You have a great idea for a small business. Or you want to grow and sustain an existing business. The first thing you need to do is start talking to investors or amassing some wealth, right? Not necessarily.
Bootstrapping refers to starting and/or sustaining a business with little to no capital. While it will require considerable research, planning and creative thinking on your part, bootstrapping is a viable way to run a successful business with limited resources.
There are benefits to bootstrapping that extend beyond avoiding excessive debt right out of the gate. Bootstrapping means you are using your time building your company rather than pitching to potential investors. It means your small business is shaped by your choices and that you are not beholden to investors looking to protect their investment.
Perhaps most important, when every penny matters, your time and dollars are focused on the details. What will create the happiest customers? What products and services will be most useful and desired by your consumers? How can you scale (up or down) your work product to deliver on the promises your company makes?
So how can you bootstrap your business?
Do what you know and love. When you are starting with little to nothing, you cannot afford a learning curve. Nor can you afford costly mistakes made by your unfamiliarity with how a particular industry operates. Starting in a space where you have knowledge and experience allows you to hit the ground running. Furthermore, bootstrappers are always hustling. When you’re working on something you love or care deeply about, the time and work necessary to do what you must is more enjoyable.
Be willing to negotiate. Can you barter services with partners and vendors? Can suppliers direct ship your product and eliminate your need to hold inventory? Can you ask for retainers up front? Do not assume that there is no flexibility with how business terms are set. If you don’t ask, the answer is always going to be no.
Hold off on that office space. Do you need a storefront? If not, make use of a virtual workplace. Today’s technology means that you can meet potential vendors and/or customers anywhere in the world without ever stepping away from your computer. Use that technology to your advantage. You will cut the costs of rent, travel, staffing and equipment.
Budget first, then your big dreams. Your big vision for your business is important. It is what drives you forward. But financing your future rather than your present will quickly put you out of business. Planning is everything when you’re bootstrapping a business. Have a plan for every spending decision and every move you make.
Think revenue flow. Always be mindful of what is best for your bottom line. Is e-commerce more viable than retail for your particular products and services? Can you convert single sales to monthly subscriptions or services? Let your business model reflect what will be most lucrative for your company.
Take advantage of a free audience. Use social media to your advantage. You can gauge interest in your products/services before ever even spending a dime. You can create a digital blueprint and make yourself searchable by establishing an online presence. And when you’re ready to sell products and services, you can essentially market, for free, to your target audience.
Be prepared to work hard bootstrapping a business. But then enjoy the rewards – a successful business you have literally created from nothing.