BOOTSTRAPPING: 12 Tested Ways to Generate Cash Without a Product Yet
Studies show that running out of cash is the most recurring reason why startups die.
I experienced that [ran out of cash] and I don’t want it to happen again. It’s, well, very frustrating!
I did some research and found several ways to bootstrap a business.
I’ll share with you ideas and real-life examples of entrepreneurs that started small, generated directly or indirectly cash and bootstrapped bigger products afterward.
- 5 Reasons Bootstrapping Your Business is the Best Thing You Can Do — Brian Foley, CEO @Buddytruk
- 8 Great Reasons to Bootstrap Your Startup — David Ehrenberg, Founder, and CEO of Early Growth Financial Services
#1. Sell unrelated products (at all cost).
You may have heard of Airbnb’s cereal boxes.
Eventually, they came up with the idea of selling cereal boxes during the McCain-Obama election.
So Chesky and his cofounders bought empty labelled boxes and literally glued the boxes and stuffed them with cereal.
Beyond repaying some charges, this little story helped them get funded at Y Combinator. Paul Graham, Y Combinator Startup accelerator program co-founder, said he was impressed:
“I was looking for startups that wouldn’t die during the nuclear winter.”
And now you know what this company is worth…
Okay, I know what you think — this funny example didn’t help Airbnb’s founders understand and better serve their customers along the way. You’re right!
So here are 11 better examples.
#2. Sell others’ products.
Entrepreneur on Fire (EOF)
John promotes a number of companies that pay an affiliate fee to John on either click or actual sale of product. EOF publishes its revenues and profits every month on its blog. Affiliate income for the month of August 2017: $237,193. Stunning!
The Wirecutter, the gadget and deal listing site, was purchased by the New York Times in 2016 for $30 million. The site makes a little bit of money every time a product recommended on the site is sold. And these deals add up — in 2015, the company generated over $150 million from affiliate revenues.
This big fish started out really small.
The founder tested his hypothesis by going online and advertising shoes with pictures. The shoes were however not manufactured by him nor were they in his stock but were only photographed at regular stores after tie-up with the store owners.
On receiving an order, he would proceed to buy the pair from the store physically before delivering it to his client. Since then, there was no looking back for him. Among retail activity, Zappos started selling is “Customer Service culture” to other companies.
- Drop shipping
- Fulfillment by Amazon (FBA)
- Product comparison website
Don’t want to sell products? Sell services.
#3. Offer consulting services
Build your business on what you know.
Instead of venturing off into uncharted territory, make sure that you build your business around your skills and knowledge.
At the origin of your product idea, there is sellable expertise. SEO, Social media, design… Use it to bootstrap.
A product-based business often requires significant up-front capital to get it up and running. If you’re in this situation, consider selling services to generate cash flow and to build up funds for a product-based business.
In less than five years, Moz had over 100,000 email subscribers. Rand originally monetized the audience through consulting services, but in 2007, Moz launched a beta subscription service for software tools and reports.
By 2009, Moz closed the consulting business entirely and focused on selling software to its audience, turning Moz into a $30 million organization by 2015.
Appster was launched in June 2011 originally as a digital agency consulting.
Appster is one of the leading development firms and has now a staff of +350, with offices in San Francisco and a development center in India; with over $20 million in revenue.
“It’s been “profitable from day one,” assures McDonald.
WooThemes is a one-stop theme shop of designs and cutting-edge commercial themes for WordPress.
Working as a virtual team, Adii Pienaar, Mark Forrester, and Magnus Jepson founded WooThemes in January of 2008.
Buying themselves time initially by doing freelance work, they were able to avoid taking on any initial funding.
#4. Solve a sponsor’s pain
AppSumo is a daily deals website for the coolest web applications in the market, bringing massive savings to over 200,000 happy web geeks.
It all began when our co-founder Noah Kagan was helping run a payments company for Facebook games and noticed that partners were having a hard time finding new cloud applications and innovations in web distribution. Noah realized this was a niche not to be ignored.
For $60 Noah hired an outsourcer to build the back-end of what would be AppSumo and Noah built the front end using open-source member registration code.
Tableau was able to sell its prototype idea to these early customers, even though it had issues.
“We worked for free.”
They offered discounts and exceptional service for these customers and worked with them to make the product better.
For customers, this early access, barring all software bugs, could be seen as a way to customize a product for their needs, as Tableau worked closely with its customers to solve issues.
#5. Turn your knowledge into sellable online courses
One of Brian Clark’s biggest secrets to success was his ability to build a loyal audience first and then let the audience inform him of what kind of software might be the most appropriate to sell to his audience.
So, rather than spending tons of money developing software that his audience wouldn’t be interested in purchasing — he simply listened to the people in his audience tell him all the things they might be interested in purchasing.
Brian launched Copyblogger in 2006 as an educational resource for online copyrighting. Over the next few years, Copyblogger generated over 100,000 subscribers to its daily blog content.
To generate cash from his audience, Brian started offering paid online courses.
Over 90 percent of the sales of come from Copyblogger subscribers.
#6. Write a book
A book is a lead magnet. Writing yours positions you as an expert, gives you negotiating power, educates the market and presells your prospects.
“A book is a business card on steroids”
— Joel Friedlander, Blogger and Book designer
#7. Curate content (or something else)
BuzzFeed was founded in 2006 as a viral lab focusing on tracking viral content. The company has grown into a global media and technology company providing coverage on a variety of topics including politics, DIY, animals, and business.
A few recent Buzzfeed figures:
- 200+ million monthly unique visitors
- 7 billion monthly content views
- 75% of the traffic comes from social media
Bram Kanstein, Startups & Innovation Expert, Growth Advisor, build a curated site of resources and tools to help startups build better products.
StartupStash reported 500K unique visitors in November 2016. Still live and growing today!
Bram has just launched “No code MVP”, a program that teaches you how to build an MVP without code knowledge.
- About StartupStash: How I launched the #1 most upvoted product of all time on Product Hunt
- The origin of Product Hunt
#8. Organize events
Start small with Meetups. Then go broader with online conferences. A next step is an in-person event.
Sponsors and attendees may be a source of additional cash. Post-event, repurpose videos in a paid online course to squeeze opportunities to its maximum.
“From my experience, virtual conferences have always been a marketing tactic that provides a perfect hybrid of convenient digital technology and real human interaction.”
— Kristen Matthews, Former Digital Marketing Director at GroupHigh
InsideSales.com offers a sales acceleration platform. They run two virtual events, the Sales Acceleration Summit, and the Sales Acceleration and consult B2B businesses on how to start their first virtual summit.
“These events help you grow your email list pretty substantially filling your opt-in data base with new connections to nurture and share content with.
The value of these events can be as big as the biggest live events in your industry if you do them right.”
— Mike Taylor, Marketing Manager at InsideSales.com
- 12 Steps To Organizing Your Event With Zero Budget
- About the Impact of virtual conferences on business success
#9. Start a YouTube, a podcast or an Instagram account
Casey is an American YouTube personality, filmmaker, vlogger. He dropped out school at the age of 15.
He is well known for different series of videos and films that help him gained international exposure in only a few years.
In July 2015, he co-founded a multimedia company, a video sharing app called Beme.
On November 2016, CNN announced that it will acquire Beme, reportedly for US $25 million.
Claus Pilgaard, is one of the most well-known celebrity figures in Denmark.
Known as “Chili Klaus”, Claus launched a Youtube channel to talk about chili peppers. Thanks to the extraordinary way he talks about it, he generated millions of views.
From this success, Claus has launched a suite of successful products under the brand “Chili Klaus” including chili chips, chili sauce, chili licorice, and dozens of other products.
Entrepreneur on Fire (EOF)
As quoted above.
#10. Build a community
They went from 100K members in August 2015 to nearly 250K today.
Facebook, Slack and other platform can help you build a community. But in that case you don’t fully own it!
Show yourself or publish content is not your thing? Code something simple but useful.
#11. Create a Side project
When it comes to your customers’ need, chances are there are several tasks inside a global need. Trying to answer each and every one of them in one product is the best way to fail.
Buffer main tool focuses on several steps of social media management: plan, publish and analytics. But you have to come up with ready-made images.
To tackle this need and, by the same time, boost the usage of the main app, they created Pablo. Pablo is a web app that provides +50 000 images and an online editor to craft engaging images to post.
Pablo is free of charge. No need to be a Buffer customer.
Clicky, a real time web analytics running on over 350,000 web sites, was initially made as an internal tool for a previous company.
Sean Hammons and his previous boss Noah Merritt realized the potential immediately.
Funded by Merritt’s savings, Hammons coded the project for release over a fourth month period.
Without any strong connections at the time they spread the word by contacting hundreds of bloggers and posting in forums.
Without doing any marketing they credit their affiliate program to be a major factor in growth.
#12. Sell data
While you study your market and customers’ need, you’ll collect data that worth something.
Chances are you’re not the only one interested in this market.
“The cheapest and only way for big corporations to learn everything they can about their industry and to inform their future investments is to invest in startups that are at the forefront of research and innovation in their field.”
— Dev Aujla, Founder at DreamNow
Benefit from open-source data to build something new and valuable.
Citymapper, took advantage of open data to calculate the best itinerary, and built its own data sets in house to fill the gaps. It now works in 35 to 40 cities around the world.
Okay, Citymapper hasn’t monetized its product yet and raised tens of millions of dollars from well-known VC firms. But they’re going to monetize soon and they could have done it earlier. The data is valuable and the fact that people are using the app quite regularly makes it valuable too.
“A lot of what we’ve been doing is building to tools to create data,” — Azmat Yusuf, CEO at CityMapper