How to start up: Bootstrapping
When you start your business, you’ll want to minimize costs any way you can. Every dollar you can save while starting up is one more dollar you won’t have to finance.
Commonly known as bootstrapping, you’re looking to save wherever possible by eliminating any unnecessary overheads, needless expenses and nonessential assets.
Look for alternative ways to fund your start up
Bootstrapping is about making smart decisions to try and generate cash flow before your business acquires too many costs. You might try some of the following well-used methods.
Get your community involved
Embrace creative strategies by getting your local community involved to help find the funding you need for your business. For example, if you’re opening a community café, you could hold a community event to get local people involved with donating old furniture items in exchange for tasting your drinks or food.
Harness free resources
The government, your state, council and local community may have free resources you can take advantage of when starting out. Search online for what’s available and find out which resources will be useful to your business.
Find willing volunteers
Until you can afford to hire an employee, see who might be willing to help out. You may have family or friends that have useful skills in one area of your business. Can you give a student some work experience to benefit you both?
If you do need to hire staff, see if you can manage without permanent employees. Part time or freelance staff will help keep your payroll costs down.
You don’t have to purchase all the equipment you need to get your business moving. Think about what items you might be able to borrow over the short term.
Draw up a list of your asset needs and make a determined effort to borrow what you can, while shopping online for secondhand items that will save your business money. Are there people you know that are already in business who could lend you equipment or machinery long term?
Call in favors
Calling in favors from friends and family – in the form of assets, time or money – is a common bootstrapping technique to save money. The bottom line will be that you owe less money to lenders in the initial phase of your business.
Start up from home
Depending on the type of business you’re beginning, you may be able to use a workspace that costs little or even nothing.
For example, if you’re starting up your own accounting firm, don’t rent an office just yet. Work from home using a spare room or the garage, or a café or similar public place. Build up your clientele before paying for expenses you don’t really need straightaway.
Harness the power of the Internet
You don’t need a large marketing budget to build a customer base. The Internet connects you to billions of people worldwide – and you can develop a strong presence for free. For instance, you could:
- Use third party sites – like Amazon to sell your goods in your business’s startup phase.
- Take advantage of free online software – like cloud storage, project management tools and video viewing sites.
With many standardized website builders already offering their services for minimal costs, you don’t have to know how to code to get your products or services within the reach of every web surfer on the planet.
Get active on social media
In today’s world of ‘liking’ and ‘sharing’ almost everything online, your business needs to give itself an opportunity for word of mouth to get hold of your offerings.
Whether you decide to create a presence on Facebook, Twitter, LinkedIn, or Google+, regular interactions and postings are the keys to gaining some sales traction.
Having gained popularity over the last few years, crowdfunding lets you receive donations on the Internet to help get your business idea off the ground. You can offer people incentives to encourage them to get behind your business.
Market effectively and at low cost
Effective marketing can be creative rather than costly. Some ways you can get your brand in front of potential customers include:
- Email campaigns – as you begin to sell to interested consumers you’ll want to get them coming back for repeat purchases. This is where building an email contact list and sending out regular deals with calls to action can keep your business going.
- YouTube videos – images can speak louder than words, and video even more so. Whether you’re explaining what your business does or showing how a product works, videos are a cost-effective medium for getting your messages across to your target market.