I’m a major advocate of bootstrapping — I think the lessons learned in the process are precious, and owing 100 percent of your business is worth the struggles and challenges. Having said that, bootstrapping is also very difficult.
I’ve personally bootstrapped all businesses I actually have started. To me, not having a pile of debt or the stress of investors breathing down my neck allowed me to remain laser-focused, even though times were difficult.
It’s challenging rolling each of the money into the business, instead of your wallet. In case you are considering bootstrapping a brand new startup, consider these five tips to help you reach your goals.
I feel that some startup founders focus on the stuff that don’t matter in the beginning. A fancy work space and ping-pong tables are cool, don’t misunderstand me, but they may be an unnecessary expense in early stages. Those funds could be used for customer acquisition and marketing, for example. To cut costs significantly, consider using a coworking space. Besides the monetary savings, there are many additional benefits.
“Working in a coworking environment can help you become a better decision maker. To be able to scale and move into your own work place you need to quickly identify your minimum viable product (MVP). Coworking spaces present an environment that allows you to put your mind down and concentrate on building minus the stress of long-term commercial office rent,” says Shannon Wu, founding father of Mr.Progress.
Look at a coworking space even if you have the funds to spring for an elaborate office. When Gary Vaynerchuk started VaynerMedia during 2009, he did so out of another office. He bartered his time for your space, and at that time, he was already rich. He might have were only available in any office space he wanted, but he opted to remove that overhead at first.
As Mark Cuban says, “Credit cards are definitely the worst investment, unless you pay them off every 30 days. Even then, don’t do it.” When times get difficult financially, one of the simplest ways to alleviate the situation is always to break out the plastic. Credit card debt can rapidly mount up and impact you negatively, including ruining your individual finances.
“The main benefit of bootstrapping is that you retain ownership from the entire company, and since you aren’t raising capital, you would like to remain as debt-free as possible. Mounting up credit card debt will be the fastest way to get in a hole, which could then require a smart investment in order to bail you. If you want to continue to own your entire company, avoid credit card debt,” advises Robert Rodrigues, startup advice.
If you do find yourself buried in personal credit card debt, concentrate on paying them back as soon as possible. You will perform far better and also think much more clearly with this weight off the shoulders.
There are several amazing PR firms available that produce a huge level of buzz and exposure for startups, but if you are bootstrapping, a $10,000 or $20,000 monthly PR retainer is going to be out of the question.
There are plenty of methods to generate valuable press for the business if you are prepared to roll up your sleeves and do the work. Dedicate time for you to replying to daily queries through free services like HARO, and network with as much journalists that focus on publishing content associated with your industry.
“Whenever you don’t hold the luxury of a budget for PR, it all is dependant on hustle. You should be able to both lean on your own existing network and not hesitate to reach out to new leads. Usually the only obstacle in between your business and free publicity is your own fear of rejection,” suggests Darius Eghdami, CEO of FansUnite.
Avoid emails. Journalists are bombarded with emails daily, and yours will probably just merge with the others. Instead, get active on Twitter and then try to get the foot in the door this way. Twitter is short and sweet, and it’s the social media that virtually all journalists monitor daily for breaking news.
If the funds are rolling in, some expenses become an after-thought. If you let your guard down and start freely spending, there may be a difficulty down the road if business slows or else you face difficult. Being financially responsible is vital.
I recently spoke with a startup founder which was trying to get their digital online marketing strategy ironed out. That they had more than a half-dozen tools and merchandise that they were paying $1,800 a month for, and they weren’t utilizing them. That’s $21,600 annually, just wasted, due to careless spending. They were experiencing sizable growth, so that they stopped evaluating every expense. You ought to never ease up when it comes to reviewing your outgoing expenses — that wasted money may be better utilized when it were put dtfxro an urgent situation operating expense fund.
In addition, you develop a business survival mindset when you find yourself constantly cautious about expenses. “Bootstrapping is probably the most valuable stages a founder goes through. When each expense is scrutinized, you have to creatively find unconventional approaches to solve complex problems and doing this builds the resourceful gritty mental habits needed to develop a successful company,” says Zain Dhanani, CEO of Tinsli.
The quantity of startups that raise a lot of money, blow through it and then fail since they can’t raise additional funds are absurd. VC money isn’t free money — it’s not even close to that. Not having enough money is one of the most frequent factors behind failure.
“Many brilliant entrepreneurs become blinded by VC dollars and end up forgetting that revenues minus costs must equal a return. Entrepreneurs have to realize VC dollars aren’t free — they get compensated back first whatever the end result is. Bootstrapping might result in a slower growth curve, but it often results in a significantly better financial outcome later on,” explains Ryan McQuaid, CEO and co-founding father of PlushCare.
Venture capital money could be a good tool for some, but it’s not really fully understood. For something large-scale like Snapchat, yes, VC money is required to handle the rapid scale. Startups on that level are extremely few and far between, meaning most can succeed through bootstrapping.