Bootstrapping in business; everything you should know
Do you want to start a business, but you have limited finances, capital and support? Well then you’re bootstrapping. It’s not an easy task, but it can, and has been done – successfully.
For some, this is a hard concept to wrap your head around, it means you begin with few resources and requires you to be intuitive to stretch what you do have. You will also have to invest in your own business without getting money from anywhere else.
Unravelling how to successfully bootstrap isn’t a challenge for everyone, even if you have the greatest idea for a startup company. However, if you CAN create a groundbreaking business plan based on bootstrapping, and you have the commitment, will, and resourcefulness to make it work, you could be onto a great way to begin your business.
Are you a bootstrap startup?
Well, if you started your business out of your back pocket without any investment from external sources, then I’d say so! And if you’re thinking of starting one, ignore the rumours that you can’t run a successful startup without a six-figure budget, it’s simply not true. In fact, there are a lot of clear advantages to consider when you’re creating a startup.
How does one begin bootstrapping?
Use the force … of a good sense of business finance. Stretch every resource as far as it will go, and then some. Use what you already have available instead of purchasing something new, rent or borrow to get your office in shape, take the chairs from your dining room if you must.
Every penny you spend needs to be accounted for, understand why you are spending that money and its usefulness. Avoid borrowing money, this way you don’t have to give up as much equity to investors, and your interest to lenders is minimal.
Make money moves
With limited resources, you need to focus on making money … quickly. Use letters of credit from your buyers as insurance for suppliers or extend your credit limit as much as you can, you have to do whatever you can to increase cash flow.
If you are not able to provide your product or service promptly, then you may not want to choose a bootstrapping model. With this model you can stretch your resources, but it doesn’t generate new ones, this is what your business needs to do for itself.
Do it yourself
Thinking of outsourcing some tasks? Don’t bother, you don’t have capital to do it. Instead, learn new skills for yourself. You can scour YouTube for tutorials on almost every software, so don’t panic, grab your computer and start studying – today. Also, lots of softwares come with a free trial period, which is sometimes perfect to get a few tasks done.
Learn the ins and outs of building your own website with the array of coding resources on the net, and while you’re there, learn about SEO and content marketing. Don’t rely on someone else to do it for you, they will want to be paid and you don’t have the funds.
You have no need for a big glass office on the 27th floor, yet. Especially, when it’s only you, your team of three employees, and your family dog running the business. So take advantage of working remotely, use free chatting and video calling services like Skype to communicate when you need meetings.
Almost all of your tasks will be able to be completed with a computer and a telephone, so hold off on the cityscape view.
Open a business account
Self funding can be difficult to manage, so move the amount of personal funding into a business account. Avoid dipping into your own funds in your personal account for business-related things, it will get confusing and untrackable.
A business bank account will help you keep track of what money you’re spending and making. It will also makes things easier when filling your taxes, you want to avoid discrepancies and spending time sifting through your personal bank statements.
When bootstrapping, making connections is also vital. You’ll want to show potential investors that your truly believe in your own company, and that it has the ability to generate revenue with few resources.
This business model is definitely not an easy process for any startup, but bootstrapping continues to be an attractive option for entrepreneurs. It can come with a lot of benefits, as long as you’re aware of the risks, and what you need to have in place.
One of the things you will need to have in place is a powerful all-in-one ERP tool, with Holded’s ERP Software #1 tool, you can manage sales, finance, operations, and human resources in one beautiful, easy-to-use platform.