No Cash, No Fear: Entrepreneurial Secrets to Starting Any Business with No Money

No Cash, No Fear: Entrepreneurial Secrets to Starting Any Business with No Money

by Terry Allen, Terry Allen


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If you've got big ideas and little or no cash—congratulations!

You're just the person Terry Allen speaks to in No Cash, No Fear—a powerful guide to start-up success bursting with invaluable lessons for the aspiring or struggling entrepreneur. Allen, who has started more than 20 businesses in his long and illustrious career, reveals exactly how he did it with none or very little of his own money—and how you can, too! He gives you his foolproof strategies for obtaining cash from a variety of surprisingly accessible sources. You'll discover ways to sell your product before it even exists and how to get someone to give you $1 million to invest (and a Rolls Royce to boot)! Allen also reveals:
* The four ingredients you need to cook up a business
* Why being short of cash should never be a problem
* How to start a business with $2,000 and make $15,000 profit in the first week
* Why you don't need a business degree to be successful
* Four commandments for running a solid, profitable company

"I love this book."—Andrew Tobias, author of the million-copy bestselling classic, The Only Investment Guide You Will Ever Need

Product Details

ISBN-13: 9780471415329
Publisher: Wiley
Publication date: 08/30/2001
Pages: 304
Product dimensions: 5.98(w) x 9.11(h) x 0.80(d)

About the Author

TERRY ALLEN is a classic entrepreneur who started his first business at the age of seven and went on to start more than 20 businesses. Currently he owns New Business Resources, LLC, a start-up company that offers a variety of services to over 100,000 newly formed businesses every month. Allen is also a partner in Chicago Venture Partners, LP.

Read an Excerpt

Chapter 1
The Early Years: Worms, Frogs, Turtles, and Snakes

How to Start a Business That Needs No Cash

I clearly remember my first commercial transaction. The year was 1946, and I was seven years old. My mother had suggested that I send my grandmother a letter (my first ever correspondence) and had given me a nickel to buy a postcard. I nervously entered the post office in bustling Red Creek, New York, secretly wondering if the nickel would be sufficient to buy both the postcard and a stamp.

When the postmistress gave me the postcard and 4 cents change, I said, "Is that all it is?" She kindly explained that it was called a penny postcard for a reason--it only cost a penny. "If there is one thing that you can count on in this world," she promised, "it is that a postcard will always cost a penny. It always has, and it always will."

Today, the penny postcard costs 25 times as much, and the post office complains about not being able to cover costs.


The lesson that I learned from my first commercial transaction is that nothing in business ever stays the same, no matter how much it seems that it will at the time. But what about the lessons? Are the lessons constant, or do they keep changing, just like everything else? I think that what makes life interesting is that it somehow becomes a perpetual learning experience. We have an experience, learn something from it, and then move on to do something else that may very well contradict what we have just learned.


At the age of nine, in St. Albans, Vermont, there was a camp on Lake Champlain--every kid's ideal for the perfect summer vacation. My father was a player and a coach for a minor-league baseball team in the Northern League.

I was really proud of my father. How many kids have seen their father hit a home run in a professional baseball game? I saw him hit many home runs and slowly trot around the bases, enjoying the applause from the home-team fans. (Years later, I learned that my father didn't like to run fast, or couldn't, depending on who was telling the story, and hitting home runs was his way of taking a leisurely stroll around the bases.)

At the age of nine, however, I was most proud of how my father could catch night crawlers. In the middle of the night, in a driving rainstorm, no one was his equal (at least, no one I knew at the time). He was so quick that he often caught two worms with a single grab. It wasn't until I reached the 10th grade and was doing a science project on earthworms that I learned of the why of these "double catches." The poor worms were merely making love when snatched from their entanglement.


The real trick to catching night crawlers was knowing where to shine the flashlight. Night crawlers never completely leave their hole, but keep their lower halves safely inside their burrow. If you shine the light directly on the unsuspecting worm, it will quickly withdraw to its hole. To be successful, you have to keep the main beam of the flashlight away from where you expect the worm to be, and look for it in the shadows.

For me, catching night crawlers served three purposes. First, it satisfied my father's enthusiasm. He really enjoyed the process (don't we all love to do the things we're especially good at?). Second, we got bait for our frequent fishing expeditions. And third, I was allowed to sell the excess worms, thus eliminating the need for my parents to give me an allowance.

Selling earthworms became my passion. I put up signs everywhere and accosted everyone I saw who carried a fishing pole. When a bass fisherman told me what he really wanted was some small frogs, I diversified my product offerings and spent countless hours wading through murky swamps in search of those quick little devils.


I remember thinking about what to charge for my catches. I never could understand how prices got set. How could the post office buy a piece of cardboard, print a stamp on it, and deliver it anywhere in the country for only a penny? That's what I got for a single night crawler, and it would be gone in a single gulp by some lucky (or not-so-lucky) finny creature.

I also couldn't understand why frogs fetched only 5 cents each, while they were at least 10 times as hard to catch as a worm. I charged 1 cent for worms because that's what other kids charged. I didn't know how much to charge for frogs because no one else seemed to be selling them. My first customer told me that 5 cents was the right price for a frog, so that became the price.

Prices have continued to confuse me. Forty years after the summer when I set 5 cents as the price for a frog, when I was nine, I sold my data compilation business, which charged 30 cents for each record we sold. After my company was sold, the new owners raised the price by 400 percent--to $1.20 per record. To my absolute astonishment, the customers continued to buy at these absurd prices. In retrospect, I think I could have gotten 10 cents for those frogs.

Halfway through the summer, I had amassed a small fortune of nearly $12, catching and selling 1,000 worms and 40 frogs. This was no easy feat for a nine-year-old.


It was at this time that I was offered my first business proposition--a partnership with two early-teenage girls who lived in the cottage that we shared with the Bob White family. These girls had bikes, and they promised to pedal up and down the lake selling my worms and frogs wherever they went. Sensing new markets and greater riches (even if we split the proceeds three ways), I agreed to the partnership. We formalized our arrangement in front of our parents at our regular Sunday night special treat of cold milk and crackers.

For a week or two, our new partnership prospered. Our inventory of worms almost disappeared, and I couldn't catch enough frogs to keep up with the demand from further down the lake. Then, nature took its course. My two young partners discovered some boys on one of their marketing trips (really cute ones, they assured me). All marketing efforts suddenly ceased. I think they decided that pedaling worms was not part of the cool image that they were trying to create.

Every Sunday night, over crackers and milk, Bob White would take down the coffee can that held the partnership's weekly receipts and dump it in the middle of the table. Tears would fill my eyes as two-thirds of my money was parceled out to my philandering partners.


Forty years later, I look back and realize that I have not encountered a single partnership that worked for all of the partners for any length of time. What generally happens is that, over time, partners' needs change. One partner inevitably remains more committed to the partnership's original mission. This partner ends up working longer hours and getting angry with the slacking partner.


Another third-grade business was perhaps the shortest of my entire career. Earlier Kool-Aid stands had lasted only until the ice cubes melted or thirst overtook me. This business, however, ended in less time than an ice cube could melt.

I had noticed that many well-dressed families walked by our house every Sunday on the way to church. Somehow, the idea of church made me think about charity, and I had a brainstorm. I took a large tin can from the trash, peeled off the outer wrapper, and found some bright red nail polish that my mother had foolishly left out in the open. I painted a large red cross on the tin can and dragged a barrel out to our front yard.

My parents, still in bed, heard my plaintive cry coming from the front of the house: "Donate to the Red Cross! Donate to the Red Cross!"

It's a miracle that my entrepreneurial zeal was not squelched when my mother closed down my operation before I even collected a nickel.


Christmas of my fourth-grade year, age 10, I received the most wonderful present I can ever remember getting. It was a loom for making potholders, complete with a bag of elastic cloth loops. I also got a flashlight (for catching night crawlers, I think). That was a bad combination, because I could stay up after being put to bed, weaving a potholder by flashlight. I stayed up almost all night weaving my first few potholders.

I fantasized about hiring all the kids in the neighborhood to make potholders using my wonderful loom, and I would go door to door selling the handiwork. I was certain I was closing in on my first million.

This business was also short-lived. When I found out how much the loops cost and what I could sell the potholders for, there wasn't enough margin to make it go. I still remember lying in bed, though, dreaming about my about-to-be-started business. It was a night like dozens of others that I later enjoyed, full of great hopes and fantasies of endless flows of money--better (at least safer) than falling in love.


In fifth grade, my parents moved to the suburbs outside Springfield, Massachusetts. We lived in the last house on a new street in a subdivision. Next to our house was a vacant lot, and behind us were woods teeming with white birch trees. I saw opportunity everywhere.

The vacant lot served as the site for a kids' carnival I set up and ran every summer for several years. I enlisted my younger sister and her friends to run the booths. Apparently, I never paid them. To this day, my sister bristles every time anyone mentions the carnivals I ran.

What I remember most about the carnival was the popcorn. Popcorn is a most wonderful product. It takes up a lot of space, so you think you're getting something big. And it really tastes good. There are two other things about popcorn, however, that really make it great. First, it's really cheap. I sold a wax paper sandwich bag of it for 5 cents at the carnival, and it cost me less than a penny.

The second great thing about popcorn is that it's salty. Eating something salty seemed to cause my customers to buy lots of Kool-Aid and soda as well. I truly loved popcorn.

As long as you can come up with something--anything--that will attract a crowd, even if you offer something that is absolutely free, you can make a profit. The answer is popcorn. It is a truly magnificent invention.


One of the biggest draws of my carnival was my collection of snakes. At one time, it consisted of 40 different varieties, almost every nonpoisonous snake found in New England.

I earned money by taking my snake collection to several day camps in the area and giving lectures about the snakes. There were other great things about collecting snakes, like the adventure of seeking them out and capturing them. I got most of my collection in a large dump where I could look for discarded but useful items at the same time.


Snakes were also great for terrifying girls and disrupting classes at school. I released my favorite snake (whom I had affectionately named Hector the Hognose) in science class one day, much to the teacher's dismay. She put me in detention. In fact, I spent many nights after school with her, mostly because Hector often accompanied me to school (comfortably resting in my lunchbox).

I actually came to enjoy detention. Not at first, however, when she made me write 50 times, "I will not release a snake in science class." I told her that detention should be an opportunity to make me do some really difficult assignments relating to science. Much to my surprise, she agreed. I can remember being given the assignment of naming 20 reasons why it was a good thing that water expanded when it froze. That was fun. Detention was the only opportunity I can remember in junior high school where I could be creative.

I would have continued misbehaving (which was usually fun in itself) and earning detention as long as I got punishments like that. However, staying after school meant that I missed the school bus home and I was forced to take public transportation, which cost me hard-earned money. So, I eventually let Hector stay at home with his scaly friends.


The white birch trees and wild princess pine in our backyard provided the materials that I needed for my next project. I cut the trees into 16-inch lengths, drilled three shallow holes in them, attached two cross-sticks as a base and added princess pine, a red ribbon, and three red candles--a perfect table decoration for Christmas.

As with most businesses, making the product was easy, and selling it was not. The biggest difference between making something and selling it is that you never encounter rejection in the manufacturing part.

I took my candleholders to all the houses in my neighborhood, and averaged one sale for every eight houses I visited. That meant that for every person who bought my product, seven people rejected it. I had never experienced this level of rejection before.

When I ran out of houses within walking distance, I asked my mother to drive me to a different part of town and leave me for an entire Saturday. I selected a more affluent area with large houses. I thought that perhaps the families in my neighborhood could not afford the candleholders.

That Saturday, I encountered an entirely new level of rejection. I stopped at over 50 houses, and did not sell a single candleholder. I was devastated. It was hard not to take it personally.


Years later, I learned that the neighborhood that I visited that day was inhabited almost entirely by Jewish families who clearly weren't celebrating Christmas that year. It was my earliest reminder of how important it is to intimately know your customer.

In the summer of my 15th year, I was a virtual conglomerate. I felt that I owned the neighborhood (which was growing at the rate of about 40 houses a year). I knew which people would buy whatever I had for sale (in addition to Christmas decorations, I grew and sold vegetables from my garden, corn picked from other gardens, and much more).

I delivered newspapers to almost every house every day. Each week, I had to collect 28 cents from each customer (3 cents for six daily editions and 10 cents for Sunday). The difference between a mediocre business and a great newspaper business was getting a 2-cent tip on collection day. When my customers handed me a nickel and a quarter, as most of them did, I could count on most of them saying, "Keep the change." I always gave them a big smile and "thank you."

When those customers who generally did not tip gave me 30 cents, I would reach in my change pocket with hundreds of coins, and start searching for pennies. Of course, I had carefully removed all the pennies from that pocket. If I waited long enough, or asked if they might have three pennies for exact change, I usually got my tip.

Twice a week, I also delivered a free Shopping News to each of my customers. And once a month, I pulled out my wagon and went around to each house collecting newspapers. I got in on the recycling craze way ahead of my time.

A 3-foot-high stack of newspapers weighs 100 pounds. If I collected a ton of newspapers, or 20 stacks, the scrap paper dealer would come to my house to pick up my paper. I don't think my father was able to park his car in our garage again until I went away to prep school. When I had accumulated a ton of paper, I would call the dealer and get the current price, which ranged from 25 to 50 cents per hundred pounds. Sometimes, I waited months until the price went to 50 cents, or until my parents rebelled because there was no room in the garage for the lawnmower.


I learned that there was a real demand for lawn mowing services while collecting on my paper route. Our only lawnmower was a hand-push reel type, however, and I figured I would break my back if I mowed everyone's lawn by hand.

Then I noticed a "Rent to Own" ad in the newspaper. A gasoline-powered reel lawnmower was available for $7 per month. I rode my bike to the hardware store advertising the deal. It was clearly a rental contract. There was no obligation to continue renting until the mower was paid for in full. I rented it with the intention of keeping it for the three summer months and then returning it.

I mowed over 20 lawns each week that summer. One was a full acre and earned me $10 per week, a small fortune at the time--enough to hire another kid to mow about half the lawns for me. While the arrangement meant giving up three-quarters of my income, I made a profit on his labor, and freed up time to make money on other businesses.

At the end of the summer, I returned the lawn mower to the hardware store. The owner was incensed. "This is a piece of junk!" he said. True, the two rubber tires were worn almost to the rim of the wheels. The mower really had been through a tough summer. "Let me speak to your mother!" he screamed at me. I replied, "My mother didn't rent this mower, I did." He vowed that he would never sign a contract with a minor again in his life.

If the hardware store owner learned his lesson about dealing with minors, and it only cost him what he lost by renting that mower to me, he got a great educational bargain. Many years later, a friend of mine sold an almost-new motorcycle to a minor (whose father was a physician) and financed the deal. The kid totaled the cycle and never had to pay my friend a cent.

While another kid in the neighborhood was mowing lawns for me, I embarked on a wonderfully successful project. I purchased Coca-Cola by the case for 2 1-2 cents per bottle. The local Coke distributor delivered it free if I bought 10 cases.

I put two pails on the handlebars of my bike, filled each pail with Coke bottles and the contents of my mother's ice cube trays, and set off for the new house construction project on the next street. Every house under construction contained a painter, plumber, carpenter, or other worker, often working alone and almost always thirsty. I sold each Coke for 10 cents, netting a whopping 7-1/2 cents on every bottle. Oftentimes, a worker, apparently lonely for companionship, bought me a Coke to enjoy with him. I had never encountered such riches!


At the end of the summer, I had deposited almost $1,000 in a savings account at the local commercial bank. I was 15 years old and the branch manager told me I had one of the largest savings accounts at the bank. I was so proud of myself. Only later did I realize that it was stupidity, not pride, I should have been feeling. A savings account at the commercial bank was paying 1 percent interest, while a savings account at a savings bank paid 4-1/2 percent. No wonder I had the largest savings account at the branch.

I will never forget that branch manager who would not tell me about a better deal elsewhere. He was one of only two snakes I ever encountered at a bank. I discovered that most bankers were like turtles--afraid to stick their necks out. Usually, I would have preferred to deal with snakes. I never minded paying an outrageous interest rate if only I could get the loan. Bankers, however, are generally turtles.

In September, after my summer of selling and drinking Coke, I went to the dentist for my annual checkup, and discovered that I had my very first cavity. In fact, I had eight cavities! My parents' dental bill surely exceeded my summer's profits from selling and drinking Coca-Cola.


As a teenager, I was totally mesmerized by Andrew Carnegie's autobiography. For many years, I wished that I had been born a century sooner, in an earlier, simpler time period when opportunities were truly unlimited. I fantasized about building an American industry, much like Carnegie had done.

I still recall three vivid incidents in Carnegie's autobiography. The first was a minor episode in the book. Carnegie was walking down a street in New York City and saw a grand opening for a new bank. In the lobby window was a plaque listing the founding partners of the bank. Much to his surprise, he noticed his own name on the list. Upon returning to his office, he asked his assistant for an explanation. He reported that the bank had asked for a nominal contribution of capital and that they were willing to give up a large share of the ownership for the privilege of having Andrew Carnegie's name on their letterhead. Carnegie became quite angry and demanded that they remove his name immediately.

He understood that each partner, no matter how small his or her contribution, could be responsible for all of the debts of the business entity. In this particular instance, it made a huge difference. The bank declared bankruptcy after losing millions of dollars. Carnegie, even though he had made only a token investment, would have been held responsible for every nickel of the multimillion-dollar loss.

The second part of Carnegie's autobiography that has stayed with me was his decision to devote the second half of his life to giving away the fortune that he had accumulated in the first half. He said that giving money away was harder in many respects than making it in the first place. I liked his ideas, and I vowed to myself that someday I would make a million dollars and give it all away to deserving charities.

The third part that I remember was Carnegie's refutation of the adage "Don't put all your eggs in one basket." He believed that you should put all your eggs in a single basket and watch that basket as if you were the mother of all mother hens. Focusing all your energies on one business or one endeavor has always seemed to me to be a more promising formula for success than scattering your energies on a multitude of projects. Yet, I rarely focused on a single project until quite later in my life.

In my mid-20s, I was once again hooked by a book: this time, Ayn Rand's Atlas Shrugged. I totally identified with John Galt, just as I had earlier adopted Howard Roark of The Fountainhead as my idol. Empire builders doing it their own way. No compromise. Wow! I loved them both. Books can be a wonderful inspiration.


  • Since every partnership is destined to fail, a prenuptial agreement is essential. Over time, one of the partners will become more committed to the original business plan than the other. It is important to create a mechanism for a fair transfer of the business to the committed partner.
  • Snitch a niche. The best business opportunities are found in the shadows, not in the bright lights where everyone else is looking. The secret to a successful business is to find a niche that no one (at least in your area) is serving, and to totally dominate that niche.
  • Raise your prices. Most entrepreneurs underprice their products or services, perhaps out of fear that they will lose business. Customers who buy because of low prices are disloyal--they will quickly leave you if someone else offers a lower price. The most successful businesses charge premium prices and offer superior service.
  • Never execute a contract with a minor. Ever! No more needs to be said. Period!
  • There are thousands, probably millions, of ways to make money. You can find riches by capturing wild worms, frogs, turtles, and snakes, or by finding a vacant lot and adding entrepreneurial skills.
  • With enthusiasm, you can accomplish (or sell) anything.

Table of Contents




The Early Years: Worms, Frogs, Turtles, and Snakes.

Formal Education: Trying to Learn, Even While in School.

Vermont Ski Lodge: Building a Business to Meet Ladies.

Real Estate Investing: Learning about Leverage.

Equipment Rental Business: "Don't Buy It, Rent It!"

Retail Toy Store: A Christmas to Remember.

Self-Publishing: My First Book.

Coupon Distribution Service: "Welcome Wagon by Mail".

The Information Industry: Selling a Product and Having It to Sell Again.

Electronic Video Games.

The Sex Education Publishing Business.

Stock Options Trading on the Chicago Board Options Exchange.

Manufacturing Promotional Board Games.

Information Industry Deja Vu.

Selling New Business Names.

Adventures in Russia: Pizza Stores and Ben & Jerry's Ice Cream Shops.

Charitable Trusts: Giving Away $1,000 Every Day Forever.

Looking Back.



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