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7 expert tips for equity-free self-employment in Germany

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Starting a business without personal funds - is it possible?

It is indeed more challenging to obtain external capital and attract investors without personal funds. However, it is still possible, especially when there is a promising business idea. Additionally, as an entrepreneur, there are ways to save costs in advance. Factors such as the nature of the business and its legal structure can influence this. For example, establishing a general partnership (GbR) is associated with significantly lower costs compared to establishing a limited liability company (GmbH), as the former does not require initial capital. Working from home also eliminates the expenses of renting office space. Nevertheless, starting a business without any personal financial means is not possible. In this regard, the various support programs and assistance offerings available for entrepreneurs can be helpful. They provide the necessary financial opportunities to successfully implement your business venture.

Tips for starting a business without personal capital

There are various options available to financially support entrepreneurs without personal capital. However, each option has specific requirements, so it is essential to gain an overview to determine the most promising choice for your specific case.

1. KfW Start-Up Loans

The most well-known financing option for entrepreneurs is obtaining a loan from KfW (Kreditanstalt für Wiederaufbau). To qualify for the loan, you need to create a convincing business plan with a detailed profitability forecast. Developing such a plan is crucial for any business venture to have a clear outline. Your professional and business qualifications are also important factors.

2. Subsidies from guarantee banks

Traditional bank loans often require collateral. If you don't have collateral, you can obtain a guaranteed loan from the guarantee bank in your respective federal state. The guarantee bank assumes a portion of the credit default risk. Again, a viable concept must be presented to secure this type of funding.

3. Franchise business model

Franchise models offer the advantage of usually not requiring personal capital. Additionally, you benefit from an established brand, avoiding the need to build a name from scratch. However, it's important to thoroughly evaluate the franchise concept beforehand, as it may limit the creative freedom for entrepreneurs. Franchising is more about running your own business under a proven model than implementing unique ideas for self-employment.

4. Crowdfunding for your venture

Crowdfunding, also known as crowd financing, allows you to obtain financial support from a large group of people. There are now various crowdfunding platforms available. For each project, you set a funding goal. To convince as many people as possible, it is advisable to launch a campaign.

Founders often start without equity capital, relying on business angels or venture capital

5. Bootstrapping

The idea of bootstrapping is to start a business without external financing and solely relying on one's own resources. To achieve this without capital, the company must quickly reach the point of generating profits. This is accomplished through a strict budget and timeline, keeping costs as low as possible.

6. Part-time Entrepreneurship

It is not always necessary to immediately give up the security of a regular job and steady income. To gain initial insight into self-employment and build a customer base, there is the option of starting a part-time business. This involves working on a freelance or commercial basis alongside your main job, for example, through a part-time small business.

7. Bringing in Investors

External investors provide the opportunity to cover higher capital requirements. Entrepreneurs can benefit from the investor's expertise and experience. However, it still relies on having a compelling business idea and a strong, promising business plan to attract investors for your own venture.

Strategy is crucial for business success

Whether it's a startup grant, a KfW loan, or crowdfunding, all of these forms of support require a solid strategy for your business project. The more detailed your idea is developed, the higher the chances of success for your startup. This is important not only in terms of financing but also for the proper implementation of your entrepreneurial venture.

Written by:

Stefanie Aust, Gastautorin

Stefanie loves to put complex topics from the real estate world into understandable and inspiring words. Whether it's about the right financing, choosing the right type of flat, or a successful property search: Stefanie is happy to inform you.

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