Bootstrapping so you can keep going
Bootstrapping is figuring out how to reduce the cash you need to start, by eliminating any unnecessary overheads while finding out who will give you a hand.
If for whatever reason you’re not able to raise enough capital to start-up you might be able to get what you need by ‘bootstrapping’ (finding what you need through unconventional or low-cost methods).
Have others lend what you need
You don’t have to purchase new equipment to start your business. Think about what items you might be able to borrow over the short term or do without until the business grows.
Draw up a list of your asset needs and make a determined effort to borrow from others what you can while searching online for second-hand items that will save your business money. Are there people you know that are already in business who could lend you what you need?
Call in favours
Time to talk to friends, other business owners’ and family to see which assets, time or money they can help with. It’s a common bootstrapping technique to save money and chances are there is more help out there than you realise.
Reduce your set up costs and overheads
Look at the bare minimum you’ll need for your own living expenses and cut your salary or work for no pay for a time. It’s quite common for business founders to put in this unpaid ‘sweat’ equity to start with.
Look around your home and decide what you can sell to raise the cash you need. If your business is that important to you then sell everything you can.
Search online for what’s happening in your industry to see if there is any specific support in your industry.
Find willing volunteers
Tap into any family and friends that are willing to help which could be cash or just a helping hand setting up and spreading the word you’re in business. You’ll be surprised who in your circle of friends will help.
Work from home
Depending on the type of business you’re beginning, you may be able to work from home or use a workspace that costs little or even nothing. There are lots of shared office options and some businesses with spare capacity may rent out their spaces or equipment to save you signing up to long leases or buying equipment.
Harness social media
You don’t need a large marketing budget to build a customer base. The Internet can help you develop a strong presence for free.
Whether you decide to create a presence on Facebook, Twitter, LinkedIn or Instagram, regular interactions and postings are the keys to gaining customer awareness.
Use crowdfunding to raise cash
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.
Some examples include:
Each of these sites has great case studies and examples you can view.
Possibly you can negotiate with suppliers a much longer payment cycle, free trials or a number of months’ rent free in a new lease agreement.
Low cost marketing
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 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.
- If you sell direct to other businesses then use up some leather and go visit (walk, drive, call, fly). Face to face meetings don’t require an advertising budget.
- Build word of mouth referrals by actively asking new customers to refer you. Don’t wait for word of mouth to build over time as it tends to be too slow.
Outline all the ways that you can save money by first reducing what you need and then from what you can borrow. Spend your time like a currency and do as much as you can yourself (with friends) before you start paying others.
Research your local industry to see if there is any specific start-up grants, subsidies or support that you may be able to tap into and talk to your financial advisers (e.g. your accountant) if you’re looking to fund from the crowd to make sure you’re doing the right thing.
List everything you need and brainstorm with others how you can get access without paying for it and be confident you’ve accumulated more goodwill than you think; if you don’t ask you won’t get.
Got a question? Please don’t hesitate to ask.