Disclaimer: This Article is updated by Yusra Qasim.
Bootstrapping is relying on personal savings, finances, sources, and skills to begin a startup and sustaining it without involving help from the money of investors. They seem difficult but have very simple and valuable meanings for entrepreneurs. While it may seem scary to bootstrap at first, here are some of the top tips to get you started:
1. Create and Manage an Income Stream
While bootstrapping, founders usually reply on their savings to launch a business idea. But, saving is a stable figure and will eventually run out as the expenses start coming in. This is why the best advice is to have a steady stream of income to pan you through the starting stages. It is a good idea to have a stable job or hobbies or an initial product that has less expenses and more income.
2. Develop More Skills
The old thinking of being a master of a single craft has long become outdated. In this day and age, the more you know… the better results you can get, with lower expenses. So, the best way to increase your portfolio of skills is to go online and take some free courses on developer skills. This way, the work will be done without any extra hands on board and you will have the knowledge when your business expands and you are looking for a developer. It helps remove any communication blocks that might come your way in the future as well.
3. Leverage Free Advice
It’s always a good idea to get advice from an outsider; it gives that new perspective every idea needs. All you need to do is join developer forums, they will connect you with the experienced people that your business needs. You never know, you might just find your future investors here.
4. Avoid Debt
It’s never a good idea to owe someone money and an even worse one if interest is involved. It simply means that at the end of each month you owe someone much more than you borrowed. Sure, starting a business requires some source of cash and at times the best way to get an investment is to get a loan. But, don’t let the loans pile on one another.
Take one out when you are ready with your idea and use it to earn revenue and pay it back ASAP. Having the option to get more loans or charge it on your credit card only leads to excessive spending and that is just going to sink your business. So, spend wisely and loan only when needed.
5. Create a Minimum Viable Product (MVP)
A minimum viable product is an operating prototype. The idea is to test your product in the market; it decreases the chances of failure and capital invested. By simply making a prototype that is inexpensive and conducting a focus group with your target market, you can validate your idea and improve on the final product. With the insights achieved from this endeavour, the benefits outweigh the costs.
6. Keep Personal and Business Separate
Entrepreneurs have a tendency to give their all for their business. Which is great for motivational purposes but it’s not such a good idea when it comes to mixing personal and business finances. For one, drawing that line between your money and the businesses money will be a huge hassle. Two, it will hurt your bookkeeping and three more money will be going out than coming in and you won’t know why. Therefore, design your life.
7. Don’t Be Cheap
Bootstrapping is all about being conservative with your spending but it is also about being wise with your spending. When making your product, it is a good decision to not skimp out on the material cost. After all a high quality product is more likely to lead to return sales than a product that barely scrapes by. Don’t hesitate in spending more if it’s to kick start your business into success.
8. Maintain Budget Even When Business Starts Bringing Money In
So you finally launch your business and luckily it is bringing in cash. That does not mean you are in the clear. If you still have to inject money into your business every now and then, then you are still bootstrapping and that means being cautious with the spending. So, start reinvesting in the business or storing it in the bank for a couple of months, it gives you that cushion you might need during some dark days that are inevitable in the world of business.
If you are brave enough to say no to investors and have the guts to rely on your own for kick-starting your startup, you are using the technique we call Bootstrapping. Try to follow these tips to have a smooth sailing into the bootstrapping process.