Small businesses don’t generally have hoards of cash lying around. It can be even harder to manage your finances, if you are building the business up without the use of outside funding. The process of bootstrapping your business, doing business with a more compact pool of resources, can be challenging, but it isn’t impossible.
The following six tips can help your small business bootstrap effectively, without compromising growth.
1. Begin prioritising
The essential skill to learn is the ability to prioritise and focus your efforts. When money is stretched thin, you can’t afford to have ‘everything you want’ – sometimes you can’t even have ‘everything you need’!
With each task or spending action, ask yourself what effect will it have on business growth? Does owning your own office boost your small business’ ability to generate growth? Perhaps it would be better to run the business from your home and instead spend the money on increasing stock.
A small business shouldn’t do business with an ‘all or nothing’ mentality. You need to be able to prioritise spending and understand what truly generates growth.
2. Add passion to your public relations
Bootstrap your small business by expelling your PR person (if you have one). Your business shouldn’t spend money on PR at this stage (a way to prioritise!) Instead, opt for passionate PR by the best person to sell your business to the media: yourself.
You’re the founder of the business, you’ve poured your heart and soul into it, and you are definitely the best person to talk about the strengths of your business. Don’t be afraid to shout out the message from the rooftops – contact local media outlets and excite others with your message.
3. Micro-test your business ideas and products regularly
Market research can be a black hole for small business finances, but it mustn’t be that way. Instead of spending thousands hiring a company to do it for you, micro-test your ideas and products.
Launch a simple landing page to promote your new business idea or product, even before it’s ready to hit the shelves. Keep an eye on the clicks and ask potential customers for feedback through free survey sites such as SurveyMonkey.
You can also sell your products in smaller quantities at first through local markets and festivals, for example. When you gain traction, start rolling out your ideas on larger scale.
4. Hire people with complimentary skills in mind
Firstly, you should avoid spending money on tasks you could be doing yourself. A small business owner should be a bit of a jack-of-all-trades. Always consider whether you could learn the required skill yourself before you start outsourcing or hiring additional staff.
If you do hire people to your team, remember to add people who bring something new to the table in terms of skills. If you are already competent in accounting, you don’t need to hire a person with these skills.
5. Save your pennies, in business and in personal life
When you’re financing your business mainly from your own pockets, you shouldn’t just focus on your company’s spending. Your personal budget should also be under scrutiny. The more you can save there, the less you have to worry about stretching your business finances.
Cut down on unessential costs for the time being. If, and when, you are required to shop for essential items, find cheaper deals. Vouchering can be a formidable option, watch out for exclusive discounts at VoucherBin that offer deals for business and personal manoeuvres.
Remember bootstrapping isn’t supposed to go on forever. Once your small business has started generating enough profits and revenue to support sustainable growth, you can relax your thrifty lifestyle a little.
6. Network benefits for your small business
Finally, if you aren’t in touch with other local small businesses and entrepreneurs, you are missing a revolutionary bootstrapping trick. If you create a strong network around your small business, you don’t need to pay for everything.
You can benefit from this network through two routes. First, you can barter with other small businesses and entrepreneurs for services. You could receive free business cards from a local company, while your business provides them with a website, for example. Bartering opportunities are plentiful and in mutually beneficial deals.
Second, at times all you need to do is ask. Other entrepreneurs understand what your small business is experiencing. While they may not be able to provide exactly what you need, they could nudge you in a direction that provides you results without high costs.
Bootstrapping a small business is a skill you can learn and develop – the above six tips are a resplendent way to start. You can share your own bootstrapping tips with us in the comment section below!