The majority of startups are started without capital injection from venture capitalists and angel investors. The real numbers are eye opening – VCs fund only 0.05 percent of startups while angel investors are responsible for funding 0.91 percent. Take a moment to really think about those percentages in relation to the approximate 543,000 new businesses started each month.
The chances of receiving funding is very slim, so if you are serious about turning your idea into a reality you are going to have to dip into your own pockets and bootstrap your way to the top. It isn’t easy, but it can be very rewarding – both personally and financially, as you retain 100 percent of your equity.
In no particular order, here are 10 tips to help you bootstrap your way to success.
1. Fully research your market and competition.
Before you do anything you need to make sure you have a viable business opportunity. Is your proposed product or service already available on the market? If there is competition, how will consumers differentiate between you and them? What makes you better? What is your unique selling point?
I know of several highly successful software-as-a-service companies that sold their products before they even had it developed. They did this to be completely certain there was a market for it. This isn’t the conventional way to do it – but it’s an example of entrepreneurs going to extreme measures to be 100 percent certain they had a winner before going all in.
2. Create a business model that produces quick revenue.
If you are bootstrapping, you need to make sure that your business model generates revenue quickly. If not, you will be dead in the water when you blow through your reserves. Constant cash flow is mandatory – if you look at successful bootstrapped startups you will see business models that generated revenue very quickly.
3. Handle your own public relations in the beginning.
Startups can benefit greatly from major media exposure in the beginning. Journalists and editors receive press kits from PR firms around the clock. They don’t want to talk to a public relations representative – they want to talk to you! They are much more interested in speaking with founders than a PR firm because they want to hear your story just as much as they want to hear about your actual startup.
There are several ways for startups to score media coverage, so roll up your sleeves and get cracking.
4. Provide ways for your initial customers and early adapters to create buzz.
People love new startups and technologies – and they love to show the world that they are cool, hip and trendy through social media. Provide ways for your early customers to help put your startup in front of their social audiences.
Allow them to unlock a discount coupon by sharing your website on social media or create a branded hashtag and randomly select winners for prizes. You can even share images of your customers using your product with a designated hashtag on the company social media pages. By appealing to people’s narcissism you can create instant brand engagement.
5. Don’t be afraid to let your website grow with you.
I see it happen all the time – a startup will have a custom website designed and by the time all of the features are built out they are left with no marketing dollars. They use their entire pile of seed money on a great website but then have no way of marketing – and they turn into a statistic, joining the 80 percent of businesses that fail within their first 18 months.
If you are operating on a shoestring budget, you can use a pre-made theme to get you off the ground and then use the majority of your funds to promote and grow your business. Once you have positive cash flow and have proven your business model, do a website revamp.
6. Launch creative branding and marketing campaigns.
You don’t always have to have the deepest pockets to get brand exposure – you just need a creative approach. A great example is Newcastle Brown Ale and its video about almost making a Super Bowl commercial with Anna Kendrick. They didn’t purchase airtime for the actual Super Bowl but they did release a video about how they almost did. It went viral on social media and was an instant hit.
7. Account for every penny you spend.
Keeping track of every penny that leaves your business account is crucial. Money goes out quickly when you are starting a business. Sloppy accounting can lead to a rude awakening. Using accounting software such as QuickBooks or free tools such as Mint that will help keep track of your spending and gauge burn rate. Monitor your cash daily – there is no excuse for lazy accounting.
8. Eliminate as many personal expenses as possible.
When bootstrapping a startup, there isn’t a nice comfortable salary that comes with the gig – you have to be prepared and willing to clip unnecessary and lavish expenses. Find ways to drastically cut expenses or eliminate them all together.
Substitute a huge car payment for public transportation, take on a roommate or two to reduce living expenses, brew your own morning cup of coffee instead of opting for a $4 cup – look at your personal bank statements for the past few months to uncover areas to reduce and eliminate expenses.
9. Do as many jobs as you can yourself in the beginning.
There is a big difference between jobs you can’t do and jobs you just simply don’t want to do. If a task requires specific technical knowledge that you don’t possess, then of course, outsource that job – but if it is something that you are fully capable of doing but just don’t feel like doing you are creating an unnecessary expense.
A friend of mine just recently launched a new business and he wanted to repaint the new office and install some shelving units – unfortunately the lease didn’t include any build-out allowance. After receiving several quotes in the $3,000 to $5,000 range he reached out to a few friends – and for the cost of the paint supplies, shelving and a few cases of beer along with a Saturday afternoon he had exactly what he wanted and saved several thousand dollars.
10. Be persistent and don’t give up.
When you are just starting out there will be many challenges and obstacles to overcome. Suppliers and vendors aren’t always overly excited to work with brand new companies and building consumer trust can be an early challenge. You have to be persistent – when I started my company I was kicking down doors and dialing the phone nonstop to build relationships and make connections. Don’t take rejection personally – it is going to happen.
Bootstrapping a business isn’t an easy task. Honestly, it’s very challenging – but not impossible.
Do you have any additional bootstrapping tips to share? Share them in the comments section below.