As a business owner, you should try and retain ownership as long as possible. One of the best ways to do so is by bootstrapping. That said, bootstrapping can be tough as it means you’ll need to forego raising capital at an early stage.
Here are five bootstrapping tips any entrepreneur can use for their startup.
1. Generate Revenue Early
If you’re choosing to bootstrap you’ll need to pay close attention to this one. When you bootstrap a startup, cash will be very tight. That said, you need to make sure you choose a business model that can generate revenue from day one (or close to it).
If you’re unable to generate revenue you’ll end up depleting the little cash reserves you have for your business. If you can’t generate revenue from the get go then you’ll either want to rethink or business model or choose not to bootstrap.
2. Stay Bootstrapped As Long As You Can
One major advantage of bootstrapping a startup is that you’re able to retain ownership and equity in your company. At your early stages your equity is at it’s cheapest. Why give up so much more now when you can two or three times your valuation in 6-months?
The majority of startups will need to take in outside funding at some point. Like anything in life, timing is everything. Unfortunately there’s no one size fits all for when startups should accept funding. What I can say is that there’s definitely a point when it’s too early.
3. Avoid Debt At All Costs
When money gets tight it’s common for entrepreneurs to turn to plastic to alleviate their struggles. If you’re using credit cards, pay them off in 30 days. No excuses.
Credit card debt can seriously add up and start to weigh down on you as the business owner. Unless you absolutely need to use the credit you should avoid taking on debt at all costs.
4. Wear Multiple Hats
In the early stages of your startup you’re going to need to wear many hats. What I mean by that is you’re going to need to handle close to everything. Whether it’s sales, customer service, inventory management, accounting, or scheduling meetings it’s up to you to get it done.
You can’t be afraid to take on all the duties in the beginning. So what if you’ve never worked in sales. Who cares if you’re bad with numbers. The point is you decided to launch the business so it’s up to you to figure it out. If you rely on hiring others to perform these tasks in the beginning you’ll run out of capital before you know it.
5. Negotiate Like Crazy
Being able to negotiate is a skill that will pay dividends forever. When bootstrapping your startup it’s imperative that you get into the habit of negotiating every deal. Truthfully everything can be negotiated. Think about this. The worst that can happen is they say no. Best case? You save money. It’s honestly worth the risk every time.
In addition, negotiating can be quite fun. It gives you the opportunity to be creative. Maybe you can offer a good or service in return. Or you can bundle a few purchases together for a cheaper total. The more you practice this skill the more successful you’ll be in the long run.
Launching a business is tough. If you want to give yourself the best shot at building a successful company I suggest you consider bootstrapping. That said make sure you use these five tips above!