As we discussed the essentials of bootstrapping in the previous blog, now we focus on other aspects related to the same. Having understood the meaning of the term now we further venture out on how actually can you bootstrap and scale your business together. With these simple tips you can definitely save a lot of costs and help your business stay afloat in terms of expenses.
- Build a team who will work for equity: It is important that your business has the right set of people more than anything else. It must be understood that every decision made will business and hence the employees chosen at this stage play a very crucial role. Equity is your best assurance of commitment and focus. Managing through cash might seem an expensive choice.
- Consider the budget first: Realise your budget and then plan the business accordingly. It must not happen that the expenses go beyond the expected and cause an immediate loss to the organisation. Most investors agree that too much money leads to poor spending decisions and lack of controls.
- Do you need an office? These are the questions that you need to ask every time you are tempted. You must also choose simpler choices when it comes to websites, designs or digital media advertising. Remember, you can always revamp these at any time once you establish the startup.
- Negotiate inventory management with suppliers and distributors. For services, don’t be afraid to ask for a retainer up front to offset your costs. Business terms are negotiable, but new entrepreneurs with plenty of cash don’t bother to ask.
- Choose a business model to optimize your revenue flow and timing. This is one of the most crucial element of a startup especially the one which operates on bootstrap. Think of clever options like choosing an e-com rather than a conventional retail store. Monthly subscriptions, services fees, usage of social media are some of the smarter choices that you can make.
Essentially the key point for a bootstrap is to limit the unnecessary expenses, prioritise the tasks and achieve them accordingly. Also, the revenue generated through this must be carefully re-invested in the business until the break-even is achieved and the business starts running on a profitable basis or reaches a point wherein external funding becomes a much-needed requirement.
Bootstrap – Checklist
Borrowing from friends and family
- Delayed payment:
Lease goods / rent them
Negotiate long term payments
Partner with other startups
Negotiate with suppliers
Develop procedures for stock control
Learn about them
Apply for them
Employees who can work for equity
- Other resources:
Avoid immediate purchasing of goods
Borrow materials that you do not need often from other organisations
Consider joint purchase of major investments
Coordinate joint purchases to negotiate discounts
Trade instead of buying/selling (e.g. media sponsors)
Initiate joint sales efforts with complementary organisations
Develop win-win relationships with other partners
Buy second-hand materials