How to start your business without going into debt ?
Starting a business can be expensive, but it doesn’t have to put you into massive debt or require you to take on investors (which is really just another word for debt!). Yes, there may be venture capital available, but I’m a firm believer in bootstrapping if at all possible.
Why? For one thing, I know it’s possible because I’ve bootstrapped all of my entrepreneurial endeavors. Second, I’ve watched quite a few people jump through hoops to secure VC investment, and I’ve learned from their experiences that taking VC funding can shift your focus away from your product. Suddenly, you’re beholden to your investors and distracted by their expectations, which may be different than yours. Plus, you may ultimately be forced to give control of your big idea to someone else.
If you’re in the beginning stages of starting a business or could use some tips on scaling back your spending, here are a few things when you’re just getting started.
1. DON’T QUIT YOUR DAY JOB UNTIL THE SCALES TIP
Many people advise not quitting your day job right away when starting a business — to keep working until the time is right. But how do you tell when that time is?
When I founded my first company, an online store, I was working at an app studio. We began working on the website at night and during the weekend with my co-founder Chris, until we had something cool for our futur customers. We started to build the brand, the community, and relationships with manufacturers. Once 60% of this stuff was done, it was enough to justify spending more of our time on our business. Basically, we opened our online store before I quit my day job, only making the move once the scales tipped in favor of my new business.
Whether you already have one business and want to start another, or you have a day job, try not to quit until your new endeavor is beating your day job in some metric, be it that you’re earning more of your income from your venture or are so busy with business that it’s demanding more of your time. If you want to start a restaurant, which could cost €250K before you even hang up the “open” sign, see if you can think of ways to “workshop” it in your free time: Maybe start with a smaller investment, like a food truck, that you can run on the weekends, or run a catering service for your friends out of your apartment in the evenings. Refine your recipes and grow your fan base until it makes sense to open a restaurant. Or, if you have an idea for a line of jewelry or clothing, open an online shop to allow you to get a sense of demand before you sign a lease, hire employees, and manufacture on a grand scale.
2. DON’T BE AFRAID OF THE KITCHEN TABLE
Office space is great, but make sure it’s really necessary to your business. If you’re leasing space because you think it will make you look more legitimate, reconsider. When we were first starting Paullster, I asked my dad if I could borrow spaces at their house. No Paris offices, Almost an hour far from the capital, but no rent for few months, so we invested them in acquisition. I soon realized that people didn’t care where I was doing business from, only that I was offering a quality product and great customer service.
The Parents-Space scenario won’t work for everyone, but there are other alternatives. You could look into becoming a member of a co-working space or renting an office from an existing business.
If you absolutely have to have your own office space, you can still control costs by buying used office furniture, renting it, or shopping at stores like IKEA. Even now, lots of offices are 80% IKEA furniture, with the rest from LeBonCoin. There’s no need to have a €100K in cubicles when some used desks work just fine.
3. SCALE YOUR STAFF ON AN AS-NEEDED BASIS
When you’re first starting a business, you may think you need a marketing and PR team, a development team, human resources, an administrative staff, the works. So many young startups make this mistake, scaling much too fast for their needs. But the truth is that in the beginning you really only need one or two other people who can implement your idea.
When we started Paullster, we only needed ourself, Chris and I, 2 laptops, and a printer. While it would have been nice to have some extra hands, I didn’t have the clientele to support additional staff. As we started getting more customers, we started adding people to our team. The same thing happened when I started others projects. To bring my initial idea to life, I needed a developer. Once we had a functioning version of the software, we needed a graphic designer to help with branding. Then we needed someone to do PR… etc
A great way to get some extra helping hands who don’t (always) demand high salaries is to seek interns, Study contracts… A lot of students are willing to contribute their skills and time toward a new idea or business to grow their own portfolio or get experience in an industry. Several of my buddies employees are previous interns to whom they offered full-time jobs as soon as their internship commitments were done (Yes this is real !!)
You can also try out potential employees on a project or contract basis. It’s a great way to test the waters with an employee before making a long-term commitment. After all, you don’t need to hire a graphic designer the first time you need one logo made. Do things with lighter-touch help (or yourself) until you reach a point where the workload or the expertise needed requires another body.
Starting a business is exciting and scary at the same time. In the midst of all the excitement, it can be easy to be distracted by what you think you need. The key is to focus on your idea and put all of your energy and time into perfecting that idea — whether it’s a product or a service — that people will want to use.
If you focus on the idea, the rest will fall into place.
