Last week I wrote about how to know if your business will be successful or not (5 Sure-fire Ways To Know If Your Business Will Work Or Not). In one of the comments, Timothy mentioned the importance of bootstrapping a company so I wanted to dedicate this post to how to bootstrap – thanks for the suggestion Timothy!
20 Ways To Bootstrap Your Business:
1. Start A Service
Service businesses generally require less startup capital than product based businesses and you can bring money in right away.
2. Figure Out What Makes The Most Money
Don’t spend time doing the things that don’t bring in money. As a startup you need money in the door as soon as possible! Defer, delegate, or ignore the rest.
3. Get Volunteer Help
High schools and foreign language schools are great places to get free help to get your business off the ground (I’ve used both).
4. Hire Part Time
Get someone to do the admin tasks for your business on a part time basis. You don’t have to hire full time until you have more money coming in. The first person I ever hired was working for me one hour per day to start.
5. Automate
Even better than hiring someone is automating your tasks! Think about what you do repetitively and find a way to make it more automatic. It will save you time and help you avoid having to take on a staff member’s salary. Automate the regular and humanize the exception.
6. Form Partnerships
Find businesses who also sell to your customers and form partnerships with them instead of spending money on costly advertising.
7. Use Pay Per Click
Pay Per Click (PPC) advertising is not always cheap but it is measurable. Run small tests and see which ones are working before committing more money to the cause.
8. Use Search Engine Optimization
Even better than PPC is Search Engine Optimization (SEO). Create useful and relevant content to help your website rank organically in the search engines. You can also read my SEO Advice Series for more help on SEO.
9. Leverage The Media
Choose a hot topic the media is covering and present yourself as an expert. The media is always looking for people to comment on the day’s issues so you’re making their job easier if you have valuable information to share.
10. Think Big, Start Small
Have a big picture plan but get started today. Remember that little steps lead to big steps and before you know if you’re a success! Entrepreneurs tend to overestimate what they can do in the short term and underestimate what they can do in the long run.
11. Do Something Every Day For Your Business
Even if it’s answering one email, sending out one press release, or commenting on one blog, do something every day to help you move forward. Never let the business building momentum die.
12. Don’t Quit Your Day Job Until You Can Afford To
If you quit to go full time and then run out of money six months later you’ll have wasted the opportunity to really build something great because you didn’t have enough time. Start off slowly and make sure you can support yourself before jumping in full time.
13. Turn Everyone Into A Referral Partner
Your friends, family, suppliers, customers, investors, etc all have the ability to refer business to you. Let them know that you’re looking for new clients and that you would really appreciate their help. You can even offer a financial incentive for them to help you out.
14. Watch Your Payments
Try to extend your payment dates for suppliers and also get money more quickly from customers. Starting a business is a cash-flow game so get money in as quickly as you can and pay it out as slowly as you can.
15. Start At Home
Don’t expand your business and get an office until you’ve proven the concept working from home and are sure you have a revenue base to support yourself.
16. Share Your Office
Once you are ready to move out, try to share an office. The first office I had was just a desk out of someone else’s office. Once I had enough money to expand, I got my own place.
17. Barter
Can you trade what you’re selling for something you need? If you’re an Internet programmer, for example, and need business cards, can you design a website for a printer in return for the design and cards that you need?
18. Lease Don’t Buy
In the long term it might cost more to lease but it helps with your cash-flow. When you’re faced with making a major purchase like a computer, car or other equipment, lease it to start so you can ensure your company has enough money to continue running.
19. Hire Friends / Family
Especially at the beginning, you can usually get friends or family to help you because they care for you and want to see you succeed. They might work for free or you might have to pay them but you can usually get away with lower than market rates at the beginning while you’re building.
20. Create A Rainy Day Fund
Every entrepreneur runs into rainy days where a major financial expense comes up. Maybe your computer broke down and you need a new one, maybe your website crashed and you need to hire an expensive programmer to fix it, or maybe you run into a serious personal issue and need more money than before (all three have happened to me). Make sure it doesn’t put you out of business by buildling up a “rainy day” fund as soon as you can. Every little contribution helps!
Good luck and keep bootstrapping! What other bootstrapping methods have you used to help your company get going?
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I would like to add one and that’s “Hunt for deals”.
When you are thinking about making a purchase decision for your business (no matter if it’s a hosting company to a new computer), a lot of times you can find a better deal if you just go a couple more pages further on your Google search results. Cheaper deals is often just around the corner.
I’m happy to say that I have fulfilled the first 17 of these. The rest I don’t plan on doing. Doesn’t really apply to my situation (we design, i do it all).
Great article, except I’d have to say that hiring friends and family can be disastrous. I have a personal policy of not getting any of my friends or family involved in my entrepreneurial efforts.
I agree with the other comment… friends and family are dangerous options and should really only be a last resort. If it all goes pearshaped you could be left with no business, no money, and a broken support network when you need it most.
May want to add a caveat to ‘hiring part-time admin’. This should really only happen once positive cashflow is established, and in my experience is a luxury most startups can’t afford. I’d hate to think someone gets the wrong idea and hires too early, just burning their cash.
Also, I don’t think any bootstrap discussion can be complete without at least a mention of offshoring technical labour! (yeah I’m biased- check my blog
)
Great post! These are very specific ideas that you can really implement, and I appreciate that. I think number 10 – Think Big, Start Small is especially important. I know that I tend to over reach in my mind. I also think we can tend to over analyze and never move on important things, like getting those first few clients.
Thanks for the great post! These ideas reinforce what I teach in my entrepreneurship class. I’ll send the post out to my students, and ask them to subscribe to your blog.
Before one hires any employees, its a good idea to see if there are alternatives that are less expensive. Sometimes a freelance contract or even a temp agency contract can end up costing less than an employee. The actual cost of each of these options depends upon multiple factors and usually should be considered on a case by case basis.
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[...] my post last week on 20 Ways To Bootstrap Your Business, my #19 suggestion to bootstrap your business was to Hire Friends / [...]
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[...] This very interesting list was published recently on the Young Entrepreneur blog, and it is definitely worth checking out in its entirety. There you have it item by item, and at the end I make some remarks. [...]
One thing I can give advice on is make sure you partner with the right people (i.e. creative types with dev & front end design make a good combination). As long as everyone is in it for the passion & idea then you don’t have to worry about staffing costs….yet.
I think that starting a business by the bootstrap method is the smartest way. Sure, it will be harder, but you will experience more success later, and you won’t have to worry about hurting your family by going under and drawing out tons of loans. This book about how to bootstrap a business is really good at showing you how to do it.
Good stuff here.What if the partners want to quit their jobs and bootstrap full time with little money from external sources.Can they sell their product to businesses and what challenges are they likely to face selling the product to businesses.
This is a good list.
What I like about bootstrapping is that you jumpstart your business into making a sale before spending anything. Your business is built with money you earned not with artificial money.