Despite the origins of the phrase “pull yourself up by your bootstraps” having seemingly been forgotten by the world at large, it’s clearly here to stay. Rather than as an example of an impossible feat, it’s used to denote using hard work and perseverance to better your position. Etymology lesson done, here’s our take on how it applies to you and your start-up.
It doesn’t matter how great your business idea is, you still need funding. Bootstrapping your start-up refers to growing your business with little to no outside investment or venture capital, relying on your own savings and revenue. Sometimes the external funding route just isn’t a good fit for what you’re trying to achieve, sometimes it just may not come through as an option. But entrepreneurs who are self-made, who have successfully bootstrapped their business and made it a success are few and far between. The process takes dedication, single-minded focus, confidence and a willingness to accept risk.
There are a number of different options available to start-ups looking to operate the bootstrap model.
- Owner financing and personal debt: Where the owner users their own income, or takes on personal debt to finance the company
- Subsidies: Where tax reductions or government grants and payments are provided
- Sweat equity: Either the owner or employee contributing to the company in the form of work for below their usual wage, usually in return for shares in the business
- Minimise operating cost and inventory to keep finances under control
- Sales: Actually selling the product/service in order to generate revenue
So with those in mind, here are our tips for bootstrapping your start-up.
Be sure your business is right for bootstrapping!
If your business model requires a lengthy sales cycle bootstrapping simply might not be an option. Successful bootstrapped companies tend to have a business model that converts and generates cash as quickly as possible
Find a reliable and dedicated co-founder
This one may or may not apply to you, but having two different perspectives running your start-up can help overcome hurdles and innovate at speed. Co-founders need to work together closely and have skills that complement each other. If your skill sets differ but complement each others’ you’ll have more control over keeping expenses low.
Cut down in your personal life
Unfortunately, rags to riches tales start with the rags part. If you’re bootstrapping your business you’re going to have to make some personal sacrifices in the (hopefully) short term. Find every method you can to reduce your outgoing expenses in order to keep yourself afloat as the business gets going.
And keep the business expenses low
Use free versions of software for accounting, CRM, project management, etc. Find free or cheap business bank accounts, office space (if it’s even needed), etc. Most importantly here, keep an eye on your business’ cash flow. You need to understand what generates money, and what drains it.
Learn to code if you need to, teach yourself the ins and outs of selling, using CRM, HR or accounting software. Find every method you can to expand your skill set and avoid outsourcing jobs that you can do yourself. You can't learn to code in a week but taking an intensive course may help those less tech savvy to know how to ask a developer in their language what you need.
Invest in your digital presence
Get your domain secured ASAP and start work on your SEO alongside your pitch for your business. Remember, SEO takes time, and your website is often just as vital to the success of your business as a pitch deck would be if you were looking for investors.
Keep your roadmap and vision in mind
As your business grows you’ll find opportunities to boost your growth at the expense of changing your operating model or product. Weigh each such opportunity up carefully. The growth may be useful in the short term, but does it compromise your vision and long term viability?
Practice repetition and resilience
You need to articulate your vision in a clear and concise manner to help validate your business, so practice communicating the proposition. Start out with voice note recording, then bounce off friends and family, then move on to peers, honing the pitch as you go. If your audience ‘don’t get it’, firstly check they are indeed your target demographic, if so, these are early adopters if not, re-focus, then rinse and repeat.
Hex have worked with numerous start-ups to help them establish their vision and forge a brand and digital presence. Get in touch with our team today for help with your new business.