Yes you heard me BOOTSTRAP! This is the one word that every startup up and coming entrepreneur knows and has a complete love hate relationship with.
For those of you who don’t understand what startup bootstrapping is let me dive a little deeper into the overall concept and methodology of bootstrapping.
WHAT IS STARTUP BOOTSTRAPPING?
When starting out on a startup or new venture it is vitally important to understand the financial premise of bootstrapping. So what is bootstrapping? Bootstrapping is when a new company or entrepreneur uses their own funds to establish and run a new startup using. This is usually done in the initial stages of company formation as it is necessary to test your startup idea and business concept to the fullest prior to seeking outside funding from friends or family or other more advanced funding methods such as crowd funding, debt funding or equity funding.
START-UP BOOTSTRAPPING FINANCING METHODS
There are a number of different ways in which company founders can fund their start-up through bootstrapping themselves. It is important however to mention that the bootstrap stage of a business is often the one where many businesses fail. So if you are considering this please try mitigate as much risk as possible, life in a start up is stressful enough without having to worry about funds and day to day living expenses.
Below is a list of different straps that you can use to fund the initial stages of your start-up company;
BOOTSTRAP 1: PERSONAL SAVINGS
Yes it sounds horrible to some people but delving into your personal savings is perhaps the best way to run feasibility analysis and establish your new startup business. All the greats and not so greats have done it in the past, Steve Jobs and Steve Woz hat this strap tight around their fingers as they developed and launched Apple One. So if you really have the drive to start a new business using your own savings is a must.
Remember also, if you ever go to a bank, venture capitalist or business angel they will all ask the question of how much money you put into the startup yourself. Make sure you can say something that impresses them. If you don’t have the money to impress them make sure you can tell them the % of your savings that you put in!
BOOTSTRAP 2: CREDIT CARD DEBT
Again, this may make you flinch a little at first! It has to be said that many entrepreneurs, unable to secure business loans from the bank for their startup go this route. As bulls begin to come in or you need something more to ensure your product and service will remain competitive or even if you just need a tiny bit of money to test a marketing campaign well then take the hit and take the debt.
START-UP BOOTSTRAPPING OPERATIONS METHODS
I could go on forever, as could the list in this section and finding different ways to bootstrap operations can be a hoot! Bootstrapping startup operations is when you do things a little different to how a large company would do things. Start-up’s tend to bootstrap all their operations. Some examples how to do this are nested below;
STARTUP BOOTSTRAP OPERATIONS 1: HIRE INTERNS
Hiring interns means that a start up can get high quality workers for absolutely no cost. As an ethical man myself I hope you promise your interns something nice, like a worm perhaps, when your start-up eventually makes it big!
STARTUP BOOTSTRAP OPERATIONS 2: SHARED OFFICE SPACE
Although you can operate your startup out of home or your garage shared office space is often a great way to work alongside highly creative people with similar aspirations to yourself. In an incubator or rent a desk environment there are usually a large number of highly talented entrepreneurs that you can converse with. Sort of like a you scratch my brain and I will scratch yours type of situation.
STARTUP BOOTSTRAP OPERATIONS 3: BUYING SECOND HAND EQUIPMENT
This may seem obvious but it goes for everything from laptops to desks. There area huge number of resources online such as Craigslist and eBay that allow bootstrapped startup companies to source whatever they need at a fraction of the cost second hand.
STARTUP BOOTSTRAP OPERATIONS 1: LEASE INSTEAD OF BUYING
Every day there are new companies coming out with new innovative approaches to the conventional lease to buy system.
STARTUP BOOTSTRAP OPERATIONS 1: DROP SHIPPING
Drop shipping can be a great way to generate sales revenue without having to buy the product first. We have a blog article case study coming out soon that will explain to you how to launch a drop shipping company in under 3 days.
So there it is, anything you need to do, just at a lower cost. So bootstrap yourself until you are Houdini, the great bootstrap escape is always on the horizon!