How to Make Money from Nothing

Getting low on cash is intimidating. Not knowing how you are going to replenish your coffers is even more worrisome. Have you ever had to devise a way to make a significant sum of money out of very few resources? A popular thought experiment involves giving teams of students or coworkers $5 with the directions to figure out a way to make as much money as possible in a given amount of time from that small sum of money. How would you respond? What would you do?

1. Think Outside of the Box. The trick of this social experiment is that the base resources you are working with, $5, are essentially useless in many places. Some responses to this dilemma motivated students to open up car washes or lemonade stands based on the idea that these were the only sort of activities that could begin with such a small amount of income. Although these are not bad ideas, the payoff for the work involved, though costing little to start up, is very small. Instead, the most beneficial perspective you can take on this question is to see the $5 starting sum as nonexistent – it is basically like having no money. What would you do to make money if you had nothing to start with?

2. What Other Resources do you have?

Instead of focusing on the tangible $5, look at what other resources you have at your disposition. What else is your team capable of? What are their talents and specialties? What service can you offer customers that requires no start up costs (other than your time and energy of course)? How can you offer something beneficial to your community? On the other side, how can you make money from the investments you have already made? Compound Stock Earnings, for example, responded to this dilemma by showing its clients how to earn a profit on their stocks through covered calls without having to lose ownership over the investment, essentially making money by providing a service to their customers (requiring little start up costs) and where their clients can also make money for doing very little. Capitalize on your resources!

3. Think About What People Need.

The key to success is simply offering people a product or service they need, where they need it, and at a price the can afford. What is lacking in your community? Identify the gap and see how you can take advantage of it to make a few bucks. One successful group of students who completed this thought experiment realized that one of the most annoying aspects of their town was the long waits on Saturday night to get a table at a restaurant. The team decided to offer a reservation service to members of their community. The students would make reservations in advance and then sell the slots to interested parties, or make the reservation at the request of a client. The students ultimately were able to make over $500 with their original $5 investment (which the didn’t even need of course) in just a few short days. Finding creative solutions to deficiencies in your community can allow you to make money without having any significant starting base.

Outside of the Developed World.

Although the principles discussed here are relevant in every situation, it is important to note that the process will not be as straightforward in different contexts. In many developing countries, microcredit loans have become a popular way to spurn the entrepreneurial spirit in local people. Banks give loans as small as $25 to people with good ideas to open a small shop or start a new service. Microcredit has helped thousands of people, especially women, earn a livelihood and change their futures all by working on the same principles of the $5 thought experiment. Before thinking that this could be the solution to the world’s poverty, however, students should attempt to do this thought experiment within the confines of a poor society with high levels of apathy and/or sickness. Nobody can buy lemonade, no one has a car to wash, and no restaurants take reservations – so how would you make money then? These are the truly relevant questions.

Although it can sometimes seem hard to believe, pooling your available resources, thinking creatively, and listening to the needs of your community is often all you need to make money from nothing. Continuing these sorts of experiments and thought processes in the contexts of poorer developing countries could help us understand how millions of people could potentially pull themselves out of poverty. Be an innovator! For more information, see Quora.

Writer Biography

This is a guest post by Nate Miller, a part-time guest-blogger. His main interests are Finance and Business, with a recent focus on Technology. He is constantly extending his fields of interest to incorporate news suggested to him by his readers. Also, if you like his writing, make sure to follow him on Twitter. He currently writes on behalf of Compound Stock Earnings.