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The gospel of bootstrapping

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HOW TO START A BUSINESS WITH NO EXTERNAL FUNDING

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The gospel of bootstrapping

  1. 1. The gospel of bootstrapping By Angela Ihunweze The gospel of bootstrapping
  2. 2. What is bootstrapping Bootstrapping in business is to start a business without external help/capital. Startups that bootstrap their business fund development of their company through internal cash bootstrap their business fund development of their company through internal cash flow and are cautious with their expenses. Generally at the will be set aside for the bootstrap process. It means using your own resources and effectively managing your cash flow1 to internally generate the funds that you need to operate your startup or relatively new business.
  3. 3. Reorganizing your business for bootstrapping Start A Service Service businesses generally require less startup capital than product based businesses and you can bring money in right away. Figure Out What Makes The Most Money Don’t spend time doing the things that don’t bring in money. As a startup you need money in the door as soon as possible! Defer, delegate, or ignore the rest. Get Volunteer Help High schools and university undergraduates Hire Part Time Get someone to do the admin tasks for your business on a part time basis. You don’t have to hire full time until you have more money coming in. The first person I ever hired was working for me one hour per day to start.
  4. 4. Reorganizing your business for bootstrapping Part 2 Automate Even better than hiring someone is automating your tasks! Think about what you do repetitively and find a way to make it more automatic. It will save you time and help you avoid having to take on a staff member’s salary. Automate the regular and humanize the exception. Form Partnerships Find businesses who also sell to your customers and form partnerships with them instead of spending money on costly advertising. Leverage The Media Choose a hot topic the media is covering and present yourself as an expert. The media is always looking for people to comment on the day’s issues so you’re making their job easier if you have valuable information to share. Think Big, Start Small Have a big picture plan but get started today. Remember that little steps lead to big steps and before you know if you’re a success! Entrepreneurs tend to overestimate what they can do in the short term and underestimate what they can do in the long run.
  5. 5. Reorganizing your business for bootstrapping part 3 Do Something Every Day For Your Business Even if it’s answering one email, sending out one press release, or commenting on one blog, do something every day to help you move forward. Never let the business building momentum die. Don’t Quit Your Day Job Until You Can Afford To If you quit to go full time and then run out of money six months later you’ll have wasted the opportunity to really build something great because you didn’t have enough time. Start off slowly and make sure you can support yourself before jumping in full time. Turn Everyone Into A Referral Partner Your friends, family, suppliers, customers, investors, etc all have the ability to refer business to you. Let them know that you’re looking for new clients and that you would really appreciate their help. You can even offer a financial incentive for them to help you out. Watch Your Payments Try to extend your payment dates for suppliers and also get money more quickly from customers. Starting a business is a cash-flow game so get money in as quickly as you can and pay it out as slowly as you can.
  6. 6. Reorganizing your business for bootstrapping Part 4 Start At Home Don’t expand your business and get an office until you’ve proven the concept working from home and are sure you have a revenue base to support yourself. Share Your Office Once you are ready to move out, try to share an office. The first office I had was just a desk out of someone else’s office. Once I had enough money to expand, I got my own place. Barter Can you trade what you’re selling for something you need? If you’re an Internet programmer, for example, and need business cards, can you design a website for a printer in return for the design and cards that you need? Lease Don’t Buy In the long term it might cost more to lease but it helps with your cash-flow. When you’re faced with making a major purchase like a computer, car or other equipment, lease it to start so you can ensure your company has enough money to continue running.
  7. 7. Reorganizing your business for bootstrapping Part 4 • Hire Friends / Family • Especially at the beginning, you can usually get friends or family to help you because they care for you and want to see you succeed. They might work for free or you might have to pay them but you can usually get away with lower than market rates at the beginning while you’re building. • Create A Rainy Day Fund • Every entrepreneur runs into rainy days where a major financial expense comes up. Maybe your computer broke down and you need a new one, maybe your website crashed and you need to hire an expensive programmer to fix it, or maybe you run into a serious personal issue and need more money than before (all three have happened to me). Make sure it doesn’t put you out of business by buildling up a “rainy day” fund as soon as you can. Every little contribution helps! • Good luck and keep bootstrapping! What other bootstrapping methods have you used to help your company get going?
  8. 8. FYI • To prepare this lecture some help was got from articles from the internet

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