Are you an entrepreneur who is struggling to startup a business with little to no extra funds? You are not alone. Many startup business owners find it difficult to create a flourishing business without taking out loans or spending all of their personal money to make it happen. Instead of spiraling into debt and stressing over finances, you should learn how to bootstrap your business.
What does it mean to “bootstrap your business”? It is the process of funding your business from your own expenses without completely drying up your own personal cash flow. It is learning to balance your business income with expenses wisely and cutting costs where you can to create a greater business cash flow. Most importantly, it allows your business to grow without being burdened by the debt of your business startup in the future.
Sure, this sounds easier said than done. And, honestly, it does take time, effort and patience to successfully bootstrap your business. But the end result is well worth your efforts and can put you on the fast track to developing serious business financial sense over your potential competitors who used the traditional route of financing their startup with loans.
1. Do Not Outsource Jobs You Can Do
With a startup, you are obviously going to be busy. It can be easy to throw in the towel, take an extra day or two off each week and pay someone else to do some work. But if you are able to do the work, do the work. Every little bit you can save from paying someone else to do something you can do with a little extra time adds up to more money for your business – and in your pocket.
Are you creating a blog for your business? Instead of outsourcing other bloggers to create your blog posts, set aside just a couple of hours each week to write 2-3 blog posts. Schedule them the same day for them to post on different dates of the following week and you saved yourself some money hiring a weekly blogger for your company’s blog content.
Even if you feel that you are over your head with a particular task, chances are you can find several free online resources to help you at least get started and learn at your own pace. However, if you are feeling completely overwhelmed by a task, consider outsourcing an independent contractor with reasonable rates for the bare minimum number of hours per week that you feel you might need to get the job done.
2. Cut Personal Expenses as Much as Possible
Since you are funding your business from your own pocket, you are going to have to be extremely careful about your personal expenses. Your social life may get moved to the back-burner for a few months, but think about all of the money you will save for your business over time.
You will probably be too busy for extra entertainment anyway, so consider downsizing your huge cable package by cutting out extra movie or sport channels you do not watch regularly. If your phone data eats up a large part of your bill, cut down your data plan and use free Wi-Fi when available.
You might even consider renting out a room in your home to a trusted friend or relative or even moving into a smaller space until business picks up. Be diligent about meal planning so you can go to the grocery store and spend only what you need for each week. Most importantly, do not be tempted to buy anything extravagant for your business just yet. Stick to the necessities and worry about other things as you can afford them.
3. Keep Your Team Small
If you can stick to just yourself as an employee for a while, that would be your best-case scenario to help cut costs. Or, consider adding on a close friend or relative who is willing to help you out with small tasks for little or no pay.
Unfortunately, sometimes it is not always that easy. You may need a few sets of extra hands and their paychecks will have to come out of your pocket. Rather than immediately hiring someone, though, consider hiring interns as an option. Interns are typically college students who can work for your business for little to no pay in exchange for experience within your business field. This will help cut costs and you can decide to hire them full-time later when business picks up if you like their work.
However, if your business is becoming too much to handle on your own or you cannot find great interns, consider keeping your team as small as possible. One awesome employee can take the place of several mediocre employees and will keep more money in your pocket.
4. Use Social Networks for Marketing
You will want to market your business to bring in more customers, but how do you do that on a tight budget? Use the power of free social networks to get the word out about your business.
Facebook and Twitter are easy to use and free. You can set up accounts in a matter of minutes and begin setting up a potential customer base by adding your friends and family. They spread the word to their followers and, soon, you can have a wide fan base from all over the world.
Schedule posts on each network daily and frequently. You can use a free tool like Buffer to schedule a bulk of posts to be spread throughout the week, and it only takes a few minutes of your day to schedule.
5. Be Diligent About Keeping Up with Income and Expenses
For both your personal and your business revenue, get in the habit of keeping track of your income and expenses. Make a super-organized file space to store all receipts and other income or expense-related paperwork. Keep a detailed checkbook that lists your income and expenses with notes for each and make it a point to balance it daily.
Consider keeping a spreadsheet on your computer to track total revenue. Not only will an organized and detailed list of your income and expenses help you see where your money is going – and what you can potentially cut back on – but it will also come in handy for tax season to maximize your business expense deductions.
6. Consider Creating a Home Office
A physical home for your business may be necessary depending on what type of business you run, like a retail shop. However, if your business is a type that can be run from home, like a graphic design business, consider utilizing a space in your home as your home office to save money on rent.
A home office is not always the most ideal space for a business, especially if you have children in the home with you, but it can be a temporary solution to save a significant amount of money until your business starts taking off and generating its own revenue. You might even enjoy working from your home so much that you continue to create a completely virtual business even after you bootstrap your business to success.
Some of the fiercest and most successful entrepreneurs choose to finance their own businesses to give them a jump ahead on financial freedom once their businesses begin to make their own money. Though it takes time, you can bootstrap your business for success by cutting back on unnecessary spending, doing as much work by yourself as you can and utilizing the space you have for your business instead of renting more. Feel free to leave a comment with your ideas or questions.
Aniket Warty is a serial entrepreneur and a venture capitalist with a passion for tech and e-commerce startups. In his spare time, he writes in various publications, and mentors upcoming business owners and enterprises.