4 Great Tips When Bootstrapping a Business
Funding is not everything and massive amounts thrown at a sinking ship won’t make a difference. Just ask the guys at Yik Yak, an anonymous chat service once valued at $400 million. On the other side of the spectrum is a very successful business that required no corporate funding for its operations, Lootcrate. It managed to raise a substantial amount within the business parameters itself, which saves it the drama of reporting figures to outside shareholders. Entrepreneurs, in Macedonia, and around the world, who would rather do things the bootstrap way should take a look at the following to get started.
Steer Clear of Exorbitant Rentals
Retail floor space can be a great boost to a business, but it can also drain the coffers fairly quickly. Businesses that don’t have any customers as yet, may find it hard to cover overheads until they have enough footfall. Those who are able to sell their wares without a shopfront should try to build up their financial reserves before venturing into rented space. An online store or word-of-mouth sales are both fairly cost-effective ways to get started. A six-month overhead buffer will help but breakeven usually only occurs after the first year in business.
Take Advantage of Free Resources
Whether it’s a simple messaging service or the help of a generous friend, it’s time to set pride aside and accept free assistance. There are a number of terrific free resources that will help any small business manage their customer expectations. Not only are these free, but cover a lot of areas where business may need help and ordinarily would need to employ someone to manage it. These include contact management, conferencing, and even customer management. Other means of accessing free resources include credit cards that provide extra features at no extra cost. These allow the cash flow to be freed up and still benefit the business with add-ons.
A Feasibility Study and Business Plan Should be the Starting Point
Before jumping into the deep end, it’s critical to determine whether the business concept is both viable and feasible. A feasibility study allows the business owner to do all the groundwork first in terms of the demographics and market research. This is usually done before the business plan. The information then allows the owner to compile a business plan which will span a five or ten-year period. One of the key components of the business plan is the cash flow projection. Without the business plan and projection, it will be difficult for the business owner to measure any growth in the business.
Work With the Fast-Sellers First
There are items that take a long time to move off the floor and there are those that seem to fly faster. These fast-sellers, if restocked correctly, can provide the necessary cash flow to keep things moving. If priced correctly, it could also provide enough capital for expansion and growth without having to rely on outside funding.
Outside funding might seem like the only way for businesses to start up, but successful bootstrap ventures prove otherwise. Not only are there no outside investors to worry about, but the satisfaction of success is so much sweeter without debt. Owners of bootstrap businesses also tend to be fully vested in these businesses as funding would have come solely from their pockets.
