Most business owners don’t have large amounts of capital falling in their laps, especially at the beginning. They don’t have investors knocking down their doors, so they have to rely on borrowed funds to get their businesses going. What if that’s not always necessary? If you bootstrap your business, you’re literally funding your own success.
It takes some dedication, but, in the end, you’ll have a much larger cash flow. You won’t have debts eating away at your profits, and you’ll have 100% control over the direction of your business. It’s not easy in the beginning, but—if you can stick it out—it’s well worth the long term success bootstrapping brings.
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How to Bootstrap Your Business
Rather than borrowing the money necessary to get your business up-and-running, bootstrapping maximizes your personal assets and your own resources. It may even extend to using up your savings accounts or reaching out to your friends and family for assistance, but it’s all worth it in the end.
Here are a few ways anyone can bootstrap their business.
Open a Business That Needs Little Capital
Keep it simple and stick to the basics. Don’t start a business that needs a lot of capital upfront. Start slow and easy with a business that requires few resources and little cash. That doesn’t mean your long-term goals can’t shoot for the stars, but, for now, keep it affordable with a business plan that includes a long-term growth strategy, if you wish.
Choose a Business That Immediately Generates Cash
Don’t start a business that will take months or even years to generate a cash flow. Do your research and find a business in your niche that you can start immediately, and that will provide instant returns. That cash flow should only be used to reinvest in your business and keep things running without incurring more debts.
Cut Down on Business Expenses
Try to be as frugal as you can with your business expenses. Think long and hard before renting a large space—consider working from home instead. You could temporarily rent, rather than buy, any necessary equipment or see how much used equipment would cost to buy. Don’t be afraid to ask friends and family to give you supplies—it’s amazing what’s available to you when you just ask. Don’t assume you have to spend a lot of money because you own a business.
Incorporate Your Business Online
Taking on the liability of owning a business is a big deal. If a client or vendor sues you, you could be left destitute. To avoid much of the liability, incorporate your business online (you can do this easily and inexpensively if you do it yourself). Once incorporated, if you get sued, the plaintiff can’t come after your personal assets, only the business’ assets. While your business may suffer significantly, at least your personal assets remain untouched.
Research Your Market Thoroughly
Know your target audience. How can you help them? What void are you filling? These are questions you must ask yourself, whether or not you’re bootstrapping your business. The answers to these questions help you market your business effectively right from the start. You’ll avoid wasting money on things that won’t help your business. Additionally, when you have limited resources and plan on bootstrapping your business, this step is even more important.
To Bootstrap Your Business, Watch Your Cash Flow
Always know where your business stands financially. Use an online accounting system that updates in real-time, syncing with your bank account. You’ll always know where you stand financially and, when informed, make better financial decisions. Whether you’re thinking about buying new equipment or just buying lunch, knowing how much money you have empowers important financial choices.
Keep Your Office at Home
It’s tempting to buy a big, pretty space to show off your business, but it’s not worth it. Offices require equipment and overhead, which requires money. Keep it small. If you hire employees, let them work remotely. Sync everybody in the cloud (there are tons of programs available today for teams working from home), and you’ll be updated in real-time on everyone’s progress without wasting money on rent, utilities, furniture, and office equipment.
DIY Anything You Can
Avoid hiring professionals if you can help it. If there are things you can do yourself, do them yourself. Even if it takes longer or doesn’t yield quite as good results, you’ll have more money in your bank account. If you can’t do something yourself, consider outsourcing. It’s a lot cheaper than taking on a new employee and carrying that burden.
Take Advantage of Social Media
Ask any business owner where they spend most of their money, and they’ll tell you, on advertising. It’s expensive. But you don’t have to overspend to try and get your name out there. Instead, leverage the benefits of social media. Word-of-mouth via social media can be just as, if not a lot more, effective than a radio ad or billboard sign. Get active on social media from the start to grow your audience faster and possibly for free.
Growing Your Business Doesn’t Have to Put You in Debt
Starting your business with limited resources doesn’t mean you have to go into debt to make profits, you can bootstrap your business. Use the resources available to you, including friends and family, working from home, and carefully watching your cash flow.
With the right steps, you can have a successful business that doesn’t have any debt, which means faster profits and more cash in your pocket sooner.