Many entrepreneurs don’t have the luxury of getting investors straight away. In fact, according to SmallBizTrends, a third of all small businesses are established with less than $5,000 in funding, and 58% were launched with less than $25,000.
Bootstrapping is defined as “building a company from the ground up with nothing but personal savings, and with luck, the cash coming in from the first sales.”
Starting a bootstrap business in this way can be challenging, to say the least. But, as many new entrepreneurs struggle to get funding from investors, especially in the early days, it’s becoming much more common.
Running a bootstrap business can be risky and involves a lot of hard work, but ultimately it can lead to great success. If you’re an entrepreneur, here are some tips to help you get started:
1. Pick a suitable business model
Before you start your business, you need to consider your business model. Is it suitable for bootstrapping. Not all businesses are, and the most successful bootstrap businesses are those that generate cash fast.
Remember, without cash coming in, you will run out of money fast. This means that you need to carefully think about the type of business you are running and whether it needs to be tweaked.
2. Be careful with your spending
If you’re running a bootstrap business, it’s not the time to spend recklessly. It’s important, firstly, to keep an eye on your spending. The best way to do this is by using a separate business account and using accounting software to monitor your costs.
In addition to this, try and use the cheaper or free versions of any business software, and if you’re paying for business premises, always choose the most cost-effective option. Even the smallest savings can make or break your business venture.
3. Avoid outsourcing if possible
When bootstrapping, you should avoid outsourcing as much as possible. If there are jobs you know you can do yourself, this is a great way to avoid unnecessary expenses. This can make all the difference money-wise - and it’s easier than ever to learn new skills online.
Plus, there are lots of free, user-friendly tools available. For example, rather than hiring a website designer, why not use a free online website builder like Wix, and instead of paying a graphic design expert to create a logo, you can use a free tool like LogoCreator.
4. Cut your personal expenses
Of course, if you’re running a new business, you probably won’t have much money to spend each month. This is even more noticeable with a bootstrap business, and many entrepreneurs experience their finances being extremely stretched.
You can minimize the effects of this by keeping an eye on your personal expenses, rather than just business ones. With no salary, it’s important to think of ways to cut costs, like reducing your bills, avoiding large purchases, and even moving somewhere cheaper for a while.
5. Build business relationships
One of the problems small businesses face is that lots of suppliers or vendors don’t want to work with you. In these cases, often, a personal touch can make all the difference.
Focus on building personal connections, as this can really help your business in the long-term. As well as being helpful in obtaining the right resources at low prices, it can also help you find new clients or customers.
Bootstrapping a business can be hard. But, it’s far from impossible. Ultimately, bootstrapping is risky, but it can also be very prosperous if done correctly.
By following these tips, and with enough hard work, commitment, collaboration, and passion, you can make your investment pay off and build a successful company - even on a tight budget.
Guest Blog by Jayden Foley