Bootstrapping is defined as the act of funding a startup by means of personal finances. This means using personal savings, credit cards, early cash flow, and frugal initial spending. Here are some quick tips to help you pinch pennies and ensure the success of your business.
1. Understand Your Business Idea
Knowing precisely what problem your product or service can solve will take you a long way. Writing a solid and meaningful mission statement on the purpose of your company will serve as the foundation for every action taken leading up to the launch of the company. Know your product, its intention, and its target market. One of the best ways to understand all aspects of your business strategy is to write a business plan.
2. Minimize Early Costs
Many young entrepreneurs dream big, like a spacious office on the top floor of a high-rise kind of big. But when youre just starting out, its important to minimize costs so you can work your way up to those dreams. Take little steps today to train for big steps tomorrow.
One of the main expenses startups face is office rent. By working out of home, you can save a lot of money and take the opportunity cost of renting office space to spend in the businesses itself. If office space is a necessity, try sharing an office in a commercial building to lower your rent costs. When shopping for supplies, like an office printer, look to buy used rather than new.
3. Form Relationships and Partnerships
Following from above, form relationships with other businesses. Borrowing, bartering, and trading with other businesses will not only help you minimize early costs, but will help to establish relationships that can help refer, promote, and market your business. And dont forget to return favors people only do business with people they like!
4. Reinvest Profits
Make sure that before the launch of your company, you have enough personal finances built up to cover your needs for at least 3 months because the business will be using its profits to reinvest in itself. The first few months to first few years of a business will be where the major growth happens and in order to grow, you will need funds. Plan on reinvesting profits several times, or you risk the business remaining stagnant – or worse, backtracking.
5. Use Friends and Family as Your Beta Testers
Before launching your company, it is a good idea to test the market, and who better than your own friends and family? Not only will you learn about their level of interest in the product or service, but you can survey the range of how much they would deliberate paying for it. You can understand how they would use it, what features they liked and disliked, and make the necessary adjustments before releasing it to the public.
6. Work with a Small Team
Having a large team means having to pay a lot of cash for their salaries. Try and only hire as many people as you absolutely need – give each member various job functions and roles until it is necessary to add another associate to the team. If cash isnt readily available for a new hire, try to add other incentives like stock.
7. Be Passionate About Your Job
Starting your own business is not an easy task, but if you are passionate about your product or service, it will give you the motivation to work hard to ensure success. Your time and effort will be constantly utilized for the business, so make sure it is something you have no problems spending long days and nights working on. And, as Steve Jobs once said, the only way to do great work is to love what you do