Five Bootstrapping Tips For Your New Business!
Funding their new business has always been one of the challenges for entrepreneurs, and not every startup is blessed with the luxury of getting the investors right away. While some kind of outside financing is often required by the founders to make their business dreams come true, some entrepreneurs must choose to fund their operations by themselves, that is, bootstrapping the business by funding it out of their own pockets.
Bootstrapping is definitely one of the best ways to finance your own business if you have the resources for it. It not only gives you financial and creative control over your business, but you are also not constrained by the equity stakeholders to move in a certain direction. While bootstrapping is one of the best ways and is very rewarding, both personally and financially, it is not as easy as it sounds. You are always striving by the last cent invested, and your business budget is dictated by your own personal finances. If bootstrapping is not done right by applying good financial management skills, then it is inevitable that debt would be knocking your door. So to play your cards right, here are some tips to keep your bootstrapping journey smooth and pleasurable.
1. Know your Market and Competition Well
It sure is exciting to start your own business but before you dive in, make sure you have a workable business idea. You wouldn’t want to run out on your life savings for a bad business idea, and so before you do anything else, do market research and gain insights into what the consumers think about your concept and how much would they be willing to pay for it. If there is any competition, then gather information for that as well to understand how you are different than them. Test your ideas, use survey tools to get the right kind of information that you need, and determine if your product will add any value to your customers’ lives. Get as much feedback and knowledge as possible before you blow your life savings on any frivolous idea.
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2. Design a Business Model that makes Quick Revenue
If you have studied bootstrapped startups, then you will know that the ones that became successful were able to generate revenue quickly. If you and your business are taking the path of bootstrapping, then you need to make sure your business brings in money quickly. Without cash inflows, you will be dead in minutes even before you could gain any traction as you blow through your reserves. To be a successful bootstrapped startup, it is mandatory to have constant cash flows.
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3. Keep track of Expenses
Account for every penny that leaves your business, because it is important. It won’t take much time for your money to disappear before your eyes if you don’t keep a tab on expenses. It is not just careless and sloppy but also risky when you spend out of your personal bank account. Create a separate business account so that it is easy to track your cash flows, and also to learn what is bringing in money and what is taking it out. Make use of accounting software that will keep you close to reality and help track your expenditure and also calculate the burn rate. There can be no good excuse for lazy accounting, so take efforts to keep a watch on your money.
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4. Don’t Outsource, Do the Jobs Yourself
There is a difference between jobs that you cannot do and those that you don’t want to do. When bootstrapping, the later cannot be the case. If a job requires some specific knowledge that you don’t possess then, of course, you must bring someone in to do it. However, if you could do the job yourself instead of hiring someone, then that is an avoidable expense. When bootstrapping you are looking out to save on expenses and doing as many jobs that you can, will not only help you save a lot of money but will also help you gain rewarding organizational experience. It will make you more aware of the tasks that need to be outsourced in future, along with saving you money to invest in your business. Be jack-of-all-trades to make your business succeed, whether that is handling your accounts or taking out the trash.
Also Read:-
The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future
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5. Be Persistent
Apart from funds, there are going to be many obstacles when you are just starting out. While suppliers and vendors are usually reluctant to do business with new companies, bringing in customers and building their trust can be another challenge. But the key to success is to be persistent, no matter how many doors get closed. Build personal relations with your partners, don’t hesitate to show your passion and share your story to connect with people’s human side. Don’t be afraid of the rejections that focus on crossing all the barriers by persevering to get what you want.
Also Read:-
Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine
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The Compound Effect
Bootstrapping is difficult and challenging, but it is surely not impossible. All you need is hard work, dedication, and little sacrifice of your current lifestyle to ensure the future of your business.
