Bootsrapping a startup? Follow these five tips

Not all startups blaze onto the scene like a fireball backed by millions of venture capitalist dollars. In fact, most do not. Most startups need to take the bootstrapping approach, literally pulling themselves up slowly and surely through each step of the process. Bootstrapping a startup is admirable, but extremely difficult task. If you can find success taking this approach, however, the rewards can be immeasurable, and you could come out set for life.

Here are my five tips for bootstrapping your startup.

1. Pick your cofounder wisely.

You cannot expect to succeed running a startup from scratch on your own. You must have a cofounder, someone who is willing to be your teammate through thick and thin. Ideally, you and your cofounder should have two different ways of thinking. You need opposing viewpoints to help make decisions and consider the possible outcomes from all angles. You want your skillsets to complement each other so that there is no task you cannot do together.

2. Generate cash quickly.

It’s going to be expensive bootstrapping your company. There is no denying that fact. For that reason, you need a business model that will begin generating cash quickly. You may not necessarily be profitable from the jump. In fact, you probably won’t be, but generating cash and gaining traction are good signs for your business. Having a stream of incoming cash will at the very least give you some money to spend on continuing to grow without having to pump your own savings dry. Better yet, showing an ability to gain traction and generate cash early on could begin to attract investors, and that is a good thing.

Investors these days are looking for hypergrowth. They want to purchase a chunk of a business that is about to give them a 10x multiple. It also does not hurt to already be thinking about your exit strategy. While that may seem a bit like putting the cart before the horse, the exit is a big part of today’s startup culture, especially when investors start getting involved.

3. Don’t hire if you don’t need to.

For a young, growing company, unnecessary employees are an unnecessary expense. You may be able to get by without a paycheck for a few months as the founder, but that is not something you can ask employees to do. In the early stages, you need to do as much of the work yourself as possible. Only hire additional employees when it is absolutely necessary.

And by god, keep as spartan an office space as necessary. The stereotypical startup office is hip, trendy, and generally a massive waste of money. Leave the futuristic furniture, coconut water, and video games to the big boys at Facebook and Google for now.

4. Be willing to learn new things.

Really, this is the most important thing you can do, especially if you are not going to be hiring many new employees. The bootstrapping phase will present you with an incredible number of chances to learn and grow as a leader of a business. You will make mistakes, but always be willing to learn from them.

5. Find a strong adviser.

The startup community has plenty of powerful advisers who will be a great asset to you in the early stages of your formation. Find someone who has already gone through the rigors of the startup life, and take their advice seriously. An adviser will help you avoid mistakes, make connections, and get to the next phase.