I have built an entire joomla website for a client, however now they want the entire site to be mobile friendly and the template used was not a responsive template
Is there a module that will either shrink the website proportionately for iphone/mobile or easy iphone site without having to create all new categories, articles, modules, positions etc?
You wouldn't have to create new categories, articles or modules. That's all content stuff, so don't worry about that.
Positions on the other hand ...
Best-case scenario is you install a new template, meaning you'd have to do some modifying of the index.php and a few other configurations to make sure you have the same module positions and so on. It might be a little tricky but generally that's the idea behind a CMS like Wordpress or Joomla ... is that you have the ability to swap out templates without necessarily affecting your site's content.
Otherwise ... there's this thing called CSS. You might consider learning some of it.