Summary: Many entrepreneurs have to fund their business purely from their own funds and from operating revenues. This is called bootstrapping.
If you can’t get loans or investors, or if you don’t have a lump sum of money, then bootstrapping is usually the only alternative.
While it can be challenging, it is not impossible.
Here’s how to go about bootstrapping your business more effectively:
Step 1: Create a business model that produces quick revenue.
If you want your bootstrapped business to succeed, your business model must produce revenue quickly.
If not, any cash reserves you have will be burnt through quickly without being replenished and your business will not be able to survive.
Step 2: Get creative with your marketing.
If you can get creative with your marketing, you don’t necessarily need to have the deepest pockets.
For example, create a video that may get a lot of shares on social media or come up with a snappy angle that people you network with will not forget.
Step 3: Provide ways for early adopters to create buzz.
Instead of hoping other people will spread the word, incentivise them to do so.
Have a discount coupon that can be unlocked by sharing your website on social media.
Alternatively, give away prizes for those that spread the word.
Step 4: Use the space you have.
Cut back on rent and utilities by using the space you have.
This could mean yourself or your employees working from home.
Step 5: Negotiate with your suppliers.
Get your suppliers to give you credit terms so that you can use your supplies to generate revenue first and then only pay your suppliers.
Step 6: Barter with others.
Instead of paying for the services you need to get your business to work, try bartering your own products or services for theirs.
Make sure that any bartering agreements you enter into are official and in writing.
Step 7: Account for every single penny.
Monitor everything you spend while bootstrapping.
It is easy for money to pour out of the business on unnecessary things if you are not careful.
Make sure you have proper accounting in place.
Step 8: Eliminate as many personal expenses as possible.
There is no comfortable salary coming in while bootstrapping a business, so keep your personal expenses as low as humanly possible.
Step 9: Let your website grow with you.
Don’t blow all your budget on an expensive, custom website.
Businesses evolve a lot along the way and websites need to be able to evolve and change as well.
If you have blown all your budget on a custom website, you may be in hot water when you realise you need a new website and have no money left.
Rather use a content management system like WordPress with a theme that you can adapt as you grow.