How to Bootstrap a Startup Company

As I wrote earlier, bootstrapping can be a great way to finance your startup company without having to take on a swath of bank debt or give up equity to a private investor.  But the other side of the coin is that bootstrapping a company requires a lot of time, energy and patience; you won’t have piles of cash to solve the problems your startup encounters along the way.

Here are a few tips to keep in mind should you decide to bootstrap your startup.

1.  Cash is King

As Guy Kawasaki puts it,

The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it’s queen and prince too for a bootstrapper.

2. Cut your Overhead

Because Cash is King, you should strive to be as frugal as reasonably possible.  Why spend $1000 on a fancy chair when all you need is something to sit on?  And since you are going to bootstrap your startup, you’ll need to be frugal in all areas of your life.  Money spent on a fancy car is money that could have gone into your start up.  Get the company off the ground, then buy the car.

3. Do it yourself (now!)

Those business owners that bootstrap their company don’t have the luxury of hiring an expert for every problem the business will face.  In fact, it’s highly likely that your company will be understaffed (though one can argue this is a good thing).  The consequence of this is that you’ve got to pick up the slack.  So put on your DIY hat, grab a cheap book (these days Google does just fine) and learn how to solve the problems your startup faces yourself.  You’ll be surprised (and proud) of what you’re capable of.

4. Guerrilla Marketing

If you bootstrap your company, you aren’t going to have a big budget, much less a big marketing budget.  Jay Conrad Levinson wrote Guerrilla Marketing for people like you, people looking to efficiently and economically expose their company’s brand.  Guerrilla marketing requires more ingenuity than traditional marketing channels, but for the clever bootstrapper, it’s no less effective.  These days the internet provides additional resources for cheap marketing, such as search engine optimization (SEO).

5. Partner with other firms

Entrepreneurs tend to like to go it alone, but bootstrappers need to remember that they’re playing a man down.  Partnering with other firms can lead to customer acquisition as well as opportunities to barter goods or services between businesses (which is great when cash strapped).  So take the opportunity to network and get to know other business owners.  It’s easy to do these days with sites like Twitter, which has a sizable business community.

If you decide to take the adventurous, challenging, but highly rewarding road to startup financing by bootstrapping your company, keep these tips in mind.  They have served us well here at smbZen over the years.

Related Articles:

Tags: , , , , , , ,
April 2, 2009 | Start Up 

Comments

blog comments powered by Disqus