When starting a business, it’s typical to look for venture capital, angel investors, and even co-founders to help get the company up and running. While funding is necessary for almost all businesses, seeking it out yourself isn’t necessarily the right path for everyone. Instead, knowing how to bootstrap your startup might be a better option.
How to Bootstrap Your Startup
When you bootstrap your startup, you retain full control of the new business. You don’t have to worry about securing and keeping funders happy. If bootstrapping is right for your small business, the following tips can help you through the process.
Get Creative With Startup Funds
It takes money – sometimes a lot of money – to start any business. So, your initial funding has to come from somewhere. But that doesn’t mean that you need to give away equity in your business or seek out external funding. During the early stages of your business, it’s possible to rely on credit cards and the personal savings of startup founders as you get things up and running.
When launching a bootstrapped startup, you may need to get creative. Design your business model so that you can quickly start selling services or products to establish cash flow. Taking the time to write up a detailed business plan outlining all of your expenses can help you better envision the expenses that will be involved, as well as the time it may take to pay off those credit cards.
Focus on Your Customers
When you’re working with limited resources, one of the best things bootstrappers do is focus on clients from the very beginning. Engaging with potential customers on social media can help inform everything from your marketing strategy to your product design and launches. The better connected your business is to your customers, the more aware you’ll be of what they’re looking for and how they’ll respond to your business, and products or services.
It’s equally as important to focus on providing effective customer service. When your business is willing to go above and beyond to create a positive customer experience, you can build customer loyalty as well as valuable customer referrals. Increased referrals can expand your business without increasing your marketing budget.
You may reach a point where your startup needs more team members, but you don’t have the finances or stability to hire anyone full-time. During this growth stage, consider outsourcing some of your work to talented freelancers or independent contractors. When you hire freelancers, you can often save money over the cost of hiring an actual employee, since you don’t have to pay into the Federal Unemployment Tax or worry about contributing to employee benefits.
If you decide to outsource some work, be deliberate and cautious in the process. Outline the types of work that you would like to outsource and determine the skills and experience that you would want to see in a freelancer. There are many platforms, like Upwork, where you can find freelancers, but this can be hit-or-miss in terms of finding talented, reliable help. Instead, try to network with other business owners to see if they have a favorite freelancer they would recommend.
Hire for Attitude
Chances are that your startup won’t have the funding to hire top-tier veteran talent, but when it is time to hire employees, hire for attitude, rather than experience. Aytekin Tank, CEO of JotForm, advocates for this strategy, and it’s paid off for JotForm.
“We’ve sort of adopted a belief at JotForm that we don’t necessarily hire superstars; we grow them. We hire for attitude and make sure we treat the standouts well with more responsibility and good pay. This has reduced turnover and kept our production consistently high.”
Look for potential employees who are invested in your mission, and who know how to bootstrap your startup too. They’ll be a powerful investment as they learn on the job, and bring genuine passion and hustle to their work.
Embrace Slow Growth
As an entrepreneur with an exciting business idea, it’s easy to get frustrated when you’re forced to grow your business more slowly because of limited funding. But according to Tank, slowing down can be a gift in disguise.
“We’re methodical about how we expand our team and add new products, and over time we’ve built something incredibly sustainable. We also always have a rule only to add new employees if we have the money to pay their salaries for an entire year.”
The forced slowed growth you’ll experience as you bootstrap your startup can make you more aware of how you’re spending money. And, you’ll become more deliberate and cautious in your business decisions. Taking the time to step back and evaluate each move can help ensure that your business is wisely built, encouraging its chances of being successful.
Be Patient – and Appreciate How it Helps
Finally, remember to be patient and relax.
“Bootstrapping is a long game,” Tank says. “So take time to unwind and appreciate what you’re doing so that you don’t burn yourself out. I’m much better nowadays at taking vacations and breaks at work. I also encourage the same from our employees. It keeps us more productive and fresh, not to mention preserves our sanity.”
Bootstrapping can take time, but be patient and enjoy the experience of building something great, all with your own funding.