Starting Small: Tips for Bootstrapping a New Business

We might think we have a good business idea when we have found a product that we can sell for more than it costs us, but this one-dimensional perspective ignores the true cost. We also need to cover equipment, marketing, rent, wages, and more. It often takes more money than we think to make money, so keeping costs down when we start out is crucial. Many businesses do this by ‘bootstrapping.’

Strictly speaking, bootstrapping refers to the process of self-funding a new business. It is often used when other sources of funding are unavailable, so it requires entrepreneurs to be extremely disciplined about keeping their costs down lest they burn through all their cash. However, maintaining this discipline is something that can benefit every business, no matter how they are financed. Here are some top tips for bootstrapping your business. 

Start out with an MVP 

MVP is an acronym from the tech industry which stands for Minimum Viable Product. It reminds entrepreneurs that it is better to quickly put out an unpolished but functioning product that starts generating income than to wait until your product is perfect. You will run out of money faster doing the latter, and if you want to apply for financing such as small business loans in Sydney or other cities, you are much more likely to be approved if you have a record of sales. 

Do your own marketing

The internet is a treasure trove of low-cost marketing opportunities that you can learn to do yourself. Take social media, for example. Pretty much everybody today is using it to manage their own brand image, even if they are not promoting anything except themselves. Then there is blogging, newsletters, collaboration, and many more methods you can use that do not cost anything except your time. 

Streamline

Most businesses involve some tasks that the owner cannot do themselves. However, when a business is just starting out, employees can be a large burden to take on. They will expect to be paid no matter how tight money is, and you will have to find ways to manage additional tasks such as payroll. Instead, it is better to use freelancers or contractors. You only pay for these when you need them which helps to keep costs down and maximise your profit margins.

Limit luxuries

Sure, a nice workplace is good for productivity. But if you are just starting out, this is the kind of expense you do not need. The concept of minimum viability applies here too. Go for the cheapest place where you can do the tasks you need to do, not the one where you can work at your absolute best. Consider working at home or in a co-working space. You can always upgrade once you are making a profit.

Conclusion  

Starting a small business usually costs more money than people realise, so keeping costs down while you establish yourself is essential. Applying a DIY approach as much as possible and avoiding luxuries like plush offices are ways to do that. It is also important to generate income as soon as possible by getting your MVP on the market. You will at least slow down your burn rate even if you are not yet in profit-making territory.