Some of the most successful companies on earth came from humble beginnings where the founders were forced to self-fund. Here's how you can do the same.
You don't need a six- or seven-figure investment from outside sources to get your business off the ground. Some of the most prominent companies in the world started from very little – Apple, GoPro, Coca-Cola and eBay, to name a few.
These companies may have received funding later on, but they all came from humble beginnings where the founder(s) pulled themselves up "by the straps of their boots" and self-funded their venture, whether it was from the founders' personal debt or investment, reinvestment from revenue, and/or sweat equity.
Having bootstrapped Visitor Queue to have over 2,000 clients in five continents, working with several Fortune 500 companies, in under 12 months, I have learned a few tricks about building a business on a budget. Below are some tips that nearly every bootstrapping businesses can benefit from.
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1. Don't leave your job until you have to.
Contrary to popular belief, you can build a profitable business while working for someone else – just be ready to give up your evenings and weekends. It's important not to put any financial stress on the company that isn't needed, including a founder's salary. You may not end up even being Employee No. 1 if that's not what the business needs at that time. Identifying when to jump in full-time is a question I've been asked by several entrepreneurs, and it comes down to whether the company needs your additional time in order to grow.
2. Don't pay upfront for anything.
Most vendors will offer you a slight discount if you pay upfront for a quarter, year or even multiple years. This is a great tactic for companies to build up cash flow, but it's not so great if you're the one purchasing it when you're trying to bootstrap. The capital you're deploying to take advantage of that discount would likely be better used in other areas.
3. Every dollar spent should have a multiplier.
This is simple but not understood by many founders. Every dollar you spend should have a multiplier for potential revenue it could bring the company. You do not need fancy T-shirts, outings, desks, etc. What you do need is revenue. Your main metric is ROI, and if something doesn't have the potential to generate a positive ROI, don't focus on it. Also, if you have the option to put off costs until a later date, do this as much as possible.
Be as meticulous with your cash as possible by carefully planning and testing the most effective way to spend it, and then double down on the ways that work the best.
4. Bring on co-founders to work for equity.
Depending on the business and your expertise, you likely can't do everything, and it doesn't make sense for you to try. A great example of this is for nontechnical individuals trying to build a tech company. If you're bootstrapping, you likely can't afford to pay an employee, a company or even a freelancer to build your software for you, so your best bet is to bring on a technical co-founder. Even if you can afford to pay one of the three people, it's still better you bring on a technical co-founder.
5. If you can do it yourself, do it.
If you can do it yourself or teach yourself how to do it, then do. You likely don't need to hire a bookkeeper or graphic designer right off the bat. If you really can't do something yourself and can't teach yourself in a realistic amount of time, consider hiring an experienced freelancer or contractor to handle the task.
6. Review your cash flow projections regularly.
I've talked to other founders who review their cash flow projections monthly, but as a bootstrapped startup, you don't have that type of luxury. Things change quickly, so I recommend you review them weekly to ensure you're on track or cutting back where needed.
7. Move quickly – perfection is the enemy of profitability.
You see it all too often where founders won't launch until their product is perfect. This can be the death of a bootstrapped startup. So get it out there, get people paying or some feedback, and then keep rolling with the punches. The more you wait, the more cash you burn, and the less you learn. Launch, launch, launch.
8. Offer incentives for customers to pay upfront.
Provide your users with a discount incentive if they pay upfront for an extended period of time. This is capital you need and that can be deployed to make you even more capital.
Yes, you have to spend money to make money, but what if you don't have any money to spend in the first place? That's where bootstrapping comes in. If you're lucky, you'll make it through this stage and be able to finance further growth through investors, loans or grants.