Building a business from the ground up is always going to be a challenge that every aspiring small business owner is going to face. Most people will try to warn you that your business idea won’t succeed if you aren’t willing to fully commit and put everything on the line.
A business owner needs to use the resources that are available to them, to be successful in any business venture, while also limiting the borrowing of funds. This will cause the dilemma of having to choose between self-funding your startup or getting investors right at the beginning of your business’s operation. Sometimes you must take the obvious path of bootstrapping to get your business started since, more than likely, you do not have the luxury of getting investors right away.
Not having to give up any equity to an investor and having 100% ownership of the business you are starting is on the wishlist of every small business owner. This can be achieved with something called bootstrapping.
For those who do not know what bootstrapping means, it is the idea of starting a new venture on a very limited budget without the use of any outside funding, either from investors or government funding. The goal is to preserve a strict restraint on your startup’s cash flow to get it up and running.
No one will be asking you what needs to be done, telling you how to run the business that you started, or be on your back at all times when you start bootstrapping.
There are a wide range of benefits to you when you bootstrap. The business won’t be indebted to an investor, to begin with. You won’t feel pressured to repay any form of a business loan to a financial institution either. There is a big misconception that if you are working on starting your own business believe that they have to have thousands of dollars as start-up capital.
When you’re bootstrapping you have to use the little resources that you have as a form of startup capital for your business. You will then need to immediately use any of the profits earned for the business. Your business will then experience some growth by doing this.
Whether your startup has been running for a little while now or just launched, here are some tactical tips to give you an idea of how you can bootstrap your business.
1. Look To Start a Business That Needs Less Capital
It is a dream for many business owners to have a world-class restaurant. However, it takes an incredible amount of capital to have this kind of business. Therefore, it would be a good idea to mark that down as a long-term goal. If you’re looking to get into the food industry, and you have less capital, you can try to start with a food truck and build enough revenue to start a restaurant down the road.
2. Understand What “Burn Rate” Is
Many growing entrepreneurs are dealing with severe budget issues, not having a full understanding of how much they are actually spending, and are too hopeful about the expenses of their new business. You really need to know your budget better than the back of your own hand.
You will want to stay on the side of caution and raise your estimated burn rate by 15% to 20% of your initial number as you begin the budget-building process. Until you are able to see a clearer picture of your business’s actual burn rate, you can monitor your monthly spending after you raise your estimate.
3. Go Virtual
You are going to look for every possible opportunity to save money when you’re bootstrapping. The last thing that you want to deal with is unnecessary overhead costs. You should be cutting any nonessentials from your budget. You can start by running your business from a coffee shop, home, or apartment until you are more established. Or, if you have a team that is living all around the world, you can have a virtual office.
You should be putting a lot of thought into how you spend your money when you have very limited resources at your disposal. Invest in things that will eventually grow your company and cut costs where you can.
4. Choose a Market Ready Business
You will need to use the little amount of capital that you have and invest in a market-ready business since you don’t have a large amount of startup capital. Quickly put the profits back into your business by looking for a business that generates immediate returns. This will allow you to kickstart the larger business by accumulating the business funding that you need.
5. Marketing That is Customer-Focused
To ensure a return on your investments it is essential to keep a sharp focus on your expenses and for any sized business, marketing your products can be a big expense. When you are starting with a smaller budget, you can’t be wasting money preaching the value of your service or product.
You can still show potential customers how your company can make a difference in their lives by using more innovative methods. Connecting with your customers is how customer-focused marketing helps your business grow.
6. Avoid Credit Card Debt
Many new small business owners can form an unhealthy reliance, as they grow, on credit card debt. You should do whatever you can to avoid doing this, patience can really be a virtue at this point. Eventually, you will have to deal with it after this debt stacks up.
You will have to learn to stick to the amount of cash you actually have for the business, this can be very difficult.
7. Get Social
It is a common problem for new entrepreneurs to get the word out about their new business. Very few early-stage startups can afford to hire a marketing or PR agency, even though this seems like an attractive option. As a small business owner, you can still create a buzz around your business and reach new potential customers by using social media channels. With enough exposure, social media can make a business go viral and give your business a great head start.
8. Let Your Product Do the Talking
You’re already halfway there if you are offering a quality service or product. Let word-of-mouth marketing do its work while you build a great product.
Remember just because you’re trying to use as little capital as possible, it doesn’t mean you can’t reach out for help. Pick up as much knowledge as possible when you are connecting with other entrepreneurs. You can also sign up for a membership with us, we have all the resources that you will ever need to be successful.
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