One of my favorite business terms is “bootstrapping.” The term is usually used in the start-up community to describe a company that is founded entirely or almost entirely by the work of the founders themselves.
Here are a few guidelines on how to start your business with as little capital as possible:
1. Nothing but the bare minimum
“You’re starting a company, so you need a big and nice office so your customers will trust you, and a new computer because yours is getting a bit slow. Maybe you should hire someone to answer the phones because you’ll probably become too busy to do such mundane tasks, and you should definitely pay someone huge amounts of money to design a cool website.”
WRONG!!!!!!
When people start their first company, they tend to think that it is okay to spend loads of money on the business because they are sure to make loads of money when it is up and running. I myself have been guilty of thinking this way, but it just doesn’t work. You’ll end up spending all your money on things that make your company look professional but don’t make money. And then, when it actually comes to advertising and doing something that creates income, you will have spent everything.
Instead, think about what is the bare minimum you can get away with. Write down a list of everything you are thinking about spending money on, then try to eliminate everything on that list by asking, “Do I really need that?” In most cases, you will end up with a short list of only a few things, and you will be able to use the money for more productive purposes later on.
2. Could you do it yourself?
Sometimes we hire people to do a job for us that we could do ourselves. For example, one of the first things many business owners do is hire someone to create a website for them. I agree that it is very important to be visible online from the beginning, but do you need a professional website? Or would it perhaps be enough to start with creating a simple website that you could make yourself? There are dozens of easy ways now to create a website without knowing anything about programming.
Advertising is also something that can often be done by the founder much more cheaply than by hiring someone. Richard Branson once jumped naked out of a plane with a parachute to promote one of his products. That’s a fantastic example of how a founder can grab the attention of the press without spending much money. You don’t necessarily have to be so extreme, but there is almost always a way to promote your product with little or no cost.
What else are you paying someone to do that you could do yourself?
3. Sell it now, produce it later
Founders tend to spend too much time working on their product until they think it is perfect. But if you’re like me, a bit of a perfectionist, that day might never come. Instead, you have to focus on the basic features of your product and get it out there as soon as possible—and then sell, sell, sell.
Selling is crucial for any business. I have seen many good businesses fail simply because no one in the company knew how to sell. If you are a good salesperson, you can sometimes sell the product before you actually produce it. That way, your income is guaranteed, and you can invest the necessary money to produce it because you already know you have enough sales to finance production. In my opinion, this is the perfect way to do business—there’s no risk, and you make a good profit.
The more experience you gain, the easier it will be to sell your product before it’s finished.
4. A powerful team
Having a good team can make all the difference when you’re starting a business. If you have smart and energetic people working with you, you can achieve anything. What you want to look for in people is passion, problem-solving skills, and someone you enjoy working with.
5. Side projects, extra income
During the first year or two of your business, you might run into money problems. In that case, it can be a good idea to take on side projects—usually projects where you and your team can sell your specialized knowledge at a good rate. The downside to this is that you lose time that should be spent developing your own product.
6. Think before spending
Bootstrapping is basically using your creativity to limit the amount of money you use and finding original and fun ways to achieve the same goals.
Don’t start a business to spend money; start it to make money.
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