How to Bootstrap Your Business on a Budget
If you’re waiting to launch your business until you secure funding, you could be waiting around for quite a while. According to reporting from Entrepreneur, only 1% of funding for startups comes from VC firms. In contrast, 24% of business funding comes from friends and family, and 80% is self-funded.
But that’s not necessarily bad news. Skipping past investors and friends and family for funding can put you in the driver’s seat for your business and help you retain more control. Fortunately, funding your business doesn’t have to cost much, depending on the industry you’re in. Create a budget for the supplies and resources you need to get off the ground, and make a commitment to scale slowly. For the early stages of your business, try to skip over expensive overhead costs like office space and equipment you’re not using yet.
Once you have a clearer idea of how much you need to get off the ground, you can set a goal to bootstrap your business with your own hard work and determination. Here’s how to get started.
Take a hard look at your business aspirations and determine if they’re realistic, and how you can meet those goals creatively. For example, a recent poll found that the average cost to start a restaurant was just under $500,000. If your business goal is that expensive, you’ll probably need to work towards a partnership or securing outside funding and loans.
However, your end goal may really be to serve customers amazing food, and you don’t need an expensive restaurant space to do that. Get creative and launch a food truck, pop-up cart or a table at a farmer’s market instead. Making the rounds to festivals, fairs and corporate parties can be a lucrative route for food businesses – and put profit in your pocket that can fund your bigger goals.
You can also skip most of the overhead altogether by partnering with other like-minded business. For example, pop-up restaurants within existing restaurants allow owners to test their ideas and dishes. A restaurant that only opens for dinner may be open to hosting your pop-up restaurant during breakfast and lunch and take a portion of the profits or a flat rental fee.
Profit From Your Overhead
You may not be able to avoid the overhead in launching a company if you really do need that office space or a company car you were trying to put off until later. However, you can still profit from that overhead and use the money to pay down your business bills.
Rent a spare office or desk through a service like ShareDesk, or partner with area consultants and freelancers interested in paying to use your space periodically. Even your professional camera equipment can be rented out for a profit when you don’t have a photo session booked. You can also rent out your car through Turo to help pay for your own car loan. Airbnb is a lucrative way to rent out a furnished basement that you would otherwise be using to store your business inventory.
Create Passive Income Streams
No income is truly passive and requires upfront work and ongoing maintenance to some degree. But you can generate an income by sharing your own knowledge and expertise by creating a video series or online workshop.
If you already have an online following, promote your new course to them directly. Or sell your product on an existing marketplace like Udemy or Skillshare where there’s already an audience waiting to consume new courses and knowledge. It’s not only a good way to create extra income, but it can also help grow your network with potential clients and business partners.
A consulting business costs nothing to start if you’re relying on your own network. This tactic can also feed into your bigger business goals like starting an agency. Spread the word that you’re offering consulting for certain areas, like social media marketing for restaurants or content marketing for startups. Look for free local MeetUps to grow your network and meet potential new clients.
As you get started consulting, your first few sessions can be done over the phone or through free Google chats to keep your overhead at zero. After you have some money in the bank, start renting out a small meeting space at area hotels or conference centers to grow and scale your new business.
Become a Freelancer
Like consulting, freelancing can be a lucrative and cost-effective way to bootstrap your business. After all, it’s completely free to start a side gig as a freelance writer or web designer right from your personal computer.
While finding clients can be tough, there are sites like Growth Geeks and Fancy Hands that can connect you with clients looking for everything from online marketing to virtual assistants. Use your personal network to start spreading the word about your new freelance venture, and focus on work that requires tapping into your zone of genius. Your freelance work should be accomplished quickly and pay relatively well. In other words, don’t reinvent the wheel and try launching a freelance service career in an area you just don’t know that well.
Start a Side Hustle
Increasing your income is an immediate way to bootstrap your business, but it can feel daunting if you’re already working to support yourself while also growing your business. That’s why the gig economy is the perfect place to start a side hustle.
Start driving for Uber or Lyft or look through job postings on UpWork, or put together people’s IKEA furniture or paint their garage on TaskRabbit. Small micro-jobs can pay surprisingly well and the schedule is within your control. Use the extra money for your business, and make sure to strike up a conversation with your gig economy clients to let them know about your larger goals. You could end up with new customers for your emerging business.
Ask for a Discount
You would be surprised by how many discounts you can get on personal and professional items just by asking. Whether you’re looking at a new office desk or industry conference tickets, asking upfront about a discount can result in quick money back in your pocket to help bootstrap your business.
However, asking for discounts often requires upfront, all cash payments, so be prepared to produce the funds immediately. You also might be asked to contribute something to the event you want a discount on, like volunteering to set up or break down tables. Meanwhile, a discount on office equipment is possible if you ask about refurbished or gently-used products.
Pre-Sell Your Services
Instead of starting your business from scratch with no clients and no money, consider pre-selling your products or services instead. One way to do this is by launching a Kickstarter campaign. Backers will often hand over their money in exchange for a discount on a product, VIP access to an event or bonus merchandise.
You can also reach out to potential clients through cold emails and calls, and pre-sell them on your business. While it takes time to nurture those relationships, you could end up with a roster full of long-term clients and pre-sales to fund your business before you ever get started.
People seem to focus on how to grow income when bootstrapping, but don’t look at how downsizing can actually impact their goals. If the real estate market is hot in your area, consider selling and downsizing to a smaller home or apartment in a nearby area to immediately reduce your cost of living. Even switching rentals and moving to a cheaper and less popular part of town can put more money in your pocket for daily business expenses. You can also consider launching your business in one of the top 10 U.S. cities most friendly to small businesses.
It’s also wise to look at your monthly budget. Use an app like Mint to keep track of every dollar spent, from cable to groceries. You may find you need to start watching TV online instead of with an expensive cable package, start shopping at discount grocery stores and curbing your spending in every category. A downsized, well-maintained budget could free up enough money to infuse your business with the cash it needs.
There are so many ways to earn extra income and save on existing expenses that you could end up with all the funding you need within a few months. Combine ideas to reach your financial goals faster, and find a mentor who has been through the ‘bootstrapping your startup’ phase before to help encourage you through the process.
However you bootstrap your business, embrace it as an adventure. Make it into a game and set financial goals for yourself to see how far you can go toward funding your own business.
How have you bootstrapped your own business on a budget? Let us know by leaving a comment below:
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