16 Feb 14 Bootstrapping Ideas: Build Your Small Business on a Budget
The sluggish economy has every small or solo business owner figuring out how they can get the biggest “bang for their buck”. Whether its money you spend on technology, systems, outsourced help or training, you want to get a great return on investment. And if you’re a start up you want to figure out how to avoid wasting money on services you don’t need. Even if you’re already profitable, conserving your cash and resources is crucial if you want to maximize your income. So, bootstrapping needs to be part of your small business planning.
Bootstrapping is all about finding ways to build your business without huge infusions of outside cash. It’s also about being conservative and strategic about how and where you spend.
Most micro businesses don’t have access to angel investors or venture funding. They use their own financial resources to get started. They borrow from savings, friends, family, credit cards or home equity. Or they get people in their personal network to invest in their business. After all, who will invest in your business if you won’t take a bit of financial risk and invest in yourself?
Bootstrapping is about getting the most value and forward momentum from your limited budget. This is where many small businesses stumble. My motto for all business owners is this: “Shop Around”. Remember that old song, “You Better Shop Around”? Well if you latch onto the first vendor or solution you run across without understanding the questions to ask and competitive rates, chances are you’re either paying more than you need to, or not getting what you need.
Everyone today is talking about going green and conserving resources. This applies to your business as well and you’ll also be doing the environment a favor!
Great Bootstrapping Ideas
- If you’re a service business, start out with a home office. You can always rent or borrow conference room space if you need it once in a while.
- Once you’re ready to rent space, don’t rent more than you need. Don’t pay for prime retail space unless you’re a retail business.
- Another option- rent a larger, nicer space and sub-lease some of it to offset the rent. Then when you need the extra space take it back when the sub-lease expires.
- Don’t overspend on web or graphic design. This is one of my “pet peeves” since I’ve seen so many business owners overpay simply because they didn’t understand exactly what they needed to ask a web designer before they hired them. Know what you need and shop around.
- DO invest in getting expert help from a coach or mentor. It can end up saving you thousands of dollars and help you increase your income faster. This is why even the most successful coaches and Entrepreneurs also have coaches.
- Use Voice Over Internet or VOIP, like Vonnage or Skype. You’ll save a lot on your phone services. I do video coaching using Skype and my clients love it.
- If you have a home office, listing your phone as a residential number will also save you money. Of course, if you need your business listing in the Yellow Pages (few businesses do these days), this won’t work. But if people look for you online, you don’t need a business phone listing.
- Don’t pay more than you need to for web hosting–under $10 a month for a basic site with no shopping cart.
- Search on E-bay for software and computers. Buying a slightly older version of the software you need can save a bundle. Almost anything can be found on E-bay or Amazon.
- Search for open source or free download software before buying something expensive. You can also do a Google search for the type of software you need and type “free” before the phrase–for example: “free scheduling software for chiropractors”.
- For anything you need, take my “shop around” advice and search the Internet for the best prices or options.
- Use independent freelancers rather than hiring employees and you’ll save a bundle on payroll taxes and workmen’s compensation insurance (US).
- Consider outsourcing specific projects and tasks overseas where hourly rates are lower.
- Remember that cheap is not always better!
Take a good look at your business and see where you need to spend more to make more and where you can cut back because you’re just not getting results. Even as your business grows, keep your expenses in check so your income can grow.
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