methods of cash flow on the left side of the quadrant are types of active cash flow that are not actually free, and as Rich Dad will tell you, they’re taxed more than the right side.

The vast majority of businesses in the US are actually single-owner, self-employed businesses. Some of these business owners actually work more than employees. Many of them have more than one job within their own business. An employee has the luxury of just being the technician. But a self-employed business owner is often the technician, manager and administrator. The cliché “wearing too many hats” applies.

The right side of the matrix has B in the upper quadrant and I in the lower quadrant. The B stands for Business Owner or Big Business, and the I stands for Investor. A business owner is not self-employed. They own the business, the business doesn’t own them. The business can operate without them being there. There is a system and organization in place so that every employee receives their wages, all operational expenses are covered, and the business still makes a profit. All of that profit is owner’s equity and it’s free, the truest form of “free” that there is. Actual investing (the I in the lower right quadrant) is also completely passive, otherwise it’s not actually investing by definition.

While there are possible ways of getting passive cash flow and starting a business with $0, there is a catch. If you’ve ever started a business you know that it’s not easy. Also, if you want to go the investor route, you’ll have to start with large sums of money. If you have a large sum of money then you can live off a lower percentage return. Generally the lower the percentages are more secure (not a 100% accurate statement, but generally the lower the percentage the more secure the investment, and higher risk brings higher returns). You could start a business or invest in something, come out with nothing, and loose everything you put into it. That’s a real possibility. But the more you’re educated and the more you’re dedicated, the more likely you’ll succeed.

How To Start A Business With $0 Startup Fees

By itself, passive cash flow is actually free once you’ve covered startup costs. When startup costs are covered, everything beyond that is gravy. But wouldn’t it be interesting if you could start a business with $0 in startup fees? Then the passive cash flow would really be free!

There are many ways to start a business with $0, but they can all be summed up into two strategies: other people’s resources and other people’s money.

Other People’s Resources

The two most effective ways to use other people’s resources is automation and outsourcing. Those are two keys to success in any business, especially new ones.

You can use free resources or other people’s resources to start a business. One example of this is to become an independent sales person for another business in full operation. As the independent sales person you’d brand your own business but outsource to a partner who provides all the services. “Whitelabeling” is when a company will operate under another company’s brand name. Large grocery stores don’t actually have their own factories to produce the generic brand which is sold for less than the name brand. These stores outsource production to the name brands and the products are simply packaged with a different label. When you sell products that other businesses have produced then you have no costs of good sold. A service-only business also has no upfront costs of goods sold.

Creative business owners can also find ways to reduce their operational expenses, just like any freebie hunter is learning to reduce expenses in their personal budget. Not all businesses start with passive income. Some start with the business owner doing all the work and then gradually removing his- or herself from every job in the business. So you start with a free sales force by being the sales person. You can also wean yourself off the sales force by hiring commission-based sales people. You can get leads and sales by cold calling, canvasing, networking and co-promoting with other established businesses. These are sources of free marketing.

Your entire workforce can be commission-based if you start by only using freelancers as your technicians. Technically, any business that is conducted online can theoretically have $0 start up fees. If all you need is a computer and internet access for your business, then you can get started for free at the library. There are samples of these business below. If you want to start with free office space, you can work from home or out of your garage.

Other People’s Money

The other way to start a business for free is by using other people’s money (OPM). Two different sources of money are commercial lenders and private lenders. You should think of your business and an entity that is independent of yourself. If you borrow money to start your business, then ideally it’s your business that will pay it back. That’s $0 in out-of-pocket costs for you. However, most small business loans will be a personal liability to the business owner, which is something to keep in mind.

Commercial lenders will have specific loans, for specific purposes, with specific requirements. Most people think of the SBA loan first (Small Business Association). Yet there are many other loans from many other lenders.

There are no requirements whatsoever for private money. Getting private money for your business is a very acquired art form that includes finding people who are willing to invest in your company and demonstrating that you can produce a return on investment for them.

Is $0 Startup Always Best?

You’ll  have to decide the answer to that question on your own and it will depend on the business you’re starting. Not all businesses can be started with other people’s resources, and even if you can get a loan, you’ll have to decide if the terms of the loan are worth it. Some loans will doom the business to fail from the beginning. This is actually how some private lenders take businesses over (which is another thing to keep in mind).

Examples Of Passive Cash Flow Businesses With $0 Start Up Fees

Self-Publishing is one type of business that can produce passive cash flow with $0 startup. However in most cases there are some small fees to start. As a self publisher you can write an ebook, sell it on your own website, and use email marketing and affiliate marketing to promote it. You can get a free word processor with Google Docs. Free software to convert it to PDF. It’s possible to get a free website, although it would be better to buy hosting. You can start with MailChimp for free email marketing. And affiliate marketing is a way to get a free sales force. The affiliate platform will give each affiliate who wants to sell your book a unique affiliate link. When someone clicks on that link and buys your book, the affiliate gets a commission. The process of selling a digital item like an ebook is completely automatic. The buyer’s computer simply copies the file when they have access to it. So once everything is set up, you have a completely automated process with free or nearly free startup costs and free marketing to promote the product. Read more on self-publishing.

You can repackage the public domain. Classic works by well-known authors, artists and musicians have expired copyrights. Once the copyright is expired, anyone can use that intellectual property for any purpose. You could sell access to a database of public domain works. However, with the nature of the internet, it might be more beneficial to offer the public domain for free on your own website and then collect advertising revenue from the site. Read more on repackaging the public domain.

Real Estate Investing has multiple methods of $0 out-of-pocket costs. The most basic is real estate wholesaling, which is not passive, but it is a way to start of free. Wholesalers do the job of finding distressed properties at prices below market value. People who are willing to sell property at below-market value include family of house-owners that have died, divorce, or home-owners that get in financial trouble or trouble with the law. Wholesalers find these people and offer to buy their house. When the owner is willing to sell, they put the property under contract. Then, while the property is in escrow, the wholesaler will have it sold to someone on his or her buyers list. They didn’t do any rehab to the property, they didn’t pay any realtors since they did the work themselves, and they didn’t pay any selling or closing costs. The owner paid the selling costs and the buyer pays the closing costs. Other way to buy real estate with $0 is to get the owner to finance the deal and then rent it out. The numbers have to work. But theoretically the rent will cover all operational costs, including the mortgage payment to the previous owner.

There are multiple micro businesses that are described on AF.c. Some of them are forms of passive income, others are businesses you can start with $0, and others are both. Find more articles like this one on the “Free Stuff” page under “free money” and “business freebies”. See also Web Freebies for resources like free websites and free software.