This is for all you wide-eyed, ambitious, and driven small business owners out there, who have decided to take it upon yourself to foot the bill for your business without taking an investment from anyone.
You don’t want to owe anything to anybody, which is both admirable and smart because once you get going and you’ve been in business for a while, it’s really nice to be able to keep all your profits (or put it back into the business, as one does).
Bootstrapping your business can be tough, and especially tough when you’re not made of money. If you’ve made the decision to do that, then you probably know what you’re getting into.
Be that as it may, however, you will likely still welcome some tips to make sure your business ends up fully-funded and flourishing. That’s the purpose of this article, and these small pieces of advice will hopefully give you that bit of insight that you need to successfully bootstrap your small business.
1. Decide Whether You Want to Bootstrap Your Business
It’s not your only option, and though it might be the best choice for you, there are circumstances which might make it undesirable in your particular case. So, most obviously, take the time to look carefully at your finances, projecting the amount of money that you expect to take in for the next year or two, at least. So you are making absolutely sure that you can fund your new small business without any outside funding.
In some cases, you may have the funds to bootstrap, but at the same time, it could be adding unnecessary stress to you. If you expect that you are going to have a really difficult time securing all the funds that you’re going to need to do this, then it might be a good idea to consider taking on an investor for at least a portion of what you need to supplement what you’re already investing, yourself.
Sometimes you can easily secure funding for your business from investors, but you are deciding to fund it yourself because you don’t want to be in debt to anyone. As we’ve already mentioned, it’s definitely a good way to go; however, you should still weigh the pros and cons of accepting investors or bootstrapping.
Is it going to be unreasonably difficult to keep the business running on your own? Will it completely tap you out, so that you can barely make any kind of living for yourself? Of course, it’s totally up to you, and some owners accept that condition, knowing full well what they’re getting into.
It’s true that, as an entrepreneur, you sometimes have to go through some pretty lean periods of time. There’s no reason, though, to make yourself completely miserable if you don’t have to. That’s a decision that every owner has to make for him or herself.
2. Don’t Quit Your Day-Job
Just because you have enough money put away to start your new business, it might not be a good idea to quit whatever job you have at the time. When you have money coming in from any source, it’s tough to give it up because you would be leaving money on the table that could end up helping you a great deal.
For one thing, the longer runway you can secure before opening your business, the better off you will be. Even with a nest egg that you have put away, you can put together an even larger cushion of funds, which is really good to have to prepare yourself for unexpected expenses.
Those surprise expenses can come out of nowhere, and if you’re not ready for them, they can potentially cripple your business or set you back significantly. It seems simple. Why would you cut off a source of additional money?
It’s understandable that some business owners would want to quit their job because it will free up a lot of time that you desperately need when you’re starting a new business. Quitting your job could put you in a tight spot, though, so it’s something to carefully consider.
3. Don’t Rush It
There’s a certain balance that you have to be conscious of when you’re approaching that time when you’re about to open your business. On one hand, you don’t want to wait too long to get started because you need to release the product to tweak whatever needs tweaking and see how it is going to sell.
Another reason for getting the business open and running, which is really important, is so that you can start bringing in revenue to help fund the business as a supplement to your existing funds. On the other hand, you have to make sure that you’re fully ready to open.
While you’re naturally going to be eager to get going, as so many owners are, who jump the gun and end up running out of money because they opened too early. Do your best to observe that delicate balance and get all your ducks in a row to open your doors, but not waiting so long that you start getting precariously close to the end of your runway.
4. Add More Revenue Streams
At the risk of stating the blatantly obvious, it behooves you during the time when you’re bootstrapping a business to find as many streams as possible to bring in extra money. When you’re paying for everything yourself, you’re going to thank yourself for every bit of additional funds you can bring in to supplement what you’ve got.
In addition to keeping your day-job, it will be extremely helpful when you bootstrap your business to bring in other revenue streams. Crowdfunding can be a great option to use for any business. You just have to figure out how to find the people who will be interested in donating to the project of getting your small business off the ground.
And that’s how you should present it to your donors—it’s a project in which they can invest if they so choose. How will you appeal to that group of people? What reasons can you give them to contribute to the project? You will also need a good incentive for them, the reward they get at the end when you meet your goal.
Finding the right crowdfunding platform is a key consideration, too, as there are quite a few different options. GoFundMe is probably the most common choice, but there are more options you can research to find the platform that is the best fit for you.
If you have assets or items of value that you’re willing to sell, that is another thing you can do if you have some things that you would be willing to part with. Even if they’re not particularly high-value assets, every little bit helps when you’re bootstrapping.
5. Consider Bringing in a Partner
If you’re starting the business completely on your own, the whole thing can be pretty daunting because everything depends on you, and that’s obviously challenging to do. Just for the funding aspect alone, however, it can be extremely advantageous to have a partner.
If you decide to go that route, you still don’t have to bring in an investor, while you’re getting additional money from whatever assets your partner brings to the table. Having a good partner that also brings their own money in with them to fund the business is kind of like having an investor with no strings.
This is actually just one of the benefits that comes with bringing in a partner.
6. Trim the Fat
When you’re funding your business yourself, you’re most likely not going to be in the position where money is no object. In reality, it’s nearly impossible for money to be no object, but you’re especially not going to have the luxury of frivolity with a bootstrapped business.
That means you’re going to want to be extra careful with how you’re spending while trying to save every penny to throw at the business. Watch your expenses carefully, obviously, but consider which items in your budget that you might be able to do without for now, such as things like brand new computers for you and employees you may have.
Things you probably shouldn’t cut, on the other hand, might be attorney fees or all the required permits and licenses. Many businesses cut some pretty important corners that can easily come back to bite you, so as you’re trimming the budget for your burgeoning business, be sure to keep all the essentials.
You can come back to the things you’re cutting later on, but for now, while you’re just trying to get your business off the ground, you might want to run as lean as possible.
7. Don’t Run Out of Runway
Your runway funds can run away from you pretty quickly, and it often takes new business owners by surprise. This is why that initial, critical period when you’re about to open, or have already opened for business, is so challenging. It’s also why you can’t spend too much time deliberating, developing, tweaking, and perfecting before you actually open for business.
Many new owners fall prey to this syndrome because they become nervous that the product is not quite right before they launch, when what they need to do is just get started to see how it will do and make adjustments as they go. It’s called a runway for a reason.
That early period of time and that money you have set aside for your runway is meant to give you the space you need to propel the business off the ground and take flight. You have a finite, and most likely fairly tight runway when you’re bootstrapping your business, so it’s wise to get off the ground as soon as you’re ready.
It’s Not Easy, But You Can Do It
Starting a business is one of the toughest things you can do, and that’s especially so when you’re paying for the whole thing on your own. The best thing you can do as you go through the process is to reduce your stress level as much as possible.
If you have family or friends who are there to support you during this challenging time, then you’ve already got a great advantage because you may very well need that support as you’re fighting to get your small business started and ensure that it’s successful.
Don’t let the setbacks that you may encounter get you down as you attempt to keep all the balls in the air while keeping the flow of funding coming in that it takes to jump-start your business. Hopefully, these 7 tips will give you that bit of extra help you need as you’re making every effort to stay on the track to opening your new business.
Add as many funding streams as you can to supplement your income, watch all of your expenses carefully, and don’t be afraid to look for help in the form of a partner or informational resources you can find online.
Making the choice to bootstrap your business is a very good way to approach your new business because it means you won’t be in debt before you even get started. As long as you prepare well and make informed decisions along the way, you can make sure your business is a successful one.