Every business aims to run a small venture and solve existing problems through their service or product. However, there are several other goals that every entrepreneur seeks to achieve through their business. When starting, most business owners feel like they need thousands of dollars to make their plans happen.
Successful entrepreneurs have one thing in common. They start on the little they have and grow to become what they are known for today. However, it can be hard to create a path to building a successful brand. Here is a quick guide to bootstrapping in entrepreneurship to achieve your business goals.
What is bootstrapping?
When an entrepreneur starts a new business without an investor, it is known as bootstrapping. Using your savings saves you from months of preparing investor pitching and getting nos.
Most business owners who have investors can sometimes feel the pressure of verifying their next step with someone else.
Bootstrapping in entrepreneurship
There are intelligent practices that startup owners can utilize to get rid of the investor mindset. Here are the simple things you can do to bootstrap your small business idea.
1# Choose a business venture within your knowledge.
You must stick to a business domain you know and love. Most people want to start businesses in areas they have very little knowledge about because they think the domains are profitable. If you are looking to succeed, get into a familiar field.
For instance, if you have no idea about creating apps, starting a tech company is an uphill task and may end up disappointing you.
Knowing all the ins and outs of a business can help you work towards success comfortably. You also have all the connections you need to make your business successful.
2# Get seed money!
While finding investors is difficult, one needs seed money to start a business. A business owner can start it as a side business where they still work a day job while they work on their business.
With the little you have, you channel it to running your business rather than borrowing. Starting on a shoestring budget reduces the pressure and risk on investment.
3# Use customer funds!
Once you have customers, use their money to grow your business. Re-inject your sales money back into your business for growth. You want to spend as little of your money on the daily running of the venture.
Minimal sales make it harder for your business to meet overhead costs. However, with time, you learn how to build up sales capacity to meet your needs and requirements.
Also, read, How to Be an Entrepreneur without an Idea.
4# Build a plan around your budget!
An entrepreneur must build a plan around their budget rather than their wishes. We all have the perfect picture of how we want our business.
However, a startup needs a realistic strategy. If one places more focus on funding to the expense of working on their business, they are bound to fail.
Ultimately, large amounts of money invested in an idea lead to overspending when there is no plan.
Create a plan that you can implement on your budget. A good business plan focuses more on what is achievable within your budget.
5# Find workers who want equity more than cash!
Every startup needs workers who prioritize equity more than cash. They will work endlessly to see the business grow.
However, if they are more set on making money, they get frustrated as most startups have very little to offer. They will also lack the motivation to carry out their duties.
Equity is always the best assurance for focus and commitment. As an entrepreneur, your business belongs to you. Anyone else who comes in sees it as a job opportunity.
Also, check out, How to Overcome Entrepreneurship Failure?
6# Do not rent before you have active customers!
Most people spend tons of money renting business premises before they can sell their product or service. Office space is crucial for every business.
However, if you want to save up on unnecessary costs, work from your apartment or home. We all know Amazon started in a garage.
Rent-free areas work best for businesses that do not have enough money to spend on space and maintenance.
7# Do what you can yourself!
If you are starting, you have to do what you can yourself. Working for yourself saves you money and helps you build more knowledge and skills on growing your business.
You may not have the option to hire a workforce due to limited resources. Start by identifying your strengths and have an open mind to learning new things as you grow.
8# Choose a business model to optimize revenue flow and timing
If you are offering a product or service, you need to choose a business model to maximize revenue and timing. If you find it hard to get customers to sign up for a service with an annual fee, you can work on a monthly subscription instead.
Consider also setting up an eCommerce site rather than retail. You can use other free tools like social media to promote the site and find your target audience.
You may like to read, Top 10 Trends and opportunities in technology entrepreneurship.
9# Advance on royalties and deferred payments
Most new business owners are afraid to ask for advanced payments on royalties. However, ask for the reimbursements so you can get your cash flow on track. Remember that your business will stay in business when you work on your sales skills.
In case of deferred payments, make a plan of how you will collect payments. Many pending or delayed payments will leave your business starved on the capital you need to run.
10# Inventory management with suppliers and distributers
Many distributers and suppliers ship your product directly to eliminate inventory. Ask for a business retainer up front to manage your costs.
Negotiate with the suppliers and distributors to get a better deal that works for you. If you never bother to ask, you will spend loads of money you can save with negotiation.
11# Creative Branding
Your new business needs creative branding. As you have limited resources, a creative branding strategy can go a long way. You have to maximize on the most affordable sources of customer attention. Think of ways to market without really spending money on traditional marketing.
Social media and street marketing can help you make your brand visible. It will cost you less, but it will make all the difference.
12# Make a partnership!
If you are working a full-time job, you may need a partner to help you run the business. When you share out the responsibilities, you can manage time and work.
Find someone with different skills than what you already have. That way, they will be able to bridge the gap.
Once you get a partner, one of you will always be available to tend to your small business. You and your partner can pool resources to build more capital.
Additionally, a partner helps in decision making which may sometimes present challenges.
13# Avoid unnecessary purchases!
Avoid making unnecessary purchases when starting your business. Remember that you are short on funds. Use one-time services if available rather than get a whole month subscription you might never end up using.
Software purchases are unnecessary until you need to use them full-time. Use free versions and only upgrade later once you finally have active clients.
It would be best to outsource rather than hire full-time positions. Your small business does not need a senior accountant that you cannot afford to pay. When starting, outsource accounting tasks to someone at a small fee. It will help you save some money.
If you are looking for employees, get them on an hourly, daily or monthly basis. Such agreements are easy to break, and you do not have to struggle to keep them when there is no work. Hire them according to need.
15# Lease equipment
If you are starting your business and cannot afford to buy, lease equipment instead. Some companies will require expensive equipment to run. However, using leased equipment gives you time to make money to buy your own.
Many people start businesses on rental equipment. Find out what equipment you can rent instead of buying to save up some money. Once you can lease, you will learn to prioritize when purchasing. It also gives you an insight into quality.
16# Enhance your image!
Successful ventures start by enhancing their image. Once you build your image, people find it easy to relate to your product or service. There are several ways to work on your business image.
Creating a website is one way to build a business image. Web designers can help you create a lasting website. If you are already running a DIY site, they can improve it to represent your entity better.
A good website earns your trust from customers and presents your business to the world. It is also secure from malware, spyware, and other cybersecurity threats.
Social media pages are also vital when building an image. Update your content and connect with your audience.
17# Don’t chase every opportunity!
Most entrepreneurs are busy trying to chase every opportunity. Chasing every opportunity presented to you will make you lose direction. They will also drain your cash flow and keep you from doing what matters.
Choose what you lend your energy to and work on only what you can handle. Overworking can lead to stress. Not all opportunities are worth your time and investment. Instead, work on small bits to perfection until you can manage more.
18# Do not be afraid of growth!
Once you are over the starter phase, you need to embrace growth. Many business owners who use the bootstrapping method tend to hold on to it for far too long. It gets comfortable, which can hamper growth.
When confident enough, look for investors and other ways to expand your business. Growth requires more investment. The skills and strength learned in bootstrapping come in handy in negotiations with investors. Use that to get yourself the most decent deal in the room.
You may also like to read, 18 Signs it is Time to Quit Your Job.
If you are looking to start a business, the above tips can help you bootstrap and grow your venture. Further, you can gain immensely from bootstrapping your business. You will enjoy growing from a small idea to a big company while learning how to make your business resilient. Most entrepreneurs who have low capital can bootstrap and make successful ventures without a stash of money in the bank.
Bijay is an entrepreneur and start-up founder having more than 14 years of IT industry experience. He is the co-founder of TSInfo Technologies, a SharePoint development company.
A dedicated professional and very passionate about public speaking and also wrote thousands of technical blogs in various technologies. He also wrote a lots of blogs on entrepreneurship, investment, startup, business, manage money tips, etc.