From defining your audience to setting up your website, we’ll take you through the whole process of starting a successful company!
Launching a company is a major undertaking. You need to build a team, find clients and keep the business running smoothly. Above all, you need funds! But not all startups have unlimited budgets to do it. Most startups are bootstrapped, or self-funded. While this can be great for founders, as they retain 100% ownership of what they create, it can also be very challenging at times when one has limited resources to work with. However, if you’re determined, focused and passionate about starting up your company with whatever resources you have available, then success will follow!
Read on to know how you can bootstrap your company so that it’s not only sustainable but also profitable.
What is bootstrapping?
Bootstrapping is an alternative to fundraising that many entrepreneurs choose when launching their businesses. The concept is simple: you launch your company and try to sustain it financially by yourself until you become self-sufficient. Bootstrapper entrepreneurs rely on personal funds, sweat equity, streamlined operations, rapid inventory turnover, and a liquidity runway.
A bootstrapped firm, for example, may take pre-orders for its products and use the revenue gained from the orders to develop and deliver the product. Bootstrapping might be best for startups or businesses that don’t want to take on debt. Here are a few reasons why you should opt for bootstrapping your startup:
- You can retain 100% ownership of your business, which means more profits for you!
- Bootstrapping is cheap, which means there is normally a low cost of entry
- You become more versatile because your success will depend on how well you perform.
- When private equity investors invest in a firm that has been bootstrapped for as long as feasible, the valuation of the company rises.
Tips to bootstrap your company
Bootstrapping doesn’t require any fancy technical knowledge or an MBA degree. With the right amount of persistence and creativity, you can make your business work with your own funds. Here are some tips on how to bootstrap when starting a new company:
1. Determine your business model
Before you get started, it’s important to determine your business model. What are you selling? How much do you charge for this product or service? Don’t forget to consider the cost of your labor! If you’re considering a drop-ship business, it’s indispensable that you know what your profit margin is for every sale.
Once all of these questions are answered, it will be easier to plan out how to start and run your business. Defining your business model will help you decide the best way for you to start monetizing your content. For instance, ad revenue, affiliate marketing, and Patreon are all great ways to monetize content while building up your company on a tight budget.
2. Focus on your clients from the very beginning
When operating at low funds, one of the significant things bootstrappers do is to concentrate on clients from the start. If you lack the funds to conduct market research on a substantial scale, you should engage with your current and potential customers to understand their needs and get their feedback on your products or services.
It is also essential to concentrate on offering excellent customer service. When your company is prepared to go above and beyond to provide a pleasant client experience, you may gain customer loyalty as well as important referrals. Increased referrals might help you grow your business without spending more money on advertising.
3. Develop your brand online
Social media is where people are spending most of their time nowadays, making it a good place to advertise and promote your products or services. Social media marketing is an easy and low-cost way to get your product or service exposure. If you’re just starting out, you can begin with a campaign on social media sites (e.g. Facebook, Instagram, Twitter) and experiment with different strategies that work best for your business. For instance, you can launch a giveaway and ask your followers to tag your company on their profiles or posts. With social media marketing, you can target specific groups of people who will be interested in what you offer and connect with them on social media.
Engaging with potential consumers on social media may also help shape your marketing approach and the design and launch of your products. The more linked your company is to its clients, the more you will know about what they are seeking and how they will react to your company, products or services. This can help you achieve our previous tip!
4. Go for coworking space to reduce your expenses
While an attractive office space can provide a fantastic working atmosphere, it can be an expensive investment for an entrepreneur who is just starting out. Besides rents, you will also have to afford new equipment, furniture and numerous other operational costs. However, during the critical early stages, investing in client acquisition and marketing is much more vital to grow your business. To reduce your expense, you may consider using coworking spaces. Besides saving money, you can also network with other companies or professionals in the office space to seek advice from or collaborate with.
5. Request for instant payments
To avoid putting your bootstrapped company into a financial dilemma, such as insufficient cash flow, you may consider asking your clients to pay for your services beforehand. It will allow you to continue reinvesting money into your startup and minimize the chance of messing up your operations. You can include payment terms, such as late fees, in the contract, or you might request advance payments. Insist on adhering to a payment plan; the earlier the payments are made, the better!
6. Get help with resources and services
As your company grows, you will have to recruit people for multiple things at a certain point. To start with, consider hiring consultants or outsourcing freelancers to get your business off the ground. For example, managing all IT operations in-house may be rather costly. To save time and money, you can outsource them to IT companies. Another economical way to look for help or seek talents is through employment-oriented networks or employment sites, like LinkedIn, Indeed.com and ZipRecruiter. These networks are great for finding people who possess specific skills or knowledge that may be a beneficial fit to your company.
7. Be Persistent—and enjoy the benefits
Yeah, you read it right. Being calm and relaxed is the key to enjoying the bootstrapping journey. Due to limited resources and funding, bootstrapping becomes a long and stressful process. As a result, it’s essential that you take time to relax and enjoy what you’re doing so that you don’t burn yourself out. This will help you stay productive and fresh and maintain your sanity. Keep in mind that bootstrapping takes time. So, be patient—you will enjoy the pleasure of establishing something amazing with your own money eventually.
What to watch out for while bootstrapping
When deciding whether to bootstrap your firm, keep in mind that it might take far longer to build a company without investment. Also, typically, venture capitalists and investors have extensive networks, knowledge and advice that can aid your startup’s growth. As a result, if you bootstrap your company, you might lose out on valuable professional networking. It can be harder to find collaboration possibilities that might open lead to new markets or more awareness without backing from investors. Most importantly, investing your own money or personal assets to get your startup started means you will face significant financial risk, particularly if the business fails. Bootstrapping implies that your whole startup is dependent on you—and only you.
Bootstrapping a startup can be a rewarding experience. You will learn a lot about how to build a business from scratch, and there is no greater feeling than being your own boss. It is just that you need the right know-how, experience and determination to turn your passion into a profitable business.
Header image courtesy of Freepik