For a startup to grow and flourish, funding is important. However, most small businesses are hardly seen relying on venture capitalists for the cash inflow. Challenges are in plenty but it seems that startups are actually finding a way around these difficulties— involving hard-to-get financial support. Recent reports suggest that only 3 percent of investor funding actually goes into setting up a startup.
To be precise, we have massive number of entrepreneurs on-board but the surprising fact is that most of them are growing big without an external aid. They are actually bootstrapping their own business model and this is what we would be talking about in this post. Here we will be enumerating 10 functional hacks involving business bootstrapping with limited, internal resources.
It isn’t entirely true that businesses are not asking for external funding. The actual scenario is focused around odds of receiving funds as startups. Most angel investors and venture capitalists hardly have faith on these startups which makes it exceedingly difficult for them to prosper. This is where bootstrapping the business comes in handy and the first approach has to be about strategizing the financial skills. While this can actually be a very demanding task, the satisfaction of owning every bit of equity is motivating enough.
So let’s get the ball rolling-
#1. Limiting Expenses
Refrain from splurging during the formative phase of your business. The trick is to focus on the functionality rather than the form. It is always a temptation to make the office or an arrangement look aesthetically pleasing but you must be careful as over expenditure can spell doom. One example would be the office furniture as you can always make peace with a basic chair instead of spending way too much on something luxurious and comfy.
#2. Minimize Outsourcing
While this theory is debatable, it is believed that excessive outsourcing might be detrimental to your financial reserves. Not just outsourcing, you shouldn’t look to hire or expand if the workload is within manageable proportions.
If you need support in the quest to grow, look to take help from family and friends who can handle less intricate jobs without asking for a fee. Look to curb added payroll expenses and concentrate on keeping the money to yourself.
#3. Concentrate More on Cash-Flow
Every startup needs to keep profits out of the equation and concentrate more on cash-flow. It is true that most investors won’t be helping you out unless the profits are tabulated and shown. But as a startup, it is necessary to keep a track of resources and indulge in quick cash making practices, including volume payments, short cycle of sales and even recurring ‘revenue models’. The trick is to maintain a steady inflow of cash as without it the startups will soon start maxing out.
#4. Bottom-Up Forecasting is the Way to Go
While the top-down approach is actually pretty good, most startups tend to ignore the ‘bottom-up’ forecasting. To be clear, the top-down strategy helps minimize variability but might only be helpful for bigger entrepreneurs who can actually live with unrealistic scenarios. The Bottom-up approach is more practical and can also be a great determinant.
#5. Striving for Perfection can be Stressful
If you are looking to launch a product or service, it isn’t recommended to strive for perfection since the inception. Instead, make a product which is really good and throw the same into the market. You can make adjustments and tweaks later on— depending upon the customer requirements. This is the case with most applications including YouTube and Showbox for PC which update the interface and coding— fixing minor bugs and software issues.
#6. Top Talent isn’t the Right Choice
If you are starting off with a business and plan on hiring, top talent isn’t actually the way to go. Bootstrapped startups need to focus on ambitious individuals rather than concentrating on the overrated concept of top talent.
#7. Sacrifice Margins at Your Own Peril
During the initial phase, it isn’t actually advisable to park into retail chains and distributers as they will only eat into your profits. Instead look for ecommerce platforms as they help minimize the travel which your product needs to experience. The tricks are to reduce cart abandonment, sell online, launch online and keep exposure limited unless you are big enough to grow.
#8. Control the Marketing Budget
For a startup to grow, marketing is an essential virtue, However, you need not spend a lot initially by starting off as a service-centric body. This in turn will encourage customers even more who will love to contribute towards the growth of the startup.
The idea here is to incorporate the loyal customers who have been a part of your journey. They can turn up as the brand advocates— promoting product at no additional costs. This will surely create a buzz which can be further extrapolated with great content, referral campaigns and even kickbacks.
Your website needs to be simple as tweaks can always be made to any existing setup, upon gathering popularity.
#9. Sweat Equity is Advantageous
Bask under the concept of long-term equity and look for some like-minded individuals to support you. Instead of approaching investors and venture capitalists, look for people who can help you through a phase in exchange of equity-based benefits, accumulated out of sweat, grit and patience.
#10. Buying Cheap isn’t always Right
Saving expenses is fine but going outright cheap can actually make you shell out even more— in terms of repairing or tweaking the product. Look to match costs with quality before purchasing something essential.
Here are some of the bootstrapping hacks which need to be inculcated in order to experience steady, unhindered growth.
