Unless you belong to the select few whose fathers can advance capital, you will have to bootstrap for a while before accessing funding. Even for the exceptional business ideas and start-ups, the need to obtain traction by market penetration will require inventive ideas from the entrepreneur. Almost all investors and financiers will require that your product demonstrates acceptable levels of viability before they can avail funds.
Additionally, most entrepreneurs want to retain creative control and ownership over their business. This becomes complicated in the face of external investors who may not appreciate the entrepreneurs’ vision and goals. Therefore, the ability to bootstrap your startup can never be overstated. The following are five ideas to help in bootstrapping your startup.
1. Wise Selection of Partners and Staff
Whilst most start-ups are a one-man show, wisdom requires that you consider taking on a partner. Such a partner will offer alternative perspectives and ideas as well as in-house solutions given that most work will be done internally.
Similar thinking should govern staff recruitment. If you are to take on staff, consider working with multi-talented and flexible individuals who will willingly cover the various needs that may require specialization much later. Ensure staff buy-in and productivity through login portals such as demonstrated by the UPS employee login portal.
2. Adopt a Liquid Business Model
Liquidity and working capital financing are a start-ups biggest challenge. The payment for utilities, rates, taxes and levies will require cash. The additional matter of the payroll can eat into your capital and reserves faster than a school of Piranhas.
Adopt a business model that will prioritize cash inflows while seeking out appropriate credit periods. Defer the acquisition of capital-intensive assets to later periods when liquidity is strong. It should be understood that extending credit should be avoided like the plague.
3. Adopt a Do-It-Yourself Approach
Most of the jobs that may need doing need not be outsourced. Deliveries and pick-ups, cleaning, catering and coding, are examples of jobs-which can be kept off the expenses schedule by simply adopting a DIY approach.
Additionally, you should not shy away from learning new skills and tasks. You can teach yourself from online resources or by observing how the professionals do it. As a startup, be ready to be the CEO, CFO, and head of HR, marketer, accountant, maintenance and technical consultant. The ability to learn and pick up new skills is a clear mark of an entrepreneur.
4. Do It Right from the Start
The temptation to cut corners and take shortcuts is strong for start-ups. This is because there are numerous bureaucratic requirements that require expertise, time and money to ensure compliance. Whilst it may seem overwhelming, ignoring these requirements will come to haunt you later on. Tackle them as they come up given that non-compliance has a tendency to swamp you when regulators step in, not to say anything about the penalties. To avoid getting overwhelmed at inspection times and to save yourself from penalties, do it right from the start.
5. Imaginative and Creative Problem Solving
Outside-the-box thinking is crucial for a bootstrapping startup. Simple solutions to challenges tend to bring with them extra costs in time and money. Only pay for what you have to, while seeking alternative resources.
Instead of hiring, use interns and part-timers who are free or cheap. Instead of buying, borrow from home or from your network of friends. At worst, lease or buy well maintained second-hand appliances. Better still, Instead of leasing, use your home space. This will eliminate the need for new furniture, phone, water, heat, and lighting installations. Schedule your pickups and deliveries to coincide with routine trips thereby saving on time and gas.
Bootstrapping is a positive approach to start-ups and should be carried on as far as possible before seeking out external funding. This will allow you to maintain creative and overall control of the business as well as ensuring a higher valuation when incorporating financiers. Though challenging, embracing it will ensure that you reap the benefits.