Want to keep costs down, grow your business intelligently, and make decisions to help you thrive for years to come?
Bootstrapping your way to the top might be the way to go!
You mostly hear this term thrown around in Silicon Valley and other tech hubs. But that philosophy actually offers a lot of practical tips you can apply no matter your industry.
Keep reading to find out how to be a better bootstrapper – and why you should.
Why Bootstrapping Matters
Businesses take time to get off the ground. Your idea might be great… but it still could flop if you run out of funds and can’t sustain yourself.
The traditional business launch means coming up with a detailed business plan, pitching investors, and either securing a lot of capital from them (or a bank) before you get started.
“Bootstrapping” is an alternative approach that’s extremely popular with tech startups. Bootstrappers launch quickly, funding themselves and learning from their missteps – all while coming up with creative solutions to address the lack of cash flow.
The idea: using your own money and reinvesting the profits back into your business is easier than getting funding from a VC firm or a business loan. You can validate your idea in the real world and quickly improve.
This approach resonates with a lot of freelancers, solopreneurs, and small companies. But many don’t learn from successful startups. They don’t pay attention because they don’t see themselves in the same ballpark as a Silicon Valley tech company.
This is a shame because there’s a lot to learn – advice that slips through the cracks because you don’t think it could apply to you.
It All Starts with a Shift in Mindset
If you’re a freelancer or solo entrepreneur, you might not see yourself as a startup or even a real business at all.
But there’s a good reason why you should make this mindset shift. Once you start viewing yourself as a legitimate business instead of just a service provider or “someone who sells something,” a world of new options opens up to help you improve.
If you think like a bootstrapper, you’ll be able to adapt faster than larger, better-funded competitors. You can keep control of your business, slash expenses to weather the downturns, and put yourself on the path to sustainable growth. Besides, you can always secure a business loan or investment later on – if you still need it.
When you’re running your own business, every dollar counts. Bootstrapping keeps that firmly in focus. A lot of us fail, not because we have a bad idea or a low drive, but because we simply spend more than we have and end up back in day jobs to support ourselves.
Thinking like a bootstrapper sounds awesome. Who wouldn’t want to save cash while growing their business? But the challenge lies where the rubber meets the road: putting things into action.
That’s why I assembled some of my favorite practical bootstrapping tips for you. These cover different aspects of business – marketing, product development, customer support, etc. – but they should apply in practically every industry.
Image credit: stevepb
Just because things are going awesome right now doesn’t mean they will be six months from now. The market could dry up. Maybe you run into the freelancer’s feast or famine problem. Maybe your business has a strong seasonal aspect to it.
It’s tempting to want to step on the gas when things are going well, but you can’t risk running out of cash. Bootstrappers leave themselves enough padding to weather the inevitable rough times ahead.
With limited resources, that means watching their expenses like hawks and only buying what they really need.
A lot of businesses get themselves in trouble after securing a big loan or investment. They buy extremely expensive websites, lease office spaces, and pick up all kinds of automated tools and services they won’t ever really need.
Now’s a great time to take inventory yourself. What are you paying for? What could you cut back? Chances are you could cut down at least a few hundred dollars a month – money you could save or invest in your fledgling business.
When you do need to buy something, buy for quality and value. Sometimes buying the cheapest option isn’t the right move. What’s the point of saving a few bucks now if the thing breaks a few weeks later?
Image credit: succo
Bartering is the most “old school” economy around. Just because it was alive and well before we invented currency doesn’t mean it’s outdated now.
The idea is simple. You trade some of your time, expertise, and skills in exchange for something you need.
Bootstrappers reach out and connect with people outside their immediate area of expertise. Once you find a select group of people all working online – designers, developers, writers, etc. – you can build a little ecosystem where someone has most of the things you need. Who knows? You might even decide to offer joint services or package deals.
This takes elbow grease, sure. And time. But it’s a lot easier to invest those to get what you want instead of trying to come up with something you don’t have much of at all: money.
The internet is full of online communities and forums where different professionals get together and network. LinkedIn, anyone? Hit up your local chamber of commerce if you prefer to do this in person.
Take some time and brainstorm everything you have to offer. It might not be money… but it’s probably more than you first thought.
The only limits are your own creativity. Sometimes it even makes sense to offer skill outside your professional ones. If you know a graphic designer whose daughter needs help with her Spanish, and you’re a native speaker, you could arrange a Skype tutoring session while the designer does your logo.
Launch Minimum Viable Products and Services
Image credit: Lucky2013
Launching a minimum viable product (or “MVP”) is how a lot of bootstrapping startups get off the ground.
Eric Ries, author of The Lean Startup, defines the MVP as this: “the version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
The idea? Do whatever it takes to get a new product or service out in the marketplace, quickly gather feedback, and improve it before your money runs out. It’s perfect for bootstrappers who don’t have the resources for endless rounds of prototypes, tweaking, and perfectionism.
Launching an MVP can work well for you too! It doesn’t mean ripping people off or putting out a shoddy product. It means doing your absolute with that you have, finding a way to serve people, and using their feedback to get better.
Perfect is the enemy of good. And it’s easy to make assumptions while your product only exists in your head. That’s why rapid validation, in the form of customer feedback, is crucial to help you get on the right course.
Chances are, you’ll end up selling products and/or services that don’t look exactly like you first envisioned. And that’s perfectly fine. In fact, it’s a natural part of the process!
Specialize (at Least for Now)
Image credit: geralt
When your time and resources are tight, it can be tough to try and sell something that appeals to a huge audience. You don’t just have to find all those people; you have to market to them effectively as well.
It’s also harder to build a reputation from scratch in such a huge space. No one has ever heard of you… and now you’re trying to position yourself as the “go-to” generalist web designer or marketing agency in a world with countless competitors – many who’ve done it longer than you.
Bootstrappers aren’t afraid to go deep instead of broad, dominate a smaller market, and then branch out.
Specializing makes it a lot easier to target your ideal customers and make a name for yourself. Once you’re the go-to guy or gal in your little niche, you’ll know what it takes to make your business work and can expand strategically.
Low Budget Marketing
Image credit: TheDigitalWay
Marketing can be a huge expense, eating away a lot of your budget. It’s especially tricky when you’re just starting out and trying to make a name for yourself.
Fortunately, an abundance of digital tools make reaching people and engaging them more cost effective than ever before.
With a little creativity and persistence, bootsrappers can launch digital marketing strategies that attract visitors, captures leads, and nurtures them into a pipeline of customers.
A lot of content marketing tactics – like blogging, podcasting, and social media – are very inexpensive or even free. They take sweat equity on your end, but they can be lifesavers before you have the budget to spend on pricey ads.
Don’t overlook the power of word of mouth! Get your customers to help spread the message for you. It’s amazing how many will be willing to put you in touch with other people who need similar work. Or leave a short testimonial for your website, Facebook, or a review site like Yelp.
This is a long-term play, but the payoff is worth it. Building an audience makes it much easier to get a pulse of exactly what they need and create buzz whenever you launch something new.
Revenue First, Scale Later
Image credit: condesign
It’s easy to get caught up in the idea of growing your business. Who wouldn’t want to reach more customers and make a greater impact?
But for bootstrappers, focusing on scale too soon can sink their hopes before they really get started.
Limited time and resources aren’t the only issues. You might just not have the experience needed to handle a significantly larger customer base yet. Building those skills take time.
Growth is awesome – when it’s done strategically. If you try to grow without laying a solid foundation of positive cash flow, you’ll just end up accelerating the rate at which your business fails. Better to play the game while the stakes are lower – with just a few customers – and figure out how to win. Then you can always move up.
Cash flow is bootstrappers’ highest priority. They focus their efforts on ensuring their business is consistently profitable. Only then do they start thinking about growth.
Image credit: ChadoNihi
With a lot of money (that comes after a big bank loan or VC investment), you also put yourself up for a lot of risk. Having a lot of money on hand also exposes you to a lot of risk. Newer entrepreneurs probably haven’t mastered generating a healthy cash flow with a tiny budget, much less a gigantic one.
Limited resources can actually be an advantage. Stop fighting the current and start swimming downstream! How can you do more with what you have now? What can you cut back? Asking yourself these empowering questions – instead of just complaining about what you lack – frees you up to move boldly and creatively.
Bootstrappers resist the urge to go running for more money when things get tough. They turn to resourcefulness and creative thinking to help them fill the gaps in the market.
You can do the same. If bad turns to worse, you can always pick up a day job or part-time gig to keep the lights on while you continue to build and learn.
Even if you’re working on your own as a freelancer or solopreneur, simply viewing yourself as a real business can help you make better decisions.
There’s a lot to be learned from some of the most successful tech startups. Many of them bootstrapped their way to massive success. Applying their strategies can help you save cash and grow intelligently. No outside funding or huge start-up costs needed.
What’s your favorite bootstrapping strategy? Leave a comment below and share your experience!