Bootstrapping Your Small Business
by Danny Brown on December 10th, 2007
One of the hardest things for any small business is controlling the finances, and for start-ups or recently established businesses, this is even more true. This is where bootstrapping can make all the difference, and if you’ve never heard of the term, you’ll wish you had earlier when you see the savings it can make your business.
If you haven’t heard of bootstrapping, it’s fairly straightforward – think of it as the equivalent of making your business successful with very little cost involved. In this respect, it could be seen as “pulling up your socks, strapping on your boots and getting on with it”. It’s a particularly effective way of saving money if your business is either a sole proprietorship or some kind of contractor, as it allows you to both create and manage your income yourself.
With over 18 million small businesses in the US alone, the competition from this figure alone means that any kind of savings you can make by bootstrapping will be worth it. You can put the extra money to use making your business a success, as well as keeping funds stored for downtimes. So what are the best ways for bootstrapping your company? Simple – reduce your outgoings and maximize your incomings.
Your Office
Unless you’re in the PR side of business and you feel you need to make a huge statement with your offices, this is the first place you can make a difference. If your business is primarily online, you can work from home and use a room there as an office. All you need is a computer and a phone anyway, so who’s to know where you’re working from? And if a client wants a meeting, take him or her out to lunch.
Office Equipment
Now that your bootstrapping is saving you office rent, the next step is to continue these savings, and where better to start than your office? You probably don’t need the latest mega-computer for example, so get a decent second-hand laptop or desktop computer, and save a couple of hundred dollars right there. You can also find companies that will sell refurbished phone systems, so even if you have 2-3 employees, it won’t cost you much to have a fully functioning phone and communication system installed.
Employees
If your business needs more than yourself or your partner to make it efficient, then having a payroll is obviously going to affect your finances. However, this is where bootstrapping can make a major difference, if done right. Instead of offering a standard salary, why not offer stock in your company as well as a token wage? You’ll find not everyone will be willing to do this, but there are always some that will. Use Facebook as an example – 3 months after that college experiment started, the company got a $246 million investment from Microsoft, making the early employees very rich indeed.
You can also hire college students. They’re clamoring for job experience towards their chosen area of study, and some may even work unpaid. For more technical jobs like graphic/web design or IT work, you can hire graphic design or IT students to help you out with those specific projects. For more on this, read Hiring Cheap Help – How Student Contractors Can Benefit Your Business .
Pay Your Bills on Time
Although it might sound strange paying money out when you’re looking at saving money, paying your bills on time can be an excellent way of saving in the long run. Because you won’t have to pay late payment penalties or interest fees, you’ll be making savings every month, which you can plow into the company.
There are many ways that you can use bootstrapping techniques – a lot depends on your company and what your selling or providing. But the ones mentioned here will work for any business, and can make the difference between a successful first year, and not being around to see the second.
