11 Ways to Bootstrap Your New Small Business When the Economy Is Down
- Hosted July 20, 2020
- By Dustin Clendenen
boot·strap /ˈbo͞otˌstrap/ verb gerund or present participle: bootstrapping Definition: get (oneself or something) into or out of a situation using existing resources.
There’s a popular saying that “you need money to make money,” but that isn’t always true.
Some of the most successful companies in the world were once launched by nothing but a clear vision and hard work. Apple Inc. is perhaps one of the most famous examples of this, started by Steve Jobs and Steve Wozniak in a garage, with no investors. Jobs sold his car, and Wozniak sold his calculator, and they used the funds to put together a revolutionary circuit board, a minimally viable product known as the Apple I. Utilizing all the resources they had available to them, the duo began making sales, and Apple Inc. was born.
This is bootstrapping, and regardless of what’s happening in the economy, it’s one of the best ways to start a new business, because it requires you to exercise and build the creativity, discipline, strategy, and resource management that will be integral to successfully running your company after you get it off the ground.
Investment money and startup capital may be harder to come by now due to the pandemic and recession, but there are plenty of ways to build your small business without any financial backing. Keep at it, and your company may be more successful in the long run because of the work you do now.
Here are 11 tips for bootstrapping your new small business:
1. Go with what you know
When you’re starting a new business, it’s going to be a labor of love, so make sure you’re passionate about what you’re doing. But more importantly: make sure you know the industry in and out or you may never find any success with your new company.
Business growth and sustainability will depend on your ability to anticipate what’s coming, and that’s only possible when you know what’s standard for other businesses in your industry. It will also be imperative that you have existing industry connections when you launch your new company. You will need all the help you can get!
2. Research the market
The better understanding you have your particular market, the easier it will be to carve out your place within it.
Another common business saying in the US is that “the customer is always right.” But when you’re a new company, customer feedback might actually lead you astray or diffuse your goals.
“Small businesses, especially the new ones, do not have enough subscribers to get clear and loud results from [a] survey,” says Bradley Steven, Founder of LLC Formations. “So, they should keep an eye on the high-selling products of their competitors. You can do this manually by exploring the ‘high-in-demand’ section of competitors’ websites or use the tracking tools for traffic analysis and high-volume queries. The next step is to optimize your website pages for potential keywords daily. It is not enough to rank for specific terms for a day. Instead, you should keep monitoring the keywords that are playing a crucial role in rankings. Optimize the pages for the potential ones and eliminate others. Many keyword tools are available in the market that provide the refresh keywords statistics every 24 hours. Using them will be highly beneficial for small businesses.”
3. Do everything you can, yourself
Running a business requires wearing a lot of hats, but that’s never more true than when you’re bootstrapping a new company. When Jobs and Wozniak started Apple, they were simultaneously the product designers, the engineers, the operations managers, the accountants, and the salespeople. And if they ever bothered to clean the garage they were working in, they were the janitors too.
Labor is expensive, and hiring employees or even freelancers to help is a luxury you might not be able to afford when you’re just getting started. On the bright side, being so hands-on with your work will teach you greater efficiency, clarify what’s most important or valuable to your business, and also expand your knowledge of how different tasks are done so you can make better hiring decisions later on.
As you’re mapping out all the things that will need to be done to get your business going, only delegate or hire out for tasks and services that are impossible for you to do on your own. You’d be surprised how much you can accomplish on your own, especially with all the advances in technology and SAAS.
Speaking of which:
4. Utilize free and low-cost platforms
Multi-million dollar companies would fall apart quickly without its various operations departments. Accounting, marketing, human resources, and more are all essential to running major corporations, but when it comes to a burgeoning small business, many of these same functions could be performed by you, with help from online platforms and software.
With a basic primer in social media, a solopreneur could easily generate their own leads with Facebook, Twitter, Instagram, and LinkedIn, or start an effective email marketing campaign with services like Mailchimp or Constant Contact.
When it comes to bookkeeping, Azlo offers a suite of services for free, right in their business banking dashboard. Invoices can be generated and sent to clients in minutes, and payment can be accepted with direct deposits. Bill payments are made super easy as well, with the ability to generate checks that are mailed out on your behalf. And for anything the Azlo platform can’t do, it easily integrates with third party services like Quickbooks and Square.
5. Work from home
Maintaining an office is expensive, and may actually hamper your productivity, especially when you’re just getting started. If you’re a solopreneur, an office doesn’t even make sense, practically speaking. Just find a designated space in your home to be productive. Even if you have a small team that’s helping, work can be managed remotely with check-ins via Slack or video calls. If that starts to become unmanageable, host meetings or coworking sessions at your home or a coffee shop.
Of course, once money is flowing and you have enough to cover the expenses while maintaining profit, a co-working space membership or even an office rental can be in order. But if you bootstrapped effectively, then you’ll know how inessential this really is.
6. Pinch pennies
When you’re just starting out, you probably have very little money to work with. Look for deals wherever you can find them. Scrutinize invoices or bills to make sure you’re not being taken advantage of. Keep track of your money and spending vigilantly so you don’t get caught in a situation where you’re low on funds or have to take on debt. It takes careful planning and a watchful eye, but these habits will be incredibly useful later on as your revenue and spending grows.
7. Find mentors
One of the benefits of starting a business in an industry that you’re familiar with is that you will probably already know other people working in it. These connections can prove to be incredibly valuable because of the insight and advice they can give you based on their own experiences.
“Don’t be afraid to ask questions from veteran business owners from your network,” says Jared Ebrahimoff, Founder & COO of Lavari Jewelers. “‘Ignorance is bliss’ is a saying that’s not applicable to business owners. If new businesses consult with seasoned experts in the industry, the chances are high that they’ll succeed because they can apply the advice from personalities with years of experience and invaluable knowledge. In doing so, it saves them the hassle of experiencing hardship and problems that could otherwise be prevented if they bothered to ask.”
8. Find people who believe in your company
Sooner or later, you will need other people to help get your business into high gear—and this time may come before you have the capital available to really hire employees and provide a steady paycheck.
Maybe you have enough money to hire a few full-time employees, but the salaries will be below market rates. Or maybe you can’t handle any staff with benefits but you can budget for part-time assistance or hire freelancers. Or maybe you can’t afford to pay at all but can incentivize with a stake in the company.
Whatever your situation, the only way people are going to work under those sorts of conditions is if they believe in your mission. Be passionate about the work you’re doing, and you will be able to find people who are just as passionate to bring your vision to life.
“As a budding business, the chances are high that you cannot offer competitive salaries to your workers,” says Alex Azoury, founder of Home Grounds. “Because of that, you should find employees with potential who are willing to help you grow your business and reap success together with you. Remember that you need to hire people who know your current situation and financial capability, but believe in your potential. That way, they can easily contribute their ideas for your business to help you achieve your goals. Otherwise, they might leave you halfway and dump all their responsibilities to remaining team members when they leave.”
9. Collaborate with other businesses and entrepreneurs
The benefits of being familiar with your industry really can’t be overstated. In addition to helping you find mentors, when you have a lot of connections to other people in your industry, it also makes collaboration easier.
No two companies do things exactly the same way. While you’re deep-diving into research on your competition so you can retain an edge, you may become inspired about ways your two companies could collaborate in order to tap into a new customer base or increase your market share.
“Collaborating with other businesses is a fantastic way to build your business, especially now,” says Carla Williams Johnson, founder of Carli Communications. “Getting together with other heavy hitters in your industry that you share the same target with can truly help promote your brand and you can leverage their marketing and advertising to promote yourself.”
During this pandemic, many businesses have had to shutter or scale back their operations. Pivoting has become increasingly necessary, but so has sharing work.
“Businesses are going through tough times,” says Steven. “Extend the hand of collaboration to your competitors. It is a useful source of sharing expenses and resources. This approach is helpful for product-based businesses as well, but service-based firms could have a competitive advantage. By doing so, both parties would stay in business effectively instead of tripping down in this pandemic. Moreover, you must share it on all social media platforms for widening the horizon of building impactful public relations.”
10. Call in favors
You may not have much financial capital when you’re bootstrapping your business, but another major perk of having connections in your given industry is that it will be easier to call in favors or simply ask for help.
Maybe you can negotiate cheaper rates from vendors or service-providers. Or extend the terms of payment so that you have longer to build up a cashflow before your bills come due.
Social capital is a kind of currency you would be wise not to undervalue.
11. Don’t stop
As you continue down your startup journey, you’re undoubtedly going to encounter things in your industry that trouble you. Maybe you’ll hear about a breakthrough or major success of one of your competitors and you’ll wonder why it didn’t happen to you. Maybe someone you know will fall on hard times and go out of business, and you’ll wonder if you’re next.
Don’t stop to compare yourself to others—that merely sows doubt. Be clear about your goals and see them through. And as soon as you achieve one goal, set more that raise the bar and keeps you going down a path to success.
Have any other ideas or tips for bootstrapping a new business? The Azlo community is all ears. Let us know on our Facebook, Twitter, or LinkedIn, and be sure to check out more articles on Azlo’s COVID-19 Portal.
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