Did you know Nick Woodman bootstrapped GoPro into the billion-dollar camera company we know today? Yes, it is possible to start a business from scratch with limited resources and grow it into a successful enterprise. Data shows that at least 77% of small business owners in the US fund their startups from their pockets.
However, bootstrapping a business is easier said than done and requires a great strategy. Are you an aspiring entrepreneur looking to start a company with limited funds? Here is a guide on how to bootstrap a startup.
Devise Ways to Fund the Business Essentials
Bootstrapping a business may sound simple, but it takes a lot of work and preparedness to pull it off. Every business has the irreducible minimums it requires to get off the ground. For instance, if you want to start a snack manufacturing company, you need the equipment, power, raw products, and packaging.
Look for ways to fund the initial business necessities to ensure your company runs smoothly. Because you are bootstrapping, the best way to fund your startup is from your life’s savings. Additionally, you can seek monetary help from parents, siblings, or friends.
Ensure There’s Market Demand for Your Product or Service
Conducting market research to gauge the viability of your product or service is paramount. If your product has no market, your business will fail. Before you focus your energy and limited resources on your startup, ensure there’s a large enough market for your offerings.
For instance, if you want to bootstrap a used car dealership, find out the number of used cars dealerships in your locality and the gap your business can fill. Otherwise, you will waste your time and money on the business only for it to fail due to low sales.
Keep Your Expenses Low
You’ve funded your business and you’re doing well so far. How do you ensure the limited resources last long enough till your business starts generating revenue? Keep your expenses as low as possible to minimize the chances of going bankrupt before money starts flowing in. Don’t spend money you don’t need to and save every dollar you can. Some of the strategies you can use to keep your expenses low include:
- Avoiding renting office premises till you start making good profit
- Doing most of the work yourself instead of outsourcing
- Buying secondhand or refurbished equipment instead of new
- Using organic marketing strategies
By keeping your expenses low, you’ll save money that will come in handy during tough times.
Adopt a Business Model That Generates Revenue Quickly
When bootstrapping a business, choose a business model that generates cash quickly. If you fail to do so, you may use every penny to fund product development only for the product to stay on the shelves. Some business models have a quick return on investment (ROI), choose one that does.
If you want your bootstrapped enterprise to stand the test of time, you need to maximize profits. As soon as you start selling, don’t think about all the things you can do with the cash. Some entrepreneurs think about upgrading their cars, buying a house, or moving to a better neighborhood as soon as the profits start trickling in. Instead, reinvest the money in the business to continue growing it. Soon, you will start seeing more steady returns.
We hope these strategies will help you bootstrap your startup successfully.