Seeking investors can be a reliable way of building startup capital, but it can also leave you under the control of outsiders and forced to surrender some control over your business model in order to keep those investors happy. Bootstrapping your startup, or financing the venture with your own money, leaves you in control and completely independent. It can also be a struggle if you’re not sure where to begin. Here are ten ways to bootstrap your first startup and get your business off the ground yourself.
- Do It Yourself – Just as you are your own source of funding, you’ll need to be your own source of labor. Because your finances are limited, you should avoid hiring until you’ve reached the point of profitability. This means you’ll have to do a lot of work yourself, but you won’t be shelling out a salary and cutting into your limited capital.
- Expand Your Skill Set – It’s tempting to say that you don’t have a particular skill set, then shell out money to have someone do something for you. Learning new skills makes you more valuable in the long term, though, and helps you avoid costs associated with outsourcing. You will end up having to hire some people/services anyway (very few people can do everything themselves and do it well), but it’s better to try to save money where you can.
- Separate Your Finances – If the capital you’re using to fund your startup comes from a personal savings account, move it into a dedicated business account. You’ll have a more difficult time tracking expenses if your business expenditures are on the same statement as your personal purchases and it will save you a lot of grief when it comes time to prepare your taxes.
- Strive for Quick Profitability – Everyone wants to start earning a profit quickly, but it’s vital for boostrapped startups. Optimizing for a quick turnaround on cash flow may mean changing some aspects of your business model, but it can mean the difference between success and failure.
- Consider Partners Carefully – A like-minded partner who brings a bit of capital to the table means more money, more labor and more attention. A well-matched partner can help you put off the first hire until your joint venture is profitable, stretch capital a bit farther and get more done than one person can accomplish alone. A poorly-matched partner, however, can mess up more than they fix and derail all of your efforts. Don’t be hasty about going into business, especially a boostrapped venture, with a partner.
- Start With the Free Version – Crucial tools like Dropbox and QuickBooks can be expensive, but they can also be free. Choosing the free version may mean missing out on a few functions, but a small venture isn’t likely to require the high-powered capability of premium offerings. Don’t leap into paid relationships before exploring free options; sometimes, free is exactly what you need.
- Negotiate Trade Credit – If your startup specializes in non-tangible goods, trade credit may not be an issue. For retail operations, though, being able to obtain trade credit can make a world of difference. In most cases, trade credit will only be extended by suppliers after you’ve established a payment history, but you may be able to negotiate a better deal if you go directly to the CFO or a small business owner. Bring your business plan and financial forecasts to the table, and see what you can work out. You may be able to get the crucial first rounds of supplies in your hands, then pay for them when you’ve made some sales.
- Test, Test, Test – You know it’s important to wireframe your entire concept before getting started, but are you factoring in time for consumer testing? Get feedback from your potential customers, and actually listen to what they have to say. You can build a better mousetrap after going live, but it will slow your momentum. Get the kinks out before launch through rigorous testing, even if that just means grilling your friends and family members.
- Build a Marketing Concept – Too often, entrepreneurs focus all of their energy on product optimization and financial forecasts, leaving their marketing campaign conceptualization on the back burner. Because your startup capital will be limited to what you’re able to raise on your own, you probably won’t be able to afford a high-powered brand strategist to handle marketing at launch. Make sure you test your marketing plan just as thoroughly as you do product roll-out and infrastructure. When it’s time to go live, you’ll be able to hit the ground running with a promo campaign to grab customers’ attention.
- Build a Buzz with Competitions/Contests – Want to get hundreds of people talking about your new venture while limiting the amount of product you discount or give away? Hold a crowd-sourced contest. For every entry, retweet or Facebook share of your competition, you’ll get more exposure, and you only have to shell out rewards for a single winner.
Boostrapping your startup will require a serious commitment, but can also give you a very real incentive to get things right the very first time. Launching without a safety net can be daunting, but you’ll be positioned to reap maximum reward when your independent venture launches and begins to thrive.