Banks have never liked lending money to new businesses and in today’s economic climate are very unlikely to want to.
What can you do to start a business successfully or grow one that has already started if you are unable to raise capital?
The answer lies in “Bootstrapping”. This is a method of starting and building a business without outside financial help. In other words you are being self reliant on your own way of generating the necessary funds to make the business self sustaining.
Here are some ways that you should consider that will help you to bootstrap your business.
The Early Start Up Stage
If you are already employed start your business without giving up your current job. Try and get all the setting up done during your non working hours and holidays. You can then look to reducing your employed hours as the business begins to generate an income.
Buy secondhand or use equipment such as computers, printers, telephone and car that you already own. Don’t think it necessary to buy shiny new items.
Work form home or if you need to meet clients and your home is not suitable rent office space by the hour or meet at an hotel or good coffee shop to discuss business. This is quite a normal way of meeting and no one will be surprised if you ask them to meet you at a suitable venue.
Count every penny that you need to spend and always ask if you really need something before you buy it. There are some things that you can hire or borrow a friend’s if they are willing to help you. Use free software where possible such as Open Office.
Promote your business using social media with Twitter, Facebook, Linkedin and others which can really get your name out to many people for free. Learn how to use social media properly or this method will not work.
Join networking groups in your area and get to know as many people as possible that can help you with your business and likewise you with theirs. For more information of networking please watch this video.
As Your Business Grows
Do not rush in to employing people. There are many ways of outsourcing your work and hiring people by the hour as required is far better than making a commitment to employ someone. Do not be tempted to grow too quickly or assume that because you have had several months of good income continuously that it will continue at that level and then over commit yourself. It would be easy to start ordering new equipment, a car etc based on something that may not last. Save first, spend later should be your bootstrapping motto!
Maintain Accurate Accounts
In business cash is king and you need to make sure that you are able to keep accurate accounts and to always have enough cash to meet your bills. If suppliers offer you a line of credit be very careful that you don’t spend money designated for an invoice on something else. It is sometimes easy in those circumstances to assume that you have more money than you thought and spend it forgetting that an invoice will soon be in your mailbox. It is also vital that you put money aside to pay your tax bill when it becomes due. Professional advice about taxation at the start of your business is vital if you want to avoid any nasty shocks later on.
Have you tried bootstrapping your business? Your comments are appreciated. Please write them in the box below. I would also appreciate you sharing this article using the share button.
The Entrepreneur Club