5 Steps to Effectively Bootstrap Your Business
Starting a business can be expensive. After all, you have to spend money to make money.
But what if you don’t have a ton of capital?
Starting a business without a ton of ready cash can be challenging, but it’s not impossible. You can effectively bootstrap your business. But it takes a little extra creativity, and non-traditional ways to cut costs.
As you get ready to start your next venture, here are the steps you can take to effectively bootstrap your business:
1. Start with a Realistic Budget
We all have wish lists and big plans. But are they realistic with the budget you currently have?
One of the problems with starting a business is that, too often, our plans are bigger than our budgets. You can’t always get everything you want – especially at first.
Instead of trying to plan around your wish list, take a look at your budget. What can you accomplish with the cash you have right now?
This means putting together a realistic plan for your business. What are the most important tasks that will help you move forward with your business? What are the absolutely essential items that need to be accomplished?
Create a plan that fits your budget and addresses the most pressing needs. When you’re bootstrapping your business, you need to cut to the bone. As much as you’d like to provide cool perks and have a sweet office space, the reality is that you need to pay attention to your cash flow.
Know what things cost. Be realistic about where to start, and focus your meager resources on the actions and things that will have the best overall impact for your business.
2. Take Advantage of Technology
We live in an amazing time. It’s possible to accomplish so much, thanks to technology. In fact, it’s much easier to bootstrap your business now than it was even just 10 or 15 years ago.
While you’re working on your budget, it’s important to look for ways to cut costs. One of the best ways to do this is to take advantage of the tools and resources available through technology.
Gone are the days of expensive merchant accounts. If you want to accept a variety of payments for a relatively low cost, you can sign up for a payment processor like Due. There are accounting and payroll companies that can handle various actions for you at a low cost.
Not only that, but it’s possible to conduct video meetings with people around the world using free software. You can run your business almost entirely from an iPad if you want.
You don’t need to set up an office when technology allows for remote teams. Coworking spaces allow you to get work done in an office environment without too much trouble or expense. You can even reserve conference rooms in many cases.
Take advantage of the technology available to start and grow your business. It’s inexpensive and there are tons of tools available to help you manage a remote team so you can get some of the best people without spending a lot on overhead.
3. Consider Barter Arrangements
One of the cool things I did when I first started my business was to provide content in exchange for web help. Rather than paying cash for a logo design, or some other type of service, I provided an equivalent amount of content.
Barter can be a great way to get what you need for your business without a lot of capital. Figure out what you can provide that won’t negatively impact your output in a big way. Then offer that in exchange for supplies or services that you need.
I know business owners that have even offered some non-business services as needed. One provided music lessons for a building owner’s children in exchange for office space. As long as you have the time and ability to provide something non-monetary, this can be a good arrangement.
You do need to make sure that you and the other party are both satisfied with the arrangement. You will have to come to an agreement as to the relative value of your exchange. In many cases, barter isn’t about putting dollar values on each of the products or services rendered. Instead, it’s about meeting each other’s business needs.
If you can find a few other businesses willing to barter with you, it’s possible to accomplish some of your business goals without the need for a lot of capital.
4. Look for Alternative Ways of Generating Cash Quickly
It’s well and good to bootstrap your business. However, that doesn’t mean that you can ignore the need for cash. While you definitely want to cut costs and fit your business plan into your budget, you also want to come up with ways to generate cash as quickly as possible.
Some ways to generate cash quickly include:
- Use a subscription model to encourage regular sign ups and payments
- Ask for payment up front if you provide services (or you could ask for a retainer)
- Make sure you have a good ecommerce cart so you can take orders and accept payments 24 hours a day
- Consider drop-shipping so you don’t have to maintain inventory, and so that orders can be filled even while you sleep
You can even combine some of these approaches for your business. If you haven’t decided on a business model yet, research some different models that you can use.
The faster you can generate cash, the better off you’ll be. Once you start generating cash flow, you can invest the money back into your business.
At some point, you run out of ways to cut back on expenses. You need to have income as well. Without the ability to generate cash flow, your business will eventually die. The faster you can generate cash, the less you have to worry.
If you can bootstrap your business for a little bit longer, while generating cash flow, you will build a nice cushion for your business in the long run. Once you are more comfortable and your business is seeing success, you can put more of that money into the wish list.
5. Learn What You Can and Do As Much as Possible
Later, as your business becomes more successful, and you have more cash, you can outsource some of your more tedious tasks. While you bootstrap your business, you have to do a little of everything. Learn basic bookkeeping. Do the social media marketing. Create copy and other content.
It can be tedious, and you might not enjoy it. And it will take up a lot of time. However, when you’re at the beginning of your business, you spend a lot of time so you can start earning money.
The good news, though, is that as your business grows and as the cash flows in, you can consider outsourcing. In the long run, outsourcing is a vital part of scaling your business. However, when you first start out, you might not have that option. You need to learn about different parts of the business and do what you can.
Another option is to look for a partner who has strengths that offset your weaknesses – and willing to accept equity in the company.
The long-term goal, of course, is to get to the point where you no longer have to bootstrap. While you always want to make good financial choices and pay attention to your cash flow, eventually you won’t have to be so stingy with your resources.