Bootstrapping is building a company from the ground up with nothing but personal savings, and with luck (not really…. opportunity shows its face to the one who deserves it), the cash coming in from the first sales. The term is also used as a noun: A bootstrap is a business, an entrepreneur with little or no outside cash or other support launches.
Bootstrapping your startup means growing your business with little or no venture capital or outside investment. It means relying on your own savings and revenue to operate and expand.
Looking back, I’m glad I bootstrapped my business. I started off 18 years ago, with a loan from my uncles. They also opened up their suppliers to me, this ensured that my business had some capital and extra terms in repaying suppliers. This has taken a lot of pressure off me at the beginning, because I did not have heavy and lengthy loan repayments to make, and I could be more creative with my business plans. Bootstrapping has also allowed me the time to focus on one thing before moving to the next. Because of my limited resources and capital, I had to wait for funds to come in and this would then give me time to finish one task at a time and not work on multiple goals at once.
Bootstrapping has allowed me to establish some solid dependable relationships with other entrepreneurs, by means of swapping skills and advice. Based on my success with bootstrapping here are my 8 ways to bootstraps your business.
1. Raise your own funds by using your savings or asking your family for a loan. Don’t use all this money, make it a habit to set a portion of your cash income aside as an emergency fund. Other ways of getting funding are:
- Business incubators – If you don’t have savings or your family can’t afford to fund you then this is the next best option. They will offer free and heavily subsidised rates for business services. My first website was developed through an incubator from the seda network, and I remember paying only R600 for it.
- Angel investors and business finance houses: Once you have established a relationship with your nearest incubator and are making progress, they will then assist you with funding. These financiers are prepared to work with you as they understand the business cycle and consider this when you are making repayments. The difficulty to getting this type of funding is that you will need to have a track record in place of about 3-6 months. Besides looking for security, they will also look at business potential and viability. So make sure you start keeping records and have a business bank account from the beginning. A good investor, venture capitalist or small business finance house will work with you to unlock the potential of your business.
- Crowdfunding platforms are great if you are an NPO or doing something that is impactful and meaningful. This is a means of raising money without giving up equity.
- Equity crowdfunding is also a funding platform. This method usually means that you will give up a percentage of ownership to the funders. The advantage of this is that your funders can also become your advisors.
- Traditional lenders like banks and other micro lenders: I advise against this, because banks are not set up for funding businesses. A business goes through cycles of highs and lows, and when business is not doing so great, your valuable cash flow goes towards the bank loan, instead of stock or operating expenses. Please note: Credit cards can be useful and buy you some time, but I highly discourage this method of funding.
2. Become a marketing expert and invest in your own brand. Use free software tools like Canva, Inshot and Unsplash to build your brand and develop your content. 78% of consumers prefer getting to know businesses via articles rather than ads. Start producing content for yourself and others. Become social and get yourself online asap. Use the internet as an investor and not a consumer. You are spending time online, use it for your benefit and not to benefit others.
3. Exchange of skills and services: This is my favourite form of bootstrapping and one that has become invaluable to me. In the beginning of my business, I could not have grown if I didn’t have the right input into my business. Consider this exchange of skills like a form of bartering, just in the business world.
Let me explain how this works – I am a business coach and my friend is good at social media marketing. I will then offer 2 hours of my services in exchange for him doing something for me of the same value. It’s a win/win all round. The benefits of this form of bootstrapping, is that it helps you unlock the value within your networks, it also helps you foster very good strategic partnerships through collaboration. These contacts become lifelong business friends as trust is built from the early stages of business. These contacts usually end up referring to each other.
4. Be resourceful: Cold calling, walking from business to business, sending emails, listing yourself on free online classifieds. Do whatever it takes to get your name out there. Your local newspaper and online classified are good places to advertise your services for free. I have used and i’m still using, gumtree and Facebook marketplace to advertise my services. With most people being online these days Facebook groups are great platforms to advertise. Wherever you are in the world you will have free classifieds or marketplaces in your area. With these free advertising services, I have managed to grow my business quite consistently.
5. Learn and earn: Always allocate time every day to improve your skills and products. The more you learn the more you earn, by applying what you have learnt. Knowledge is not
6. Build your tribe: By offering your goods and services to people you now first might be a good place to start. Please know that some of them will ridicule your idea and not support you. This is absolutely fine, as they are not part of your tribe. Approach your family and friends whom you know will support you. Ask them to recommend you to their friends and family. They will form the foundations of your tribe or supporters. Take any large music band today, they started out in the garage, heck even apple started out from a garage and was supported by the local innovation society. When I started my business, I reached out to the craft clubs, asked them what they needed and got the crafts for them. This way I used my cash flow efficiently and no money was wasted.
Seek help from advisors and mentors: This does not need to be hired help. Find entrepreneurs or businesses who have achieved great success in your area and use them as role models. Success leaves clues, if you follow the clues, you will learn the habits and tricks that made these people successful. A good hack here is to visit your mentor’s website, the chances are that you could find free resources on the site, saving your R100’s or R1000’s of Rands. Once you have sufficient cash flow and your business is stabilising, then hire a mentor or business coach. This will prove to be one of the best moves you can make for your business. Your advisor, if you can afford one needs to contribute real value, otherwise this will be an unnecessary expense. Make sure that your advisor is an expert in an area that you are not good at, this way you can extract the most value from them.
8) Value, value, value: BY looking after my clients and offering them extra value at no extra cost, I managed to build rapport and expand at a faster rate. Everyone loves a freebie, by offering an initial 15% discount or a coupon with your product, you will not only have a happy client but you will give the client reason to come back for more. Value floats to the top, I’ll say this again because I want you to tattoo this into your brain. VALUE ALWAYS FLOATS TO THE TOP. The more value you can give the better your chances of becoming a leader in your field and owning your lane. Giving extra value is the hook that gets the consumer’s attention, it can be the ideal way to open the door for consumers and get them to step into your business. The cool thing about giving value, is that the cost to the business could be minimal and one that is easily absorbed by the business in the early stages.
My overnight business success took 18 years, and I’m still working on the frontlines because I love making a positive difference in people’s lives and actuating people into their highest potential.
Bootstrapping is not easy, because it’s all on you. What you put in you will get out. It’s really tiring, you won’t see money for years after you’ve started your business and at times you will feel like a failure. This is all part of the process. Diamonds are made under extreme pressure and it’s no different for successful businesses. Keep sight of your vision, maintain good habits, practice self-care and take smaller manageable steps towards your goals. Don’t give up when things are tough, face the challenges, I have your back you will get through it and be better for it.
Most great businesses started in a garage with the initial loans coming from savings or family. It was only once the idea grew and became popular did the venture capitalist invest. Today, has never been an easier time to start or grow a business, because most of the resources, besides money, can be found free on the internet. You can even learn the skills you need to give birth to your idea for free. Platforms like YouTube, Quora and Skillshare are great for learning.
These 8 ways to bootstrap have helped me considerably build my business in the early stages, and I still use them today. If you survive bootstrapping you will have a strong, lean, efficient, customer-focused company.
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