Bootstrapping refers to starting a company without external funding, just personal savings and funds from sales. It is the purchase of resources for a new business at the expense of the owner without loans or sharing equity. Many creatives and small businesses operate in this manner. However, they find it very difficult to keep the business afloat.
If you are in this boat, then you need to learn how to bootstrap with confidence. This is what we will be teaching you in this post.
Tips to Help you Bootstrap with Confidence
Bootstrapping saves you from spending so much time on pitch preparation or looking for loans. It also eliminates the risk of having the bank on your trail for unpaid loans. Here are a few tips to help you bootstrap with confidence.
Stick to your area of interest
When you hear about a new business with a high propensity for success, you almost want to jump right in. This sort of motivation is great if you have some experience in this area or you love the business. However, if it is uncharted territory, it could be dangerous.
If you lack insider knowledge about the business, we suggest you stay away. Don’t get tempted to dive into a business that is away from your area of interest. It could be costly, whether for secular entrepreneurs or Christian professionals.
Make your plan budget-based
If you start a business without a plan, you are already setting yourself up for failure. One of the most important aspects of planning a new business is the budget. Having a budget tells you how much you have at your disposal and what you can spend on different resources.
We all have wishes for our businesses while we brood on them. You shouldn’t make the mistake of building your plan around wishful thinking. If you do, you’ll end up spending more money than you can afford. It is better to draw up a budget based on the funds you have at your disposal. Build your plan around this and bootstrapping becomes easier.
Select a business model that optimizes revenue flow
Technology has presented us with several tools to ensure that we shift from the traditional business models. The traditional business model of a store requires you to have opening and closing hours. With this model, you are limited to running your business within certain periods each day. You may not be able to work on weekends because of other commitments.
Adopting an e-commerce business model allows you to facilitate 24/7 sales. Now, you don’t have to be present to make sales. You don’t even need a physical store. Customers from any part of the world can make purchases any time they like from their homes. All you need to do is get their orders, process them, and make deliveries.
It doesn’t matter what sector your business falls under, there is a business model that you can adopt. Choosing the right business model cuts costs while ensuring that revenue flows into your business consistently.
Choose team members that will work for equity
At the startup stage, especially in bootstrapping, you have very little funds at your disposal. You can’t afford to spend excessively on recruitment if you want the business to stay afloat for longer. While you will need to take up several tasks by yourself, you can’t do everything.
You need to choose team members that will work with you for equity. Give them a stake in the company rather than money for their services. Doing this makes them know that if they fail, the business fails, and they lose. With equity comes focus and commitment.
There is always the urge to get an office space when starting a new business. Don’t succumb to this urge except you have to. We advise that you wait on getting a store until you have sufficient customers and you can afford it.
Working remotely frees up funds for other purposes. You can work with a computer or smartphone connected to the internet from any location. Getting an office space requires you to employ staff, purchase furniture and equipment, and pay several bills.
Benefits of Bootstrapping
In rounding up this post, we will state a few benefits of bootstrapping your business. Check them out below:
- Gathering of experience while risking just your money. Even if the business fails, you don’t entirely lose.
- Boosts your creativity and problem-solving skills.
- Independence from investors. Because of this, it is easy to make business decisions quickly.
- Improved focus on the most important aspects of the business.
- Provides more value to customers.
Bootstrapping is not as difficult as we think if we get it right. We have dished out a few helpful tips in this post. What other bootstrapping strategies do you know? Share them with us in the comments section. Meanwhile, check out GodKulture for interesting articles to boost your creativity.